2025 Macro Musings Retrospective

David Beckworth and producer Sam Alburger dive into the last year of Macro Musings. They discuss David’s foray into Substack, their favorite episodes of the year, the most popular episodes of 2025, David’s push for NGDP targeting, this year’s most hotly contested episode, how the year 2025 will be remembered in macro history, and much more. 

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Read the full episode transcript:

This episode was recorded on December 10th, 2025

Note: While transcripts are lightly edited, they are not rigorously proofed for accuracy. If you notice an error, please reach out to [email protected]. 

David Beckworth: Welcome to Macro Musings where each week we pull back the curtain and take a closer look at the most important macroeconomic issues of the past, present, and future. I am your host, David Beckworth, a senior research fellow with the Mercatus Center at George Mason University, and I’m glad you decided to join us.

Sam Alburger: Welcome to the 2025 Macro Musings end-of-year retrospective. My name is Sam Alburger, and I’m one of the producers of Macro Musings. It’s my esteemed privilege to welcome today’s distinguished guest. He’s the maestro of macro, the proprietor of the Macroeconomic Policy Nexus Substack, and my good friend, David Beckworth. Welcome, David.

Beckworth: Thank you for having me on the podcast, Sam.

Alburger: Absolutely. We’re here again for our second annual retrospective. I appreciate that you let me take the hosting duties for another spin this year. Today we’re going to talk about the last year in Macro Musings land, peel back the curtain on the making of the show, discuss big trends and events that happened in the last year, and then we’re going to definitively decide how this year will be remembered in macroeconomic history. Are you ready, David?

Beckworth: I am. Let’s do it.

Macroeconomic Policy Nexus

Alburger: All right. Let’s start with the biggest change in the realm of Macro Musings. You started a Substack this year, Macroeconomic Policy Nexus. Listeners, if you’re not already subscribed, are you even a real macro head? Anyway, David, big picture, how’s Substacking going?

Beckworth: It’s going great. I’m glad that you and others at Mercatus nudged me into it. As you know, I did blogging for a long time. Really, I started late 2007, and I blogged all the way up until November 2020, then I let it go. Even the last few years during that period, I was letting that blog go. It’s still out there if you want to check it out. It’s called Macro Musings, which is where we got the name for the podcast. I gave that up as I was working more and more here on research, the podcast projects here. 

I was encouraged by you and others because Substack is the place to be. It’s great because it’s a place where I can share more of my views as the host of the show. I do some, but I really want to flesh out my ideas. It’s been a great place to do that. I’ve gotten feedback. I even had some listeners tell me they’re happy that I’m doing this so they can hear more of me.

Alburger: Absolutely. You were a little nervous to start Substacking originally. It’s a big commitment to dust off the old blogging fingers. How has it been just being back in the blogging game, getting feedback from listeners? Do you have any stories from the year?

Beckworth: It’s been great, actually, because again, it forces me to think more about these issues, to write them down, to put them down, to go out there on a limb. It’s been great because I’ve had a lot of engagement. I’ve written on a number of topics, but a lot of them have generated conversations that I wouldn’t otherwise have had. 

For example, I’ve done a lot of writing on central bank operating systems. Now, I’ve talked a lot about that on the podcast as well. I think that was a big part of the story I’m going to tell. I got invited to the Atlanta Fed’s Financial Markets Conference. I think a lot of that, again, had to do with the podcast, conversations with Bill Nelson and others. I was invited there to moderate a panel on central bank operating systems. That’s something I have written about in this newsletter.

I know I’ve had follow-up conversations with some central bankers, some Fed people about the issues written in there. It’s great to see that activity go on. I’ve also had feedback on my discussions about fiscal dominance. Is it arriving? Is it not? Then stablecoins. Probably the most feedback I’ve gotten is on stablecoins. I’ve had conversations with people in the administration, with the Fed, and then just people outside wanting to know more. I’ve been invited to conferences because of the Substack to talk about stablecoins.

Alburger: Absolutely. We’re going to touch on a bunch of those topics because those were big trends in macro this year. We’re going to get to that a little later in the episode, so make sure you stick around for that. One of the things that Substack has allowed you to do is some Substack Lives. You were on a real run there when we did five or six in a few weeks. What was it like doing Substack Lives this year?

Beckworth: It was great because, as you know, as the producer of the show, the show actually takes time to get out. We record a show, then we have to go through the transcript. You have to go through the audio file. We now make video clips. We have to get links into the transcript. It’s a process.

To be clear also, Sam doesn’t have the biggest team in the world where he can just throw everything at them, so there’s a lot of work being done by a few people here on the podcast production team. We appreciate that, Sam, you and everybody else doing the work, which is to say that it takes time to get something out. If something happens quickly in the news and I want to respond to it in real time, the podcast isn’t always the best medium to do that.

Substack Live has been fantastic. I had Peter Conti-Brown on. We were talking about the Lisa Cook case. Things were happening. They were unfolding fast, too fast for the podcast. We had conversations on the podcast about Fed independence more generally. Just to have a quick turnaround, it was awesome. 

I also had a conversation with Kaleb Nygaard and it was interesting because we talked about the Federal Reserve Act actually empowers the Board of Governors to redraw the districts, which is mind-blowing, which is also tied to Fed independence. Could a certain set of governors determine where districts are? In fact, the Federal Reserve Act also allows them to shut down banks as well as set new ones. Now, this has never happened. Probably would not. It was really interesting. We did Substack Lives all in the context of Fed independence. It was fun to do the Substack Live. Again, it’s useful for more real-time analysis.

Alburger: Absolutely. You also did one with Brian Albrecht on the Nobel laureates for economics. It was a great avenue to peel back the curtain a little bit for listeners. The general turnaround time from recording to publishing is about a month. We’re a small but mighty team. I’m going to get to some thank you’s at the end of the episode for everybody we need to thank. That is why you don’t hear us talk about the happenings of the day quite as often. It’s more broad strokes about the world of macro on the podcast. Another great avenue there.

If any listeners aren’t subscribed or haven’t been keeping up with the Substack, those are some great places to start. Are there any big highlights from the first nine months of Substack? Are there any posts that listeners should start with if they want to dive in?

Beckworth: I think probably look at something more recent. You get a flavor of what I’m doing. I would probably recommend a Substack titled “Barbarians at the Fed’s Gates.” The subtitle is, "Stablecoins Are Knocking and the Fed Is Letting Them Inside.” It gets into the developments of the Genius Act, the discussion of the Fed’s skinny master account, how this administration, this Fed, is completely turned around in its embrace of crypto, at least in terms of stablecoins.

I think that’s a great place because we discuss a lot of issues in that Substack, everything from what does it mean for the Fed’s balance sheet to dollar dominance. I bring up the example of Sweden, the Reichsbank, because they also had an experience where they actually saw a reduction in the amount of physical cash, which would be similar to stablecoins. If we brought stablecoins, widely adopted, and you reduce the amount of physical cash, what happens to seigniorage? What happens to the cost of the Fed’s balance sheet?

It’s a great segue into the Substack that I’m doing. You could always go back also and look at the Substack where my wife and I do an interview where we talk about the 500 episodes. That was fun. You get a bit of the flavor, too, of my thinking, and you get to see inside my house.

Alburger: That was a whole family affair, wasn’t it?

Beckworth: It was. In fact, it was fun because my son, I’ll mention his name, Houston, he actually works with you, Sam. I guess we can bring this out in the open here. My son is very techy, and Sam actually hired him to do some editing on another podcast or two. He has the technical expertise. We recorded this at home, and he set up the lights, the gear, the mics. It’s great to have someone in the family who knows the technical side of podcasting.

Alburger: Absolutely. He was a huge help when you set up your home studio as well, making sure that everything looks good for when David’s recording from when he’s at home at Nashville. Houston works on Ideas of India, and has previously worked on Conversations with Tyler as well. He’s a great freelancer, and we’re really grateful to have buy-in from the whole Beckworth family. 

You suggested the “Barbarians” post. One of the things you’ve been doing is putting a hotly contested, spicy image that you create with AI as your header on the Substack. Can you talk a little bit about how you’ve used AI to drive a little bit of engagement to the Substack?

Beckworth: Yes. It’s been fun using AI to generate images that capture the flavor, the spirit of the post. Sometimes it’s important because if the discussion gets technical, you might lose someone. It’s good to have graphs, images, tables, and then have these images of people or places. On that particular post, “Barbarians at the Gate,” I took an image of the Federal Reserve, a photo, and I had AI generate a number of stablecoins in front of it with shadows cast, so it looks like they’re really there. The stablecoins are there knocking at the door to get in. There’s no knocking, but they’re there at the front.

Another great use of AI art was a previous stablecoin post where I looked at what is happening around the world in terms of stablecoins being adopted in places like Europe. We had a previous guest on the show that talked about this, Luis Garicano. He had this really profound point that in Europe, they’re terrified of dollar-based stablecoins. The reason being is because they are restricting or highly regulating euro-based stablecoins being issued privately. Then, on the other hand, the CBDC that they’re going to issue is watered down.

The reason for this is, is they want to protect the banking industry. Banking is very important in Europe, but it opens up this vacuum where the dollar could step in. If you read speeches from ECB officials, they are worried, close to panic, on what this would mean. In fact, I just read a column by Martin Wolf from the FT. That same concern is expressed there. He goes, “We got to do something. We can’t let the dollar-based stablecoins take over in Europe.”

What was useful about that is I was able to take ChatGPT, and I had to do a number of iterations. It doesn’t happen easily. Sometimes it takes a lot of time to create these images. I came up with an image of Donald Trump. He has a genie bottle in his hand, and a very masculine, strong genie, scary looking, is coming out. Across the genie’s chest, it says “Stablecoin.” Standing next to the genie is Christine Lagarde, the president of the ECB, and she’s got panic on her face. 

It was fun. I wrote it up, and I put it out there. As a result, I had an ECB person reach out to me. They wanted to talk about this post. Also, that image itself was shared multiple times by other people. They just loved the image, even if they didn’t get to the post itself. AI is very useful.

When I was younger, I used to read The Economist magazine. They had these amazing images on the front like, “Oh, that’s so clever. I wish I could do something like that.” You can. You can do your Substack and incorporate amazing art. You just got to come up with a creative idea to capture the spirit of the article.

Alburger: Absolutely. One of the other posts that has a fun image is the post titled “When the Fed Meets in Silicon.” It has all the robots around the FOMC table. That post was based on the episode with Tara Sinclair, her and her co-author, Sophia Kazinnik, wrote the paper this year where they modeled the FOMC in AI, creating a synthetic FOMC with Sim Powell and Sim Waller, all the works.

Actually, one little behind-the-scenes tidbit from the podcast that I can share is that before the call, Tara and I were chatting, and she said that she had to get this paper out quicker than expected because you were so excited about it that you kept talking about this paper at conferences.

Beckworth: Oh, really?

Alburger: Yes, and on the podcast. They had to get it out quicker than expected.

Beckworth: I did not know that.

David’s All-Star AI FOMC

Alburger: That episode was really fun, and it created a bunch of really fun hypotheticals. I wanted to explore a couple of these fun hypotheticals with you on our retrospective episode. First, in the episode and in the Substack post, you mentioned an all-star FOMC. Who would your all-star AI FOMC be? You can give me all 12 if you’re feeling really ambitious, but we can just do a starting five as well.

Beckworth: Let me start with some historical figures. I think it’d be fun to go back—and we talked about this on the show—to go back and pull some people from history and see how they would respond to current situations. That was part of the exercise. For those who haven’t checked out the show, go do it. The point is they’re able to take these current participants, FOMC, and they were able to actually predict what they voted very closely at a certain meeting. It would be interesting to mix things up as you suggested.

I would love to go back and get the following individuals. I’d like to go back and get Alan Greenspan. There’s lots of information about him. I’d like to get Paul Volcker, add him in. Then go even farther back than that. I’d like to go get William McChesney Martin. He was chair from 1951 to 1970. He had a very productive run, stable Fed. It was a good time for the Fed. 

Then I’ll go back one more. I’d go back and pull out Benjamin Strong. Now, he was the New York Fed president. He wasn’t a chair. By that time, they didn’t really have a board of governors that really had much teeth. In fact, the law was changed in the ’30s that made the chair more powerful. He effectively led the Federal Reserve System. Some argue that when he died, it’s one of the reasons the Fed’s response was so tepid and not very forceful. He was a strong personality.

I would love to pull these people to the present, sit them on a panel, feed them the current data, but based on how they reasoned, how they thought, based on historical documents, see what they would do. Now, I would also add just for funs, maybe for kicks and giggles, I would bring in some nominal GDP targeters. In other words, I would bring back Jim Bullard. He’s still alive, still with us. Put him on, and see what he would say. Then I would bring maybe some Fed staffers who aren’t necessarily past members. I’d love to put Evan Koenig as a member. He did a podcast with us this year. I’d like to maybe bring in a few others, but I’ll stop there because my list is getting big.

Most Entertaining Economist Debate

Alburger: That sounds like a great list. Now, I want to stir the pot a little bit, David. I’m sure that if you could have any economists on your all-star FOMC, it would be nominal GDP folks like you mentioned, Evan Koenig and George Selgin even, or Scott Sumner. If you could put together a starting five of economists on the Fed side or even the academic side like George Selgin’s on, who would produce the most entertaining debate? Who would you pick?

Beckworth: Definitely go with who you mentioned, George Selgin, because he’s very passionate, strong, and he’s well informed. Usually, it’s not wise to disagree with him, but you can. I’ll start with George Selgin. To put someone opposite from him, but still, I think, kindred spirit, I’d put John Cochrane. They often very strongly disagree, but they both believe in a limited footprint of the Fed. They believe in markets. They have very strong views, but they’re both well-informed, smart guys. Start with those two.

I would go and put on the panel Eric Sims from Notre Dame. He’s a great nominal GDP targeter. He’s a past guest of the show a few years back. I would put him on, and then, as a countervailing force, maybe put Rich Clarida on. They’re both New Keynesian. One favors nominal GDP targeting. One’s more of an inflation targeter. I think that’d be a rich debate. Again, this is for entertainment.

Alburger: Entertainment value. We’re trying to see who is going to duke it out the best.

Beckworth: Then I would put Lorie Logan. She’s a wonderful person, great personality, very strong on ample reserves. Then I would put Bill Nelson opposite of her. They could duke it out on the operating system.

Alburger: That sounds awesome. It sounds like we’re probably, hopefully, going to get some nominal GDP targeting out of that FOMC as well. That was a very, very fun exercise. Thanks for humoring me and doing some of my hypotheticals.

Underrated or Favorite Episodes

Now let’s dive into favorites, or in the word of our Mercatus colleague, Tyler Cowen, most underrated episodes of the year. Like you said last year, you’re a very diplomatic parent and you love everyone equally. Looking back at the list of episodes that I provided you, which episodes stood out above the rest?

Beckworth: I’m going to try to be objective here. I’m going to not pick from recent episodes because we’re biased toward recency. Even though there’s some I would like to pick from the recent period, I’m going to keep those ones out. I’m going to go back and start maybe early in the year and work through and pick a few.

Again, as Sam said, I love all of you who might be listening who were guests this year. I would pick all of you if we had time, but I’m going to have to pick a few. I’m going to have to make some tough choices here. I’m going to start with Senator Pat Toomey. That was a fun episode. He came here in the studio. We actually had a meal with him afterwards. It was great to have him on because he was the ranking member on the Senate Banking Committee that dealt with the Federal Reserve issues. In particular, he dealt a lot with the Fed master account issues that emerged over the years. It was great to hear his story, what happened.

He is responsible ultimately for getting in one of these big omnibus bills, where you throw everything in, a provision that requires the Fed to disclose who has a Fed master account and who has applied. It was interesting to hear him talk about how legislation is done. One point he made is it’s a messed up process because the way you get things done isn’t what, ideally, you would do. He also talked about what it was like during the pandemic as a senator working through that.

I really enjoyed Pat Toomey, behind-the-scenes action from the Capitol Hill side of the Federal Reserve. Smart guy. He knows his macro, but he was a great senator. Great opportunity to have him on the program.

Someone else I’ll bring up I really enjoyed, and for me, it was almost a treat and a special, was Paul Blustein. He has a book out this year on the dollar. I think it’s called King Dollar.

Alburger: Yes, King Dollar.

Beckworth: King Dollar. Really great book. The history of the dollar, its dominance, which resonates with topics I’m interested in. More importantly, he is someone that I read in grad school. He had a lot of popular books out. During the time I was in grad school, I read his book on the financial crises around the world in the late 1990s. There’s the emerging market crisis of ’97, ’98. It affected a lot of the countries. IMF steps in. This is when the IMF became unpopular. He had a great ability to tell stories. It wasn’t just dry. It was fascinating.

Then he had a book on Argentina and the Currency Board and when the Currency Board broke. I really enjoyed this. In fact I’ve used the Argentina book in one of my classes that I taught. I should mention, when I interviewed at the US Department of Treasury, I had read his books. His books dealt with the issues the US Department of Treasury dealt with, particularly international affairs where I got hired.

Because I’d read his books, in part, I was able to answer all their tough questions. In fact, when you interviewed back then in international affairs, they bring you in, and they sit you around a table of economists. They throw these really hard questions with you. Just for fun, I’ll tell you a few. For example, one of them said, “David, you’re traveling with the Secretary of the Treasury. You’re going to a country. The country’s running a current account deficit. He turns to you and says, ‘David, is this a problem?’ How do you respond?”

Alburger: Wow. How’d you respond?

Beckworth: I said, “Well, it depends if it’s a large closed economy or a small open one, how much debt it has.” I just started saying things that I had read and I processed, in part because of Blustein’s book and some other sources as well. They liked that.

Another question was, “Does the emerging market need flexible inflation targeting? What should happen with China?” We were discussing China back then. A lot of issues was based on popular reading I had done, not technical stuff in grad school. I credit Paul Blustein in particular for helping me get my foot in the door at Treasury. I met people there. John Taylor was there. John Taylor got me an opportunity to speak at a conference at Hoover. You see little things unfold, networking opportunities. I give Paul Blustein credit for getting me behind the microphone right here now between you and me.

Alburger: That’s awesome.

Beckworth: What was awesome was he helped me get my job, which eventually led to this job, this podcast. Then I get him on the mic and I’m helping him talk about his book.

Alburger: Yes, full circle.

Beckworth: It was fantastic, and then to go to lunch with him. A very special place in my heart because of my career, his influence he didn’t even know he had on me. It was a real treat for me. Let me do a few more.

Paul Kupiec, I’ll mention him. He was a fun episode because I really learned a lot of new things. We touched on some of this before. The Federal Reserve Act, I had not read the Federal Reserve Act much at all. I’ll confess. As someone who follows the Fed, I probably should have. I learned, for example, that the Fed can require its member banks to pony up and pay more capital that they’re supposed to pay by law if the Fed ever needs more capital funding. The Fed can also stop sending dividends out. The Fed can also redraw districts. I learned all this from Paul when he came in and talked about the losses on the Fed’s balance sheet. That was really almost shaking my paradigm of what the Fed can do, Federal Reserve Act.

I’ll mention one more. Again, plenty of other fun shows. Jim Clouse, he used to be at the Federal Reserve, the Board of Governors. What was great about him, he’d been there for so long. He’d been there from the ’90s to just recently retired. He told a great history. It was like everything from 9/11…  Actually, he was also there for the Y2K.

Alburger: That was such a fascinating story.

Beckworth: That was so cool. They had a war room set up on the top of the Fed, screens, watching liquidity around the world. From that to 9/11, he said he could feel the ground shake in the Eccles Building when the plane hit the Pentagon, that’s wild, to the Great Recession, 2008, to the pandemic. He has seen it all. It was super fascinating to have him on. Again, just a perspective you normally don’t get.

Alburger: Absolutely. That was a fantastic list. I’ll toss out a few of my favorites. I have to come clean. I’ve been producing your show for two and a half years. Before that, I was in school. This is my first job out of school. I have to admit, I’ve never taken an economics class. This has been a crash course into a PhD-level macro as I edit your episodes. Some things I understand better than others as I try and write titles and copy and all kinds of stuff.

A few episodes that I felt like I learned the most from this year. One recent one, Mike Bird, his book on the land trap. It was so fascinating. There was so much depth. Land, housing is such a huge issue for people of my generation. I felt like I learned so much. I felt like I came away from that episode smarter. Then, Mark Blyth was a really fun episode.

Beckworth: It was.

Alburger: Winners and losers of inflation. He was hilarious. His accent was very, very fun. That video setup was incredible with 30 guitars in the background. If you haven’t seen those video clips on X, you should definitely check those out. Mark Blyth was really fun. 

The last one I’ll mention was Scott Lincicome on the Trump trade war. That episode was so informative, especially in a time when things were so murky with tariffs and trade and stuff like that. Those were three that really stood out to me. Those were our favorites. 

Most Popular Episodes

I want to play a new game with you this year, David. Do you think you can guess the top three episodes in terms of downloads, so the most popular episodes of the year? I provided you a list of all the episodes that you just picked from. Why don’t you take a stab at guessing the top three most popular? I have a list here of the top five, so I’ll be able to help you if you get close.

Beckworth: I could have gone online and looked at Libsyn, but I did not, Sam. This is a true honest attempt here. I’m going to begin with Andy Levin because that was such a controversial podcast. That’s one of my top three I’m going to guess.

Alburger: Surprisingly, no. It was controversial. We will tell the story of the Andy Levin episode and the policy briefs in a bit. No, Andy Levin was not in the top three.

Beckworth: Wow. I’m going to go for Matthew Pines because he’s a Bitcoin guy. There’s a lot of passionate Bitcoin bros out there.

Alburger: There are a lot of passionate Bitcoin bros. We’re going to talk about the Bitcoin Policy Summit, but he is also not on the list. Why don’t you take one more stab at it.

Beckworth: One more stab. I’m going to go with Robin Brooks because he has a lot of followers, and maybe just simple math.

Alburger: That is a good guess. Robin was the second most popular episode this year. He was a real treat. Went out to lunch with him. He was a really awesome guy and, it turned out, a fan of the show, which was super awesome.

Number one, Scott Lincicome. I think that episode, it was a fantastic episode, but it also came out at the right time. I think it hit people’s feeds at the right time. Robin Brooks was number two. Your hero, Paul Blustein, number three. That was really good. The episode I mentioned, Mark Blyth, number four, and number five, Ben Harris. The Brookings fellows, also were very, very popular.

The Push for Nominal GDP Targeting

All right. A few other odds and ends from the year, and I’m going to go in order throughout the year. If you can remember, all the way back to last January, we released a greatest hits episode highlighting the Fed’s framework review and, in particular, this show’s push for NGDP targeting. Now let’s talk about the episode itself first. That was a really fun episode to make, and it even had a fakeout in it with a fake record scratch and everything.

Beckworth: That was great.

Alburger: Talk about making that episode and how Macro Musings and the monetary policy team at Mercatus has pushed for changes in the Fed’s framework this past year.

Beckworth: As listeners of this show will know well and people who have followed me elsewhere, even the Substack this year, I discuss this a lot, that I am passionate about the Fed’s target, and I would love to see them go to something like a nominal GDP level target or nominal income target. Athanasios Orphanides, though, he did give me pause. I’d say this, he’s the one guy that gave me pause about level targeting as opposed to growth rate targeting, but another point for another time.

We have fought the good fight, so to speak. We want to see more rules-based approach to monetary policy and, in particular, not any rule, but something like a nominal GDP target. In fact, the founder of the monetary policy program here at Mercatus was Scott Sumner, who’s also well known. He was here, then they brought me on. Eventually, Scott retired, then I took over what we we’re doing here.

We worked hard because we knew there was a Fed framework review that was supposed to actually start, I believe, at the end of last year. It got pushed forward to this year. We had commissioned a number of policy briefs on nominal GDP targeting, people like Peter Ireland, Scott Sumner, myself.

Alburger: Carola Binder.

Beckworth: Carola Binder. All past podcasts, I guess, all great macroeconomists. We wrote a number of papers. Evan Koenig also, he did, and he was also on that special podcast. We pushed hard. We did a full court press. We did that. We have a video that you recorded of me.

Alburger: Yes, an explainer video.

Beckworth: We’ll provide a link to that in the transcript. Check that out. That was a lot of fun. We did that. I actually visited several Fed officials and I made my case. In fact, I was just thinking of Raphael Bostic because I just put out a Substack where I was talking about the Atlanta Fed. In it, there’s the video of our conversation. In that video, I asked him, I said, “Did you guys get any discussion of nominal GDP targeting?” He goes, “Yes, we did. It was one among many.” Ultimately, they settled for something like flexible inflation targeting.

Alburger: He did mention that the time is now, though. At the end of that segment of the podcast—

Beckworth: He did say that.

Alburger: —he mentioned the time is now to get into decision-makers’ heads, right?

Beckworth: Yes. Basically, we were five years too early.

Beckworth: He did say that. It was interesting. He did say, “Moving forward, this might be something we take more seriously.” He even said, “We’ll probably be calling on you, David.”

We worked hard. We made the case. We had policy briefs. We did podcasts. We had that special episode that you just mentioned. I visited people. I attended conferences. We even participated in a conference here in DC where we made the case. A lot of effort and work went into it. Ultimately, it was a no-go. I wasn’t surprised. The Fed wasn’t going to adopt something radical like nominal GDP targeting. My hope was just to nudge them, push them in that direction, make them more aware, more cognizant of this possibility and what it can do.

I had a paper I wrote with our former colleague, Pat Horan, where basically I argued that you can get a two-for-one targeting deal. Who doesn’t like a two-for-one deal, Sam?

Alburger: No one.

Beckworth: I love it. What’s a two-for-one deal? Well, if you target nominal GDP-level targeting, you get a medium-run inflation target automatically. It falls out by default. We illustrated this. That article actually got a lot of interest and discussion. It’s something that we pushed. Hopefully, that’s the point that I got across to Fed officials. Again, I talked to them. I know they heard, but ultimately, they had to settle on something the whole committee would agree on and nothing quite as big of a step as nominal GDP targeting.

Alburger: Absolutely. As you mentioned, it doesn’t appear that nominal GDP targeting has fully infiltrated yet. It’s in the hearts and minds, though. They flipped from FIT to FAIT, back to FIT again at the end of the year. That was the ultimate decision of how that 2025 framework came out. How are you feeling about the direction the Fed is going as we approach 2026?

Beckworth: In terms of the framework itself as we had it in 2026, I’m glad that they made a decision. We can move forward from there. At least we know where they landed, what they’re thinking. If you read the consensus statement where they wrote out this new framework, yes, it is flexible inflation targeting, a return, but it has some lines in there that suggest that they’re open to things like a makeup policy, resorting to using balance sheet policy when necessary. They got rid of makeup policy from FAIT, but they put it on the shelf, and they’re willing to take it off and use it if necessary.

Again, if you do a medium-run inflation targeting and you allow for, say, makeup policy in really deep recessions, you’re effectively doing something like a nominal GDP-level targeting. Even though I didn’t get what I wanted, I think they, at least, opened up the possibility of doing something like that should it be necessary. Again, going forward, there’s opportunities in the next five years. There are also much bigger fish to fry for the FOMC this year. We can talk about some of that too. I think this is a nice, probably reasonable outcome given they had high inflation, given there’s trade wars, given there’s political pressure on the Fed.

Accountability at the Fed

Alburger: Absolutely. We’re going to get now to a bigger fish that they had to fry. Another highlight from the year was in the spring, we had our most hotly contested episode. We talked about this a little bit with Andy Levin. We heard from folks about that episode. Obviously, things got swept up into the political sphere with that episode, culminating in the meeting of the minds with Trump and Powell on the construction site. Let’s set the record straight about that episode and the policy brief series that came along with it. Those episodes and the policy brief series, it was about the idea of greater accountability at the Fed, right?

Beckworth: Yes, absolutely. We have here, as part of our program, three buckets or three strategies. One is a more rules-based approach to monetary policy. That’s where nominal GDP level targeting comes in. We also have a bucket for better, more efficient use of the Fed’s instruments. We’ve looked at everything from negative interest rates to balance sheet usage to what rate should they target? The third bucket is transparency and accountability. That’s where this story comes in.

We’ve always raised questions about how do Fed presidents get appointed? How do they deal with the trading scandals? Master accounts, how do those things get assigned? Just more transparency. The reason we push that is not just to be annoying, but because we care about Fed independence. The more transparent and predictable the Fed is, the stronger the Fed’s ability to do what it really needs to do. That’s why we did this.

We’ve commissioned Andy Levin before. He had a paper with Christina Skinner on the fact that the Congress isn’t doing its job overseeing the Fed. This was just something that Andy, he came to us and said, “Hey, there’s some issues.” In fact, the first policy brief, the Fed building was only a part of it. He dealt with some other issues, as well, facing the Fed in terms of—

Alburger: Independent IG.

Beckworth: The key point was we needed an independent IG to deal with all these issues, among them being, one, the Fed’s building. Once that took off, and it did really take off, as you noted, he did another follow-up policy brief because he was being accused of cherry-picking data or having an axe to grind. He also came on and we did another recording with him. He tried to be as fair as possible.

Now, I’ll say this, Sam, because this ties back into the podcast. We did this. I think people at the Fed were really irritated with those podcasts, those policy briefs. In fact, multiple people told me. People that I don’t even know told other people, who then told me.

Just some anecdotal stories here. During May, there was a number of conferences I attended. A number of Fed people told me, “We love your podcast.” In fact, one senior Fed staffer at the board said, “Oh, David, we love your show.” He pointed to the whole block, “We all listen to you.” That’s what he did with his hands, motion, “We all listen to you, except for that one episode of Andy Levin.” I had that very story told to me multiple times. I don’t think they didn’t like, “Hey, we’re going to go tell David this.” They all came across, “Hey, David, we loved the podcast, but man, that Andy Levin episode. What’s up with Andy?” Someone has said that to him, “What’s up with Andy?” I said, “Oh, he’s trying to promote independent IGs. That’s why we had him on.”

Interestingly enough, also during that month of May, I’ll just throw this in there as an aside, I went to a great conference, another one. I would sit at a table and I would be talking. It’s a circular table. There’d be someone on the other side, and they would be listening. They’d stick their head. I could see they’re trying to figure out who I am. They would come to me afterwards and say, “Are you David Beckworth?” I said, “Yes.” “I thought so. “I recognized the voice.”

Alburger: They recognized the voice before the face.

Beckworth: Yes. People don’t know what I look like, I guess. Then at that same conference, a Fed president, a regional bank president, I went to introduce myself to her. She heard me introduce myself. She goes, “Oh, you sound in real life just like you do on the podcast.” All of that taking place in context of the Andy Levin stuff going on. I just thought that was a great anecdotal story to tell.

Bitcoin Policy Summit

Alburger: Absolutely. Now we’re going to touch on another conference that the two of us went to together. We got invited to the Bitcoin Policy Summit this year by friend of the show, Matthew Pines. While that conference was certainly a hoot, tell us about attending that conference and the larger work you’ve explored in crypto and stablecoins this year.

Beckworth: We were invited to participate, I think in part because I’ve become friends with Matthew Pines, who’s been on the podcast a few times. He, for a while, was the executive director of Bitcoin Policy Institute. Also, we wanted to record some podcasts. There are some other scholars. They have some affiliated scholars. In fact, it was Josh Hendrickson and Will Luther. Great podcast. Go check that one out too.

Alburger: Check out Josh’s chain on Twitter as well.

Beckworth: Great discussion about Bitcoin. We discussed why is Trump going after Bitcoin? Why does he support it? Why does he want the sovereign wealth fund? We discussed those issues. I discussed those with Matthew Pines on the podcast. Of course, you know George Selgin comes on soon after, and he completely blows up the notion. He did not like the sovereign wealth fund.

Alburger: I was actually going to ask you about this. It was almost like Josh Hendrickson and Will Luther were the end of a trilogy of episodes.

Beckworth: That’s a good point.

Alburger: George Selgin comes on in late 2024, and he rips this idea of a strategic Bitcoin reserve. Then in summer, I think it was July of 2025, Matthew Pines comes on and he tries to refute George’s claims about this and provide some other context. Then to wrap up the whole thing to provide context, Will Luther and Josh Hendrickson respond to the back and forth between Matthew and George Selgin. They even call George a proto-Bitcoiner, which I’ve heard from George he didn’t love quite so much. Talk about that fun trilogy and that experience.

Beckworth: It was great because George Selgin, among many other things, is known as a free banker, or at least done work on free banking, like the Scottish free banking system, some of the antebellum free banking experiences, the Canadian free banking system. He’s taken a serious look. He’s a serious scholar. He’s written on a lot of areas. This is one that he’s well known for, him and Larry White.

A lot of the early Bitcoin crypto money people, they actually were inspired by George Selgin and Larry White. What happens, though, is they become too passionate. They don’t fully understand the free banking literature, and it drives George Selgin crazy. He doesn’t like to be necessarily affiliated with it, even though some of the ideas that inspired him were drawn from his work on free banking. Also, he raised great points about why is President Trump promoting a strategic Bitcoin reserve? Do we really even need it? Are there political reasons? Is it a good use of resources? All those things. That’s how George got drawn into this.

George is the authority on free banking history. In fact, he wrote favorable pieces about Bitcoin. I think he called it a synthetic commodity currency many years ago. He’s well ahead of many of the Bitcoin bros who think they know everything. That’s what’s particularly frustrating to him. He’ll be accosted online, sometimes in person by Bitcoin bros who think they have it all figured out. This is someone who really was intellectual forefather to them. It’s great to have George.

Of course, George is also known for many other things on this podcast: central bank operating systems, nominal GDP targeting, payment systems. He’s a very impressive individual. Going back to the Bitcoin, then Matthew Pines comes on. He’s the executive director of Bitcoin. Then Will Luther and Josh Hendrickson, they do. They close the circle. They help round it out and say, “Look, there’s points I think George would agree with.” They even said that some of these Bitcoin enthusiasts are a little obnoxious at times. It was like a trilogy. If you guys want to go back and experience the drama of Bitcoin, go at it.

Alburger: Absolutely. Don’t quote me on this, but I think they said, “The problem with Bitcoin is Bitcoiners,” right?

Beckworth: Yes.

Macro Musings at the Atlanta Federal Reserve

Alburger: Last highlight of the year that I want to get to before we set the definitive record on how 2025 will be remembered in macro history. I hope your gears are churning on that.

Beckworth: Yes.

Alburger: No pressure, of course. In September, you and I took Macro Musings on the road for a second time. This time to Atlanta, Georgia, where we recorded two episodes, at the Atlanta Federal Reserve, one with Atlanta Fed President Raphael Bostic, and one with authors and economists William Roberds and Steve Quinn. Tell us about that experience.

Beckworth: It was fantastic. In fact, we’re sitting here with two Atlanta Fed caps in front of us.

Alburger: Got some free swag afterwards.

Beckworth: They had some free swag. For whatever reasons, they were handing it out to their employees, and we snatched a few for ourselves. They also had some water bottles, some other things. We timed it perfectly.

Alburger: We did. We really did.

Beckworth: It was nice. First time I’ve been in the Atlanta Fed. Even though I grew up in Atlanta, I’d never been in the Atlanta Fed building. I got to go inside, and we got to meet Raphael Bostic. Now, I’d met him before at the Atlanta Fed Financial Markets Conference. They had invited me to participate and to moderate a panel there. I chatted with him.

In fact, as I mentioned earlier, among other things, I hit him up on nominal GDP targeting. If you listen to this podcast, it was a lot of fun. He is a big avid birder. We talked about birding, which is really great. Lessons from birding for central bankers, you should go check that out. It was great to chat with him. As you know, we recorded in the Atlanta Fed studios. Really nice setup down there. It was great to have a conversation with him. It was wide-ranging. We covered a lot of topics.

Then we were able to chat with the historians. Now, Will Roberds is a former Atlanta Fed employee. That’s how we got in the building. Then Steve Quinn is a professor, I believe, down at Texas Christian University. They have a super fascinating book about the Bank of Amsterdam, which you could argue is the original central bank. No longer in existence.

If you think the Reichsbank, the Central Bank of Sweden, is the oldest, I think one could argue against that and say the Bank of Amsterdam. What you can say about the Reichsbank is it’s the oldest central bank currently in existence and operating. Anyway, super fascinating discussion about the Bank of Amsterdam. Just a great experience overall at the Atlanta Fed that day.

Alburger: Absolutely. They were wonderful to us. I can share one story, peeling back the curtain on the production of the show side. I apologize to the producer I was working with. I tried to find you on LinkedIn, but I couldn’t. One of the things about being at the Atlanta Fed is that we needed a chaperone at all times. We needed somebody to be with us at all times. The studio was in the basement right next to the vault. Down there was no service. There was really no cell service anywhere in the building. For whatever reason, it was locked down. We finished the recording, and we’re going up to have lunch with a few other economists, and I give my hard drive to the producer. All of a sudden, I get a message across my phone that it’s going to take the files 15 days to transfer from his computer to—

Beckworth: 15 days.

Alburger: —the hard drive. I’m freaking out that we have these two really important recordings, and I need the files. He’s like, “We can ship them to you.” That’s a producer’s worst nightmare. A leak gets in a box, and all of a sudden, you lose all the files in the hard drive. Totally freaking out. I have to call my chaperone. The chaperone has to come down, but I don’t have enough service to get a hold of the chaperone.

Anyway, this producer, at the very last minute, I have to catch a flight about an hour and a half after these recordings. At the very last minute, he was able to fix something within the software wiring of the hard drive. I was able to get the files literally in the nick of time to make my flight. Thank you to that producer. That was quite the scare. They were really fun, and they treated us very well. We got these wonderful hats. That was very fun.

I know some people who were listening to the episode might have expected some talk of basketball this year. We didn’t play any basketball this year, but we talked about that on our last year’s episode. We did both mess up our ankles this year. We’re getting a little bit older. Not quite as adept.

Beckworth: We’re still going out even though we got hurt.

Review of 2024 in Macro

Alburger: We’re still going out, and we’ve gone on a couple of runs and stuff like that, so no fitness updates from the two of us this year. Let’s set the record straight on the year 2025 in macroeconomic history. Before we get there, I want to remind listeners and you how you remembered 2024. This is what you said at last year’s retrospective. You said the last year, 2024, was a year of major transition as central banks around the world were changing their operating systems. You said the Fed might have fallen behind the curve on that.

You also talked about the Treasury market resiliency and potential reforms coming to the Treasury market. The final thing you mentioned was the soft landing coming out of COVID and questions about the size of the Fed’s balance sheet. How are you feeling about that prognosis of 2024 first before we get to 2025?

Beckworth: I think all of those items have continued to be important. Central bank operating systems, the Fed’s still behind on the count, but other central banks are moving forward. In fact, we just released an episode with Laurie Bristow from the Reserve Bank of Australia, formerly from there. A lot of central banks are moving forward and they are changing, so I do think this is an issue. It’s an issue primarily because we went through the pandemic. A lot of central banks blew up their balance sheet. Now they’re having to deal with it. That’s still, I think, a big deal.

Treasury market resiliency, yes, that’s an increasingly important issue because we continue to run big deficits. There’s increased pressure on the Treasury market. Who’s going to absorb all this debt? We did see some actually changes this year to help that. One, supplemental leverage ratio was tweaked, so it’s easier for banks to buy up and absorb the debt.

Another thing that was done, not explicitly for this, but it certainly helps, is the GENIUS Act. It helps stablecoins. It brings stablecoins into their regulatory perimeter. It brings certainty, so people are more willing to run with stablecoins. That increases demand for Treasuries. Again, that wasn’t the intended goal to fix the Treasury market, but it certainly helps. We’re seeing, I think, pressures in the Treasury market and attempts to fix it at the margin. Ultimately, the solution is getting our deficit under control. That’s much tougher not to correct. 

Yes, the size of the Fed’s balance sheet continues to be an issue. The Fed did quantitative tightening this year. They’re probably going to bring it to an end here soon. They’ve said they would. Then there’s a question of how do they move forward? What do the assets that they have consist of? Do they go from mortgage-backed securities and Treasury bonds to all Treasury bills? That seems to be where they’re going. That will continue to be an issue. 

Also, there’s been some discussion at the Fed by a few people, at least, about changing the operating system, which goes back to the first point. It’s just been brought up by a few people, so I don’t think there’s a consensus there yet.

Macro in 2025

Alburger: Sure. Now, there’s been a number of major events that have affected the macro world this year. You’ve touched on a number of them already in this episode. How would you sum up 2025? And talk a little bit about the major events that happened this year.

Beckworth: I think it has to be said that the trade war is probably the biggest event in terms of excitement, concern, worries, but it never really manifested in the way that many thought it would, including myself. In April, Liberation Day happens, markets go crazy, stock market tanks. Even the Treasury market struggled, which is typically not the case. Typically, when the economy weakens as a recession, stock market goes down, Treasury strengthens or the yield falls. It actually did not happen. That concerned a lot of people.

President Trump actually pulled back a little bit because there was weakness in the Treasury market. The concern was that this year we would have significantly higher inflation because things are more expensive because of the tariffs. Also, it would cause a weakening of the economy.

What we’ve seen is some signs of higher inflation, but not as much as many expected. I think part of the reason being is because a couple of reasons. One, I think many suppliers, many firms, they brought in a lot of inventory before the tariffs kicked in. Secondly, Trump’s application of tariffs have been on and off. I think only now we’re probably beginning to see the price pressures emerge as much as we expected.

Also, why didn’t we go into recession? Well, we may be. We don’t have good data right now on labor markets, but it does seem to indicate the labor market is weakening. Household balance sheets have been robust since the pandemic. They’ve built up. They got a lot of injections from the government. I think trade war is a big thing. Going forward, it will continue to be. 

There’s a case before the Supreme Court which could completely undermine Trump’s legal case for it. I think that’s been a key issue. Again, the big takeaway is it has not been as bad as we thought it would be. I also think over the long run, there’s going to be a big price to pay for the uncertainty and all the trade deals and chaos it has created.

Another big story would be AI this year. If you look at the economy, even though it hasn’t tanked, you look at two parts of the economy, the AI sector and activity related to that has been driving what growth we have had. Elsewhere, it seems to be slowing down. The question is, will AI translate into rapid productivity gains? We haven’t seen the evidence for that yet. We had a wonderful show with Martha Gimbel about what will AI do to labor markets. Will you and I lose our jobs to AI so it can do the podcast, for example? I think that’s a big story. We’re still beginning to find out what it means.

Something else to me, maybe this isn’t as big, but to me, I think it’s caught my attention this year. Given the continued growth of debt, the large deficits, and we passed the One Big Beautiful Bill, I thought there would be higher Treasury interest rates. I thought yields would go up a lot. Here we are today and interest rates on 10-year Treasures are still close to 4%, which is just remarkable to me. The market hasn’t panicked like I thought it would have by now.

The final thing I think that’s important is the Federal Reserve in the year 2025. It came under a lot of pressure. Its chair in particular, Jerome Powell, came under a lot of pressure from the president to cut rates. Of course, interestingly, I have to mention this, President Trump invoked the cost of the debt, the interest payment on the debt as the primary reason to cut it. He’s now invoked some other reasons, but the fiscal pressures has been a part of the story.

Jerome Powell’s been under a lot of pressure. We mentioned the building saga, which was used as a way to attack the Fed, attack Powell, rates not being cut quick enough. All those things have put political pressure on Fed, the Fed independence becomes a big point. Then who will he appoint as Fed chair here in 2026? Will this person be able to be his own man and make his own decision? Those are the big things I think that I would look back upon and pay attention to because they haven’t completely come to fruition. There’s still a story being told.

Alburger: Absolutely. We’ll check back in next year at our third annual retrospective, see how you did.

Beckworth: Absolutely.

Thank You

Alburger: We’ll keep going into the future. Now, as we come to the end of the show, I want to give you a chance to thank the listeners for spending another year with us. One of my favorite podcasts says there’s literally infinite ways that anyone can spend their time, and we feel really lucky that you choose to spend it with us. Before we get there, maybe to motivate our thank yous, this year, Macro Musings surpassed 500 episodes. Tell me what it means to hit that milestone and say anything you wish to the listeners, especially those who have been on the ride with us for a good long while.

Beckworth: It’s been great to have you with me for over 500 episodes. I never in my wildest dreams would have imagined I would have done a macroeconomic podcast. We talked about this last time, last year. Other people don’t expect this to work. It’s been amazing that it’s worked. It’s because of you, the listeners. Thank you so much for joining me and my podcast producer, Sam, and the other podcast producers of the past.

I pinch myself that I still get paid to do this. I am so blessed, so fortunate I get to do this. I meet so many fascinating people. Again, I told the story of my voice being recognized at conferences. Part of me getting invited to that conference was people had listened to me on the podcast. I get to meet amazing guests. I get to meet people out in the public who also know me from the podcast. None of this happens unless you, the listeners, continue to listen. Thank you so much. I appreciate your support, all the feedback I get, emails, the contact being in the public. The Substack also, its success is tied to the podcast. Thank you for subscribing. Many of the subscribers are our podcast listeners. Thank you so much.

I also want to thank you, Sam, because you’ve worked really hard. For people who don’t know, every week I get emails from Sam, “David, have you got the transcript done? David, have you checked on these links? David, can you approve the final files?” Sam is doing multiple podcasts. Let me be very clear. He’s working on multiple podcasts. He is the main podcast producer here at Mercatus. We have a number of wonderful people who help support us. I want to thank you, your entire podcast team.

I’d like to thank people at Mercatus who put up with me. We’re a free market organization, classical liberals, and I’m the guy talking about the Fed. I appreciate Tyler Cowen, Ben Klutsey, my boss, Eileen Norcross. A lot of support from people. I’ll briefly mention Kayla Lahti as well. She’s been a wonderful program manager. I have around me a number of wonderful people who make sure this podcast happens. Thanks to all of them.

Alburger: Absolutely. We are incredibly blessed. Now, I have a few people I want to thank as well. I won’t get into too many of the changes, but a lot has changed in the way that we produced the show this year. First, I want to thank our wonderful freelancers, Alex Bennett, who edits the audio and did a great job making me sound better than I actually do, and Mary Horan, who edits the transcript and adds all the links so that listeners can find everything cited in each episode.

I want to thank Katie Jester, who now runs Macro Musings’ social media and has done a great job inflicting new life into the @Macro­_Musings’ X account. If you’re not following that account, you can find three video clips from each episode over there, as well as other Macro Musings’ related content. I want to thank Dallas Floer, who oversees production at Mercatus, and Kendra Strawderman, who’s sitting in my seat today producing this episode. Additional thank yous to Kayla Lahti, who is an excellent program manager of the monetary policy team at Mercatus and make sure that all of David’s research finds the right home, and Jeff Holmes, who does all the Jeff Holmes brand and strategy things.

Finally, I want to thank you, David. You work incredibly hard to make this show and Substack possible. I come to you with all kinds of crazy ideas, and I can’t think of a time that you said no to any of them. It’s a real treat working with you each and every week. To that, I raise my nominal GDP targeting mug. Here’s to another 500 episodes of Macro Musings.

Beckworth: Kudos.

Alburger: All right. Thank you so much, David.

Beckworth: Thank you, Sam. It’s been a great year.

Macro Musings is produced by the Mercatus Center at George Mason University. Dive deeper into our research at mercatus.org/monetarypolicy. You can subscribe to the show on Apple Podcasts, Spotify, or your favorite podcast app. If you like this podcast, please consider giving us a rating and leaving a review. This helps other thoughtful people like you find the show. Find me on Twitter @DavidBeckworth, and follow the show @Macro_Musings.