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GM100: Central Banks in the Dark: Inflation, AI, and the Limits of Control ft. David Beckworth

May 13, 2026
Guest
David Beckworth
David Beckworth, Senior Research Fellow at the Mercatus Center and host of Macro Musings, brings sharp macro expertise on U.S. monetary policy. He discusses why central banks struggle with supply shocks and fragile inflation expectations. He explores nominal GDP targeting, AI as a potential supply shock, QE and balance-sheet limits, and the rising tensions between monetary policy, fiscal sustainability, and stablecoins.
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ANECDOTE

How A Requirement Class Created A Macro Career

  • David Beckworth discovered economics by chance taking an undergraduate macro class to fulfill a requirement.
  • That early exposure 'lit his fire' and led him to grad school, Treasury work, academia, and a think-tank career.
INSIGHT

QE Lowers Yields But Leaves Lingering Effects

  • QE is now a normal central-bank tool and does lower long-term yields materially, but its effects are persistent.
  • Guests estimate QE1–QE3 cut 10-year yields by ~100bps and QT reverses not only holdings but the insurance expectations QE created.
INSIGHT

QE Created A Ratchet In Bank Funding Structures

  • The 'ratchet effect' means reserves injected by QE become baked into banks' funding structures and can't be fully removed.
  • Higher reserves plus post-2008 liquidity rules changed funding incentives, reducing interbank lending and making QT painful.
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