David Wessel on the Fed's Current Inflection Point

**David Beckworth** (0:02)
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. I'm glad you decided to join us.
Our guest today is David Wessel. David is a senior fellow in economic studies at Brookings, and is the director of the Hutchins Center on Fiscal and Monetary Policy. He is also a longtime veteran and public intellectual of the Federal Reserve space and is the perfect guest to join us today to discuss this pivotal moment in the Federal Reserve's history. David, welcome to the podcast.

**David Wessel** (0:46)
Good to be with you, finally.

**David Beckworth** (0:47)
Great to have you on. This is long overdue.
I have to say that when I think of you, I think of the first time I chatted with you. I don't know if you remember this. This goes way back.
I was at Texas State University and I had just written either a blog post or it was an op-ed, but I had highlighted how Milton Friedman had advocated for a version of QE or large-scale asset purchases for Japan in early 2000 Long before we had this at the Fed and someone had pointed it out to me, some speech he gave at the Bank of Canada. I dug it up and people were shocked. Milton Friedman is advocating for something like QE. It has blew their minds because you remember there are all these op-eds like this, create inflation. You reached out to me because you were to call him on the Wall Street Journal about that very thing, but even Milton Friedman would have supported something like that. I think that's the first time we chatted.

**David Wessel** (1:40)
I wish I could say I remember that, but I don't.

**David Beckworth** (1:42)
But it was a great time. There in those early years of QE, it was unconventional, now it's conventional.
You've seen so much, David. Tell us about your journey because you were a reporter at one point, now you're like a think tank. You've seen a lot.

**David Wessel** (1:56)
I came to Washington in 1987 to work in the Washington Bureau of the Wall Street Journal shortly after the stock market crash. I worked with Alan Murray and we covered the Fed. At that time, the same reporters covered the Fed and the federal budget at the Wall Street Journal.
I like to tell people that I learned most of my economics, even though I majored in economics in college, as a reporter for the Wall Street Journal.
One reason for that was that a lot of powerful people, including Alan Greenspan, thought it was important for the Wall Street Journal to get it right. So they would talk to us and they would talk to us about things whether they had to do with monetary policy or not. So I covered the Fed for a while. I did a stint for the Wall Street Journal in Berlin when the European Central Bank was just getting off the ground, which was also interesting. My good fortune was that the European Central Bank's working language was English, and I spoke Central Bank, so that was a good match. Yeah. Then I had been approached about doing a book on the Fed in 2007, and I told the book agent it was boring and there was nothing to write about.
Actually, that was 2006, I should say. When Bear Stearns happened, the Fed became the midwife to sell Bear Stearns to JPMorgan Chase. I wrote a piece in the Wall Street Journal that said they would always be before Bear Stearns and after Bear Stearns. The book agent called me up and said, there's your book proposal. I was convinced that this was the peak moment for the Fed, Bear Stearns. I took a leave from the Wall Street Journal. I would come back periodically. When Lehman Brothers hit in the fall, I thought, I'm the idiot who's trying to write a book on the Great Depression in January 1930, and my agent who happens to be married to a psychiatrist, and my publisher said, people are going to be writing books about this episode forever. You'll have first mover advantage. Because I'd spent a lot of time with people at the Fed during that period. And so I got really lucky. I finished the book in March 2009, and it came out in August 2009 And it's called In Fed We Trust. And that was like one of the best parts of my career, writing a book about what was happening almost in real time and being embedded the way soldiers or reporters are embedded with the military.