I have been reflecting recently, and in connection with this speech, on America's centuries-long enthusiasm for novelty. In the main, it has served us and the world well, by making America the home of so many of the scientific and practical innovations that have transformed life in the 21st century from that of the 19th. But, especially when coupled with an equally American susceptibility to boosterism and the fear of missing out, it has also sometimes led to a mass suspension of our critical thinking and to occasionally impetuous, deluded crazes or fads.

Sometimes the consequences are in hindsight merely puzzling or embarrassing, like that year in the 1980s when millions of Americans suddenly started wearing parachute pants. But the consequences can also be more serious.

Which brings us to my topic today: central bank digital currencies, or CBDCs. In recent months, public interest in a "digital dollar" has reached fever pitch. A wide range of experts and...

Jason Furman is a former chair of the Council of Economic Advisers and is currently a senior fellow at the Peterson Institute for International Economics. Jason is also a professor at Harvard University and he rejoins Macro Musings to talk about overheating, the inflation outlook, and the right way to think about fiscal policy in an era of low interest rates.

Read the full episode transcript:

Note: While transcripts are lightly edited, they are not rigorously proofed for accuracy. If you notice an error, please reach out to macromusings@mercatus.gmu.edu.

David Beckworth: Jason, welcome back to the show.

Jason Furman: Good to be back and thrilled that I now have two mugs.

Beckworth: Oh, did you get your nominal GDP mugs in the mail?

Furman: I did.

Beckworth: Fantastic. Yes. So listeners, we had to correct a great failure on our part. We never got Jason his original nominal GDP targeting mug. Jason was one of the early guests...

The US Federal Reserve’s resolve to care about jobs as much as it does about inflation is being tested by rising prices.

The debate over the direction of the US economy has entered a new stage as vaccines allow normal life to return, while the lawmakers debating pandemic relief have now turned to schemes for long-term investments in the US economy. The great re-opening has surprised observers in different ways—employment has been slower to return and prices have risen slightly faster than the Fed and many forecasters expected. At the same time, the underlying dynamics of the economy, particularly the connection of price increases to predictable post-recession supply shortages and pandemic-driven social changes, remain in line with the expectations.

For chair Jay Powell, this is the moment to prove that the Fed has learned the lessons of the recovery from the Great Financial Crisis, when employment didn’t return to pre-shock levels for six-and-a-half years. What that...