Jeffrey Lacker is the former president of the Richmond Federal Reserve Bank and is a senior affiliated scholar at the Mercatus Center. Jeff returns to the show to discuss the history of the Fed Treasury Accord, the state of fiscal dominance, his five proposals for a new Fed Treasury Accord, his calls for reform around the discount window, a memorial to his friend and colleague Charlie Plosser, and much more. Watch the full length video on our new YouTube Channel! Check out the transcript for this week&#x27;s episode, now with links. Recorded on May 20th, 2026 Subscribe to David&#x27;s Substack: Macroeconomic Policy Nexus Follow David on X: @DavidBeckworth Follow the show on X: @Macro_Musings Check out our Macro Musings merch! Timestamps 00:00:00 - Intro 00:00:56 - Fed Treasury Accord 00:18:26 - Fiscal Dominance 00:22:05 - Jeff&#x27;s Five Proposals 00:49:05 - Charlie Plosser 00:55:49 - Outro

Jeffrey Lacker on What a New Fed Treasury Accord Might Look Like

Macro Musings with David Beckworth

# Full Transcript

**Podcast:** Macro Musings with David Beckworth

## Participants

- **David Beckworth** (Mercatus Center at George Mason University)
- **Jeffrey Lacker** (Mercatus Center; Former president of the Richmond Federal Reserve)

## Transcript

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.

Our guest today is Jeffrey Lacker. Jeff is the former president of the Richmond Federal Reserve Bank, where he was president from 2004 to 2017. He is also a colleague of mine here at the Mercatus Center, and today we're going to talk about the Kevin Walsh Fed, what it might mean for a new Treasury Fed Accord, and other developments in that space. Jeff, welcome back to the podcast. It's a pleasure, David.

It's great to have you on. Now, just a little while ago, we were at the Hoover Monetary Policy Conference. Yeah, in Palo Alto. Yeah, it was a great conference. It's a great place. I encourage everyone who can to go there if they get a chance. But one of the big themes that were discussed, and I definitely discussed around dinner tables, hallway conversations, is what would a new Fed Treasury Accord look like? And we're going to talk about that today because you actually had some great testimony that you did before Congress recently.

In fact, you did it with our other colleague here, Tom Honig. You both got called before Congress and do what you do well, and you testified and shared your wisdom with the people on Capitol Hill. But it was also a big point of interest at the conference. And I'll just tell one story. We were having dinner one of the evenings there, and we went around the table, and each person gave their view of what they thought the new accord would be. And it was all different. Everyone had a different story.

So we needed to be wiser, and that's why we got you here to help us think through that. But maybe, Jeff, you could help us first set the stage by talking about the history of the accord. Because you bring this up in your testimony. So maybe start there with that. Sure. Yeah, it's a fascinating story. Back in 2001 at the Richmond Fed, we did a special issue of our economic quarterly dedicated to the Fed Accord.

It was the 50th anniversary. So in 1951, early 1951, the Korean War has been underway for a few months. The Fed agreed with the Treasury back in 1942 to maintain a cap on U.S. government security yields to keep down the financing costs for World War II. That required the Fed to accumulate a lot of government securities and to intervene pretty often.

After the war, things are back to normal, but the Treasury kind of likes keeping its financing costs low. Under Truman and World War II, you know, we had a surge in commodity prices. Inflation was creeping up...

Jeffrey Lacker on What a New Fed Treasury Accord Might Look Like

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Jeffrey Lacker on What a New Fed Treasury Accord Might Look Like

Transcript

Built for investment professionals

Every day you wait, your competitors are findingedge in conversations you're not hearing.

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