Slate Money — "The Coolest Thing in the World for an Econ Nerd"

Date: November 28, 2025
Host: Felix Salmon
Guests: Elizabeth Spiers, Emily Peck, Austan Goolsbee (President of the Chicago Fed)

Overview

This special Thanksgiving episode dives into the inner workings of the Federal Reserve with Austan Goolsbee, President of the Chicago Fed. Rather than focusing solely on short-term rate decisions, Felix Salmon, co-hosts Elizabeth Spiers and Emily Peck, and Goolsbee himself explore what actually happens inside the Fed’s Federal Open Market Committee (FOMC) meetings, demystify Fed transparency, debate the evolution from “mystique” to modern communications, address public trust issues, and discuss how the Fed responds to both public perception and political changes. The episode offers a rich, insider’s look at how U.S. monetary policy is crafted and the foundational philosophies guiding it.

Key Discussion Points

Inside the FOMC: What Actually Happens?

• The FOMC experience ([03:13]):

  • Goolsbee describes attending his first FOMC meeting as “the coolest thing in the world” for an econ nerd.
  • Meetings occur in a massive room around a giant table; security is tight (no phones, no outside communication, shades drawn).
  • Day one focuses on staff briefings about the economy, markets, international business, and financial stability.
  • Day two is voting day for interest rates, led by deliberative speeches from each committee member.
  • Goolsbee: “You go in, it's a huge room with a giant table, biggest table I've ever seen. … the shades come down so that nobody can spy and you're not allowed to bring your phone in.” [03:13]

• Preparation & deliberation ([05:21]):

  • Prep occurs in the week before the meeting — each Fed bank analyzes the circulated “teal book” and prepares.
  • During the meeting, members present their independent analyses; debate is rehearsed and respectful, not combative.
  • Goolsbee: “People take pretty seriously I think the idea that everybody's coming there with an independent view.” [06:02]

• How decisions really get made ([08:24], [08:56]):

  • Outcome is rarely a surprise; votes are almost always unanimous.
  • Fed chair’s diplomatic skills are key to achieving consensus, often by crafting language everyone can accept.
  • “If you just predicted everyone's going to vote yes on Alternative B, you would almost always be right. Almost all the votes are unanimous.” — Goolsbee [08:56]

The Role and Limitations of Market Expectations

• Market vs. Fed influence ([10:46], [12:39]):

  • Sometimes “market expectations” seem to predetermine the Fed’s decision, but the Fed’s role is to act, not simply follow market predictions.
  • Goolsbee reflects: “The Fed's job is to act and the market's job is to react. And let's not get the order mixed up.” [11:45]
  • Warns against letting market expectations dictate Fed actions, as it creates a “reflection problem” ([12:46]).

• Transparency and Communication Evolution ([18:10], [21:15]):

  • Under Jay Powell, the Fed is far more open than during the days of Volcker or Greenspan, who thrived on “mystique.”
  • Goolsbee argues for more transparency due to declining institutional trust in America:
    “It's really important to convey as much as possible to both the market and to the semi interested public. What is the Fed? What do we do? As I always say, we're not the bad guys. We are the guardians of the galaxy.” [19:21]

The Value of Transparency Versus Mystique

• The mystique argument ([22:40]):

  • Felix pushes back, championing the old era of Fed mystique: “I am gonna be the one dissenting voice here. I'm gonna be team tall Paul and I'm gonna be like, there was real value to the Mystique and Dora era.” [22:40]

• Forward guidance and new communication tools ([23:51]):

  • Forward guidance — explicit public commitments to future monetary policy — emerged during the financial crisis.
  • Goolsbee is skeptical: “You know that I've never been that big of a fan of forward guidance and I was kind of critical of forward guidance. … The era of heroes is done. … The miracles aren't there. We are never. None of us is going to fill Paul Volcker's shoes.” [23:54]

• Rebuilding public trust ([24:50], [28:31]):

  • Both Goolsbee and the hosts note public distrust in the wake of the 2008 financial crisis and other recent upheavals.
  • Transparency is positioned as essential for restoring trust: “I think the only answer to eroding public trust is forthrightness and treating people like adults and saying, we aren't magicians, we're trying to figure it out.” — Goolsbee [24:50]

The Public’s Misunderstanding of Monetary Policy

• Public perceptions of the Fed ([28:56]):

  • The public links interest rates to mortgage rates, and inflation to gas and milk prices — oversimplifications compared to how markets and economists think.
  • Goolsbee: “We don't even set the mortgage rates exactly.” [29:15]

• Who do FOMC members represent? ([31:00], [31:18]):

  • When voting, Goolsbee says he acts on behalf of the nation as a whole, though informed by his district.
  • “We're explicitly supposed to be taking a national view.” [31:18]

Critiques and Defenses of Central Banking

• Responding to ‘Abolish the Fed’ and gold standard arguments ([33:59]):

  • Goolsbee breaks down different forms of anti-Fed sentiment, particularly gold-standard advocates.
  • Explains why the gold standard fails, especially in crises:
    “When stuff starts going wrong, the gold standard forces you to do the opposite of what you want to do.” [35:00]

• On monetary rules vs. discretion, like the Taylor Rule or NGDP targeting ([36:06]):

  • Skeptical of strict rules: “The test of the rule is does it give you insight when stuff is going wrong or when there are very complex dynamics that are unlike things that have happened before. … It would be a big mistake to commit ahead of time to not have discretion.” [36:54]

Political Risks and the Future of Fed Independence

• Future FOMC fractiousness and politicization ([37:04], [38:00]):

  • Felix asks about potential future “fractious” FOMC meetings, with political appointees voting in blocs, risking transparency making divisions public.
  • Goolsbee’s hope: “The people around this table take the job extremely seriously. And you'll see when the transcript comes out, it's not about politics. … I hope to God that we will always maintain that this last bastion of deliberation, conscious deliberation based on fact, and that it won't become politicized in some way like that. I think that would be really. That would be troubling.” [40:16]

• Stagflation and communicating difficult mandates ([40:33], [41:33]):

  • Goolsbee discusses the challenge for the Fed if both mandates (maximum employment, stable prices) worsen at once, e.g., stagflation.
  • “We're going to try to figure out which side of the mandate is getting worse, quicker and by more. And how long do we think each error is going to last? And we're going to be in a business of we're trying to strike a balance.” [41:33]

Monetary Policy versus Fiscal Policy

• Who is more powerful? ([43:16]):
  • Goolsbee argues fiscal policy is much more powerful long-term than monetary, but monetary policy can act quickly and independently.
  • “Setting of interest rates is a very primitive tool. It's basically just a screwdriver. … Everything else in the universe is fiscal policy.” [43:16]
  • Strongly defends Fed independence amid occasional political pressure to monetize public debt:
    “The central bank must be independent from political interference when setting the interest rates or else inflation is coming back.” [44:12]

Living Through Data Droughts and Embracing the “Data Dogs”

• How the Fed copes with missing data ([47:29], [49:00]):
  • Goolsbee calls himself a “data dog,” always sniffing out information; jokes about the lack of “data cats.”
    “The thing is, cats are predators and they involve killing… that's why there are no data cats. The data cats are out killing birds.” [49:00]
  • When government statistics go dark, the Fed pulls in private sector data and constructed indicators, but warns: “Everybody's numbers are getting worse the longer the official statistics are down because everybody benchmarks onto the official data.” [50:02]

Memorable Quotes

• “If you're an econ nerd, it's about the coolest thing in the world.” — Austan Goolsbee [03:13]
• “The Fed's job is to act and the market's job is to react. And let's not get the order mixed up.” — Goolsbee [11:45]
• “Almost all the votes are unanimous. … But that's misleading, because Jay Powell... has a remarkable talent for talking. He knows, in a way, I think he does the poll you're describing ahead of time, but he's the only one who truly knows.” — Goolsbee [08:56]
• “As I always say, we're not the bad guys. We are the guardians of the galaxy.” — Goolsbee [19:21]
• “You want the Hollywood star system and you're like, you know, there used to be stars like Marilyn Monroe, there were giants of the Fed like Paul Volcker. And the era of heroes is done. The miracles aren't there.” — Goolsbee [23:54]
• “The only answer to eroding public trust is forthrightness and treating people like adults and saying, we aren't magicians, we're trying to figure it out.” — Goolsbee [24:50]
• “We don't even set the mortgage rates exactly.” — Goolsbee [29:15]
• “When stuff starts going wrong, the gold standard forces you to do the opposite of what you want to do.” — Goolsbee [35:00]
• “If you tried to do what Greenspan did now or Volcker did now, in terms of you'll get nothing and like it, you know, that's a message. … I just think the environment has changed.” — Goolsbee [25:44]
• “The central bank must be independent from political interference when setting the interest rates or else inflation is coming back.” — Goolsbee [44:12]
• (On cat people in economics): “The thing is, cats are predators and they involve killing and it doesn't… that's why there are no data cats. The data cats are out killing birds.” — Goolsbee [49:00]

Timestamps for Important Segments

• FOMC Meeting Atmosphere & Routine — [03:13]–[07:00]
• Debate, Decision-Making & the Role of the Chair — [08:24]–[13:00]
• Transparency, Mystique, and Forward Guidance — [18:10]–[24:50]
• Public Trust and Post-Crisis Distrust — [24:50]–[31:00]
• Abolishing the Fed, the Gold Standard & Rule-Based Policy — [33:59]–[36:54]
• Future Political Fractiousness — [37:04]–[40:16]
• Stagflation and Dual Mandate Dilemmas — [40:33]–[42:52]
• Fiscal vs. Monetary Power & Independence — [43:16]–[45:08]
• Data Drought and “Data Dogs” — [47:29]–[51:46]

Tone & Takeaways

The episode, playful but substantive, offers listeners a rare, candid seat at the monetary policy table, showing both the ceremony and genuine debate within the Fed. Goolsbee is both explanatory (“We are the guardians of the galaxy”) and disarmingly honest about challenges, risks, and the limits of what central bankers can do. The show underscores the importance of public trust, the perils of nostalgia for Fed “mystique,” and the seriousness with which FOMC members take their charge—even if, in Goolsbee’s words, “the era of heroes is done.”

For anyone wanting to understand the real Federal Reserve—not just the headlines or rate announcements—this episode provides clear, nuanced answers, plenty of inside anecdotes, and valuable context for both econ nerds and the broader public.