It’s not yet official, but the White House has indicated that it is seriously considering Judy Shelton to fill one of the vacancies on the Federal Reserve board of governors, according to this article. This would make Dr. Shelton a voting member of the Federal Open Market Committee, FOMC, which is the Fed’s interest rate-setting panel.
Trump’s last two potential nominees, Steve Moore and Herman Cain, both failed to attract support because of some damaging personal history, but also because neither man held a Ph.D. in economics. That degree is not a precondition for Fed board membership (Jay Powell is a lawyer, not an economist), but it is considered a plus and most Fed governors and chairs do have that credential.
Judy Shelton has the degree and was already approved by the Senate for her current development bank position. But she is encountering opposition because of her support for the consideration of the role of gold in the monetary system.
She does not insist on a hard gold standard overnight, but there are many useful roles gold can perform as a gauge of confidence in the U.S. dollar and a check on uncontrolled monetary policy.
As usual, this article raises many objections to a gold standard that are false. The article says that gold does not allow discretionary monetary policy because the supply of gold is “more or less fixed.” That’s false. New mining output is about 1.6% per year and the U.S. can buy all the private gold it wants if that’s needed to expand the money supply.
This article is a case study in how even the brightest economic minds don’t understand gold. Judy Shelton does understand gold. Let’s hope she gets the job.
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