For the last century, the Federal Reserve has been seeped in indoctrinated Keynesian orthodoxy, comprised of men and women who adhere to the ideology of manipulating economies and distorting markets through monetary policy – the conventional and unconventional. Creatures in the Swamp have occupied the central bank for much of its history, but a new face might emerge at a future Federal Open Market Committee (FOMC) meeting and take a hammer to traditional thinking.
While no means an Austrian, Judy Shelton has expressed views on the Fed and gold that show she could be given the benefit of the doubt and the opportunity to defy the smartest suits in the room with a modicum of intellectual diversity. Remember, it could always be worse: The Fed could add another bland, stuffed-shirt, milquetoast, and classically trained economist or Wall Street banker to the board.
Build a Waller and Find Shelton
Last summer, President Donald Trump announced on Twitter that he would nominate Shelton and Christopher Waller, the director of research at the Federal Bank of St. Louis, to the Board of Governors. Their nominations to the seven-member entity now have been formally submitted, and their confirmation will require a months-long Senate approval process.
Experts consider Waller a safe nominee. The so-called dove had worked intimately with St. Louis Fed Bank President James Bullard and helped shape his “view about the U.S. shifting into a low growth, low inflation and interest regime,” says Kathy Bostjancic, an economist at Oxford Economics. Waller has lamented hikes to interest rates, and, if confirmed, he will likely support keeping rates low.
Shelton is the wild card, however. For years, Shelton has espoused and published blistering attacks on the Fed and its policies, urging the nation to adopt a gold standard. Her past writings featured lamentations on the current monetary system, quantitative easing, and the overall central banking institution. She further criticized the Eccles Building for maintaining a benchmark zero-interest-rate policy (ZIRP) during former President Barack Obama’s reign. Shelton, an author and former campaign adviser to Trump, has tergiversated and now supports a low-rate environment.
Recent reports suggest that Shelton could be Fed Chair Jerome Powell’s replacement once his term expires in 2022 – Trump is probably counting down the days! That is if the president can win re-election. A gold bug with “exotic” views at the helm of the most powerful institution in the world – why not? What do we have to lose?
Until then, with a Republican-controlled Senate, the odds of her being given a seat at the Fed are high.
Left-leaning critics will allude to Shelton’s resume as a reason not to give her a post inside the Eccles Building. She is not an academic economist and instead possesses a doctorate in business administration. Her career mostly has been spent working at free-market policy think tanks, writing a book about the crash of the Soviet Union, and composing papers about money – including a currency backed by gold.
Libertarians critical of the Fed might be split on Shelton. On the one hand, they may be apprehensive over her support for supply-side monetary policy, a tactic of greasing the wheels of trade by injecting markets with liquidity. On the other, they might like her opposition to paying interest on excess reserves, a policy that directs or influences short- and long-term rates.
Conservatives may champion Shelton as another Trump loyalist who will bulldoze the pillars of the Swamp. She maintains a contrarian stance to the 3×5 card of allowable opinions that would make policymakers uncomfortable, a fact conceded by Senators Richard Shelby (R-AL) and Jon Tester (D-MT). They ostensibly disapprove of her previous positions on the gold standard.
“The gold standard would probably shatter a lot of people’s dreams around the world right now. There was a reason to get off of it,” Shelby said.
“I’ve gotta see where she’s at on a lot of other stuff, but this is not necessarily something that I would give her high marks for,” added Tester.
Shelby is the chairman of the Senate Banking Committee, and Tester is a member. That explains their consternation over Shelton.
A Bulldozer to Orthodoxy
Liberty Nation’s resident political sage, Joe Schaeffer, has repeatedly opined on the need for President Trump to back individuals who endorse the America First legislative agenda rather than the generic RINO one. This political maneuvering could apply to monetary policy as well. Free market fetishists, as Schaeffer has also remarked, may not agree with Trump’s directives of implementing ZIRP or NIRP. But if an anti-globalist, anti-Fed, and pro-gold person can infiltrate the Fed, then why not?
Read more from Andrew Moran.