Judy Shelton Has the Votes
Senator Lisa Murkowski (R-Alaska) will now back Shelton giving the candidate 51 votes for the appointment.
With that, Judy Shelton Heads for Confirmation to a Federal Reserve Seat.
“I’ve had an opportunity to talk to Judy Shelton and I’m going to be supporting her,” Murkowski told reporters Thursday afternoon, according to reports in various news outlets.
Shelton’s nomination had been stalled in the Senate even though the finance committee cleared her by a narrow party-line 13-12 vote in July. Several key Republicans had been wavering in their support, and it appeared for some time that the nomination would not clear before the current congressional session ended.
At the contentious July hearing, senators grilled Shelton over her views on Fed independence, her support of the gold standard and her wavering over whether bank deposits should be insured.
Democratic senators accused Shelton of backpedaling from earlier statements she had made on those issues.
McConnell’s move drew an angry rebuke from Sen. Ron Wyden (D-Oregon), ranking member of the finance committee, who called it “an effort to sabotage what little economic recovery we have by installing an unqualified, political pick.”
“Her ideas are so wacky and outdated, giving her authority over the dollar would be like putting a medieval barber in charge of the” Centers for Disease Control, Wyden said in a statement. “Shelton’s views are so extreme, Senate Republicans have long refused to confirm her.”
Attack Dogs Blast Shelton
In a stunningly ignorant, yet hardly surprising op-ed, Steven Rattner says God Help Us if Judy Shelton Joins the Fed.
“Why do we need a central bank?” Ms. Shelton asked in a Wall Street Journal essay in 2009. She wants monetary policy set by the price of gold, a long-abandoned approach that would be akin to a Supreme Court justice embracing the Code of Hammurabi.
Anyone who questions the need for a Central Bank immediately has at least something on the ball.
The Fed has blown 3 consecutive economic bubbles of increasing amplitude.
Diversity of Opinion
True diversity is not about race or sex, it’s about opinions.
Former fed Chair Janet Yellen was every bit a part of the good ol’ boy network.
Instead of another “good ol’ boy” group-think candidate, we will actually have diversity of opinion.
Imagine
- Imagine having a dollar backed by something, rather than nothing.
- Imagine having a 100% gold-back dollar so that FDIC would not even be needed.
Neither of those will happen because Shelton will be ignored by the rest of the Fed.
However, as Fed governor, he views will at least get public airing. That’s a start assuming she did not abandon he views on gold, just to get the appointment.
God Help Us
For further discussion, please see my July 24, 2020 post Controversial Gold Advocate Advances for a Fed Appointment in which I mock Steven Rattner for his view “God Help Us if Judy Shelton Joins the Fed”
Rattner has things ass backward. God help us if we stay on the path we are on.
Addendum
I was asked why FDIC would not be needed under a 100% Gold-Backed Dollar.
- Gold stored for safekeeping could not legally be lent out. To do so would constitute fraud.
- A 100% gold-backed dollar with audits takes care of the safekeeping requirement.
- Gold lent out pays interest. It is not risk-free. If people want interest they take a risk of default.
- Banks make money out of charging a small safekeeping fee and lening gold they are authorized to lend.
- Past bank failures were because banks lent out more gold than they had or took excessive risks. No one can or should guarantee loans anymore than governments can guarantee stock market investments.
- If people want to protect against theft or bank fraud despite #1, private insurance, possibly part of the safekeeping fee, would take care of it. There is no need for government to get involved.
Mish
An interesting article here.
Why is a gold standard needed people ask ?
Because…
Lamar Alexander is now added to the Nay column putting Shelton in doubt
Thanks for this.
Seems like unless the whole world is on the gold standard all that is gonna happen is th egg us will lose all its gold. Isnt that why nixon took us off the the gold standard anyway. Paying for oil
Why is gold standard needed ?
Because…
$ 15.000 gold would pull the trick, with corresponding periodical devaluations as required by parallel currency printing. Capitalism thrived with such monetary system
Imagine, no growth, queues for mortgages, business unable to borrow, because there is no money, welcome to the Gold Standard……
Imagine , a planet destructive eternal growth rat race, people queueing for 0% rates mortgages with house prices rising 10%/year, businesses and individuals endebted up to the eyeballs because there’s too much free money ….that’s what we re enjoying now, WITHOUT the Gold Standard
Moving to a gold standard is economically unfeasable and will never happen. However it is used as a political tool to lend “theoretical” support for smaller government, lower taxes, etc. to generate populist support.
Exactly, and very clearly explained. The PROBLEMO@Jojo comes when people both in the US and outside the US see that as well as yourself and then proceed to DUMP US debt which suddenly becomes a worthless piece of of paper
Apologies. My comment just above was meant for@Johnson1 NOT @Jojo .
Sorry about that. My bad
Sure you can increase the price of gold but is that realistic? Of course, people holding gold will be all for this. But what about the businesses that use gold in industrial manufacturing?
And would people buy gold jewelry that cost 10X, 20X or more due to a sudden change in gold pricing? Think India, for example, where gold ownership is used in place of using regular banks. I don’t think so.
So HIGHLY unlikely that such a change will ever occur regardless and despite all the many articles touting gold backing of the money supply.
But at least all these articles provide space for gold ads, so some people can still make money.
It isn’t just a “Fed” problem, it’s a “global” problem
Debt ultra-high + effective GDP dropping fast + velocity of money close to 1…
If the Dems can control the Senate, I suspect one of the promises they will first tackle is Student Loan forgiveness.
I kept telling my kids an their friend to not pay off their graduate student loans. They have been diligently trying to pay off their loans the past 3 years. They have couple of friends who went to Notre Dame who each have over $100k in undergrad student loans. My kids have zero. Now they pursued master degrees which they had to pay for and do have some student loans but under $30k.
I feel like a sucker for saving up and paying the plus $80k for their undergrad degrees.
My questions are:
Living in the U.S. and its debt creation financial engineering seems like a pretty good deal for people who can work the system?
You would think how can a bank stay in business with people defaulting all the time. Because all the loans they make these days are monetized, sold to investors, and then when stuff hits the fan, the FED buys up all this bad debt. No harm….no foul. Wash, rinse, and repeat.
Jim Sinclair and Bill Holter (interviewed by Greg Hunter on 10/31/2020) said based upon Fed balance sheet – debt of $27,000,000,000,000 and divide that into 260,000,000 ounces of gold that the U.S. Treasury supposedly has, then price of gold should be more than $100,000/ounce based upon simple arithmetic.
Oh, I don’t think that we’ll see that, as the debt will be flushed down the toilet first. Those holding the bag of flaming paper d- s- will be the suckers.
Not so fast@[Dodge Demon] because foreign markets hold lots/most of US debt which, if dumped, will be flushed right onto our front lawn, not the toilet. Right there and then gold would skyrocket, probably overshooting the price currently needed to back-up currency.
EU gold crisis re NO-deal BROVID goldfare
Hard-Brexit + the un-available EU Gold + Covid-19
Decades ago, current EU member states deposited their gold in custody at the Bank of England (BoE) in London.
Now, with hard-Brexit + Covid-19
Many supposedly ´knowledgeable´ experts both sides of the English Channel need to do some past due homework, fast. Should the Davos crowd be forced to re-establish anything similar or equivalent to a gold or SDR standard (quite probable) the matter will aggravate a 100-fold, even more.
Because many or all EU members would now want to simultaneously repatriate their BoE-vaulted gold partially or totally for many good reasons, Covid-19 included.
Beware: recently Germany had to wait 5 years to forcefully repatriate only 50% of its gold and never received back any single one of the gold bars it had originally deposited, which clearly explains the delay.
The problem is NO independent audit has ever been carried out (see sources below) in order to answer the following key questions:
(a) does the BoE still have everybody´s gold bullion… or has it been sold off or loaned out already (partially or totally) as many true experts insist is the case ? (see links below)
(b) is the BoE willing and able to return EU gold it may still have to legitimate owners ? Who are the legitimate owners ? Would the ECJ decide gold ownership ?
(c) has the BoE lent out, swapped, re-hypothecated or encumbered such bullion now lien with other alleged legitimate claimees also standing in line with ´fractional un-allocated synthetic´ bullion custodies unfit-for-purpose per Digital Derivative Pricing Schemes “(sic, I kid you not) thru which no one can know who owns what where (if anything) ?
Of course, the ECB would also claim it actually is “their” EU gold while the IMF and the BIS would also meddle, of course. But however it unfolds, the “continental gold” now vaulted across the English Channel will most probably be weaponized by The City of London during hard-Brexit negotiations with Old-Etonian types in charge.
Paraphrasing James Carville, “ It´s the gold, stupid ”
…“…There is nothing transparent about the London gold and silver markets. Unlike the equity and bond markets, there is no reporting of transactions and trades in the OTC London gold and silver markets. There is no data whatsoever about positions and transactions in the London gold lending market, no data on which commercial banks hold gold accounts at the Bank of England, no data on the identities of central bank gold custody customers of the Bank of England, no data on the size of the enormous unallocated gold and silver liabilities of the bullion banks, no published data on the location of the London commercial vaults, and no published audits of the claimed gold and silver inventories in the LBMA and Bank of England vaults. And that’s just a flavour…”…
Why should it be backed by something as limited in supply as gold ? Why not something like sand.
Because sand has 0 (zero) market demand for monetary backing. Gold has had lots of monetary for the past 6000 years. That´s the difference.
Because anyone could get rich by collecting sand on the beach and trading it in for greenbacks. Although with a sand standard, they would probably be worth less than what the currency in Zimbabwe is now.
I’ve read there isn’t enough gold to back the amount of US $$. If true, what is the solution?
It depends on the price.
Sure you can increase the price of gold but is that realistic? Of course, people holding gold will be all for this. But what about the businesses that use gold in industrial manufacturing?
And would people buy gold jewelry that cost 10X, 20X or more due to a sudden change in gold pricing? Think India, for example, where gold ownership is used in place of regular banks. I don’t think so.
So HIGHLY unlikely that such a change will ever occur regardless and despite all the many articles touting gold backing of the money supply.
I wasn’t suggesting you’d increase the price of Gold. If it costs say 45mg of Gold to buy a dozen eggs there’s no reason that would change. How many dollars it equates to is a different matter.
I don’t think they’ll be a change to a gold backed currency either btw.
I don’t think we’d go back to a gold standard, it’d be going from one extreme to another.
I think the price of gold would crash overnight if it happen.
Interesting, why?
Oh I think I see. If each dollar was suddenly backed by Gold the dollar would be more attractive. I suppose it depends on how much gold a dollar is backed by. Currently a dollar is worth about 16.5 mg. If a dollar was backed by 8.25mg of ahold you’d need two backed dollars for the same mount of Gold. So it would depend on the terms of the backing and whether existing dollars are similarly backed.
Yes, the mis-handling of the monetary policy for decades has been oh so bad that now the situation can only be solved by going to the “extreme” of a gold standard at the right price, probably USD $ 15.000 per ounce or higher depending upon backing % required by current amrket forces. If larger % were needed the price should be proportionatly higher
I think I’m missing something.
How does a gold backed dollar make the FDIC unnecessary? I don’t think it would eliminate the possibility of smaller banks defaulting on deposits.
A Gold-backed Dollar with no fractional reserve lending would make FDIC insurance unnecessary. Or at least less necessary, as there would always be the possibility of bank failure due to fraud.
Thanks, I can see how it would make it less likely. However you don’t need fraud, even at 100% reserve requirements, a single loan default will require the bank to top off reserve requirements out of pocket.
Do that enough and the bank will not be able to meet reserve requirements.
Not so – when a deposit is made by a customer there is the choice made by him or her to allow that money (in this example gold) to be lent out. If there is a loan default the customer(s) involved lose their money. The money due for repaying the loan is written off along with the loan. So caution and trust replace “guaranteed returns” .
When you think about it, fdic just guarantees poor investment and punishes everyone for it by debasing the currency to patch the loss, a confidence trick really. If you want to save, or not possibly lose your savings you simply do not lend them out for attempted profit.
What is created this way is a hierarchy of access or ownership of the money that resolves according to contract.
Gold stored for safe-keeping cannot not be lent out. That would be fraud.
Gold lent out pays interest. It is not risk-free. If people want interest they take a risk of default.
The skeptic in me says Republicans didn’t want her on the Fed while they controlled the Executive branch and now find Shelton useful to gunk up Biden’s economy.
The skeptic in me says Republicans didn’t want her on the Fed while they controlled the Executive branch and now find Skelton useful to gunk up Biden’s economy.
Shelton
Being appointed to the Fed seems to make gold advocates lose their memories. I give you Alan Greenspan as a prime example of that. But I have no problem with an Austrian economist on the Fed. It’s about time…..
Still not sure of confirmation though. I don’t give the Congress high marks for financial or economic acumen……they’re a bunch of pigs busy at the trough, who only looks up when a real crisis hits….and they always look to the Fed and the GS alums at the Treasury for their salvation.
Normal, you are against the printing press until they make you in charge of it, classic. Truth is gold standard would end up with gold confiscation and world governments forming a cartel over gold price aka same thing under the sun.
It’s normal to be against something until you are in charge of that thing. Than you realize that even if the gold standard comes back gold is going to be seized by world governments who will dictate it’s price aka same thing with a different name. It’s all about power , you are delusional, what you call fiat money allow us to control the world’s resources (gold included) with numbers and words , that’s all that matter.
President Biden will be furious about this. A Gold advocate? She is nuts. We are not living in medieval times, this is 2020.
Above all, “President-elect” Biden ( not so fast, we shall see… ) doesn´t yet preside anything. Furthermore, the LAST thing he knows about (what does he know about anyway ?) is monetary policy. If MMT is what you want Stan, you´ll have it with Biden and right after that in less than one year you will join everybody else begging for the gold standard.
How’s that Russian-basked brexit working out for you?
The constitution clearly states the only thing that is money is gold and silver. After 49 years of toilet paper it’s time to go back to sound money. Only those with the assets and those at the spigot like cheap fiat and inflation. It’s a tax to the rest of us. Wages have not kept up with the devaluation of fiat. In my opinion we need to end the fed period.
I do not believe Libya nor Iraq (euro-backed oil) had anything to do with US attacks on them
…rrm, well, interesting Mish, to say the least, but this article is supposed to be about Shelton, innit ?
My reply was in response to a Q from@[Dodge Demon] but I thought everyone would be interested
Hillary Clinton fully disagrees with you Mish… and let´s agree in that she should know, right ? (“we came, we saw, he died”). MG´s planned downfall and subsequent assassination was all about the ill pre-announced gold-backed Libyan African money, like real MONEY, not the fiat backed-by-nothing legal tender currencies with the US dollar leading the pack and soon to pass into oblivion.
At the time, I found it remarkable that in the midst of the pitched battle for power in Libya, one of the warring factions should declare the creation of a central bank. It appeared to me to be a unique choice of priorities at that particular juncture.
Mish, regarding your Imagine bullets above, which I agree – isn’t that what Gaddafi was trying to do with a Libyan-African currency? That didn’t go over very well in the State Department here at the time.
True that, still that´d be the only valid end-game for the coming fiat currency debacle.