Loose Money and the Roots of the Crisis
Shelton has favored a return to the gold standard although recently seemed to back off such a hard stance.
On September 30, 2008, Shelton wrote a Wall Street Journal Op-Ed Loose Money And the Roots Of the Crisis.
These days, we don’t often refer to the validity of the money itself but rather to “monetary policy” and how the Federal Reserve has managed to calibrate the money supply to economic activity over the last two decades. There are plenty of critiques; the most pointed ones blame former Fed chief Alan Greenspan for keeping interest rates too low, too long.
If capitalism depends on designating a person of godlike abilities to manage demand and supply for all forms of money and credit — currency, demand deposits, money-market funds, repurchase agreements, equities, mortgages, corporate debt — we are as doomed as those wretched citizens who relied on central planning for their economic salvation.
It is time to take on the task of establishing a new foundation for international economic relations and financial relations — one dedicated to open markets and based on monetary integrity.
That’s how a gold standard works. We need to fix the money. Literally.
Once considered a longshot, Judy Shelton, Trump’s Hot-Button Nominee, may soon be on the Fed.
While her fate is far from guaranteed, the Senate Banking Committee is expected to approve Ms. Shelton’s nomination on Tuesday, putting her one simple-majority vote in the full Senate away from confirmation at a moment when the central bank is employing vast powers that she has a track record of questioning.
Ms. Shelton’s bid can advance to the full Senate without any support from the 12 Democrats on the committee so long as all 13 Republicans back her. Her nomination will come to a vote alongside Christopher Waller’s. Mr. Waller, the research director at the Federal Reserve Bank of St. Louis, was also nominated by Mr. Trump to the seven-seat Fed board. Mr. Waller, a more traditional nominee, is expected to clear the committee easily.
Group Think Advocates Attack
Sarah Boom Raskin, a former Fed governor and top Treasury official, said in an email: “The economic moment right now is too precarious to be rolling the dice on a person who has not wrestled with the current challenges of managing an economy that has been shocked by a pandemic, and whose views have not been fully articulated or reconciled with prior views.”
Diversity of Opinion Needed
There is no room on the Fed for anyone who does not think like the rest of the good old boy inflationists.
The bubble-blowing track record of Greenspan, Bernanke, Yellen, and Powell is amazingly bad. They have not gotten anything correct, but there is no room for diversity of opinion, which is what really matters.
Change of Opinion
I wonder if Shelton has changed her opinion about gold or she is saying what needs to be said to pass the Senate hearing.
Regardless, anyone with an ounce of common sense knows she will be a dramatic improvement over the rest of the lot.
“We Need to Fix the Money”
Bingo. The notion that a bunch of wizards sitting in a room can divine the correct interest rate and rate of inflation to steer the economy is proven nonsense.
Central planning of economies does not work.
Mish
Really interesting page of charts …
This is all Hot Air Fluff . . . a complete waste of time talking about it . . . You can’t have a Gold Standard unless you have GOLD and TRUST will be the name of the Game between Countries . . . and that is being destroyed . . . Their can’t be an audit of the People’s Gold because the only thing to audit is Paper slips !
For info BullionVault carry out a daily audit visible to account holders.
I was very unimpressed when I heard her speak to congress.
She was attacked by several members and she didn’t have good answers. It sounds like she’s the type of person who says what it takes to get the job. In other words, not a consistent viewpoint.
Keep your friends close, and your enemies closer.
The key issue is who takes the initiative to abandon faux petro-dollars for international transactions: China+Russia+Iran+a few others; or the Bank of International Settlements, with strong support from most, if not all, EU member states.
The wise thing for the US to do would be to deftly reposition in that milieu before it is too late, not stand on the sidelines flogging Treasuries. However, that will lake more than one woman’s voice on the Fed.
The Fed can gin up a make-believe stock/bond market only so long. Living beyond one’s means, one eventually goes bankrupt.
The U.S. can’t go back to a GOLD Standard because it doesn’t have any !
So?
There has not been a single physical audit (outside of US Treasury) of US gold holdings in over 30 years.
Plenty of pretty audits re: paperwork can be found, though.
Madoffs statements looked damned good … on paper.
Well, not enough anyway, not even to back a fraction of the INSANE money creation in recent years…..
Then where is? If they went off the gold standard by refusing to redeem, who do you think ended up with?
Judy Sheldon is an advocate of Digital Currency. She is saying what she needs to say to be on the Fed board.
In my opinion this is a set up to confiscate the fiat dollar (cash) and turn all currency from savings accounts to retirement accountants to trackable and traceable transactions of the American citizen(s).
“Shelton has favored a return to the gold standard although recently seemed to back off such a hard stance.”
A gold standard will last only until it gets in the way, again. Martin Armstrong notes that eventually all pegs are broken. If we go back on a gold standard, it is simply just the start of the next gold standard cycle.
Being on the gold standard in 1929 didn’t prevent the Florida land boom or the stock bubble. Roosevelt confiscated gold from Americans after he took office. Almost 40 years later, Nixon closed the international gold window. It has been almost 50 years since then. The current situation can only go on so long. Cycles always peak or trough, then flip.
“A gold standard will last only until it gets in the way, again.”
…
I think gold standard a non starter.
I DO think Shelton is shot a cross the bow of the MMT folks — Curb Your Enthusiasm (it ain’t happening … at least the way they imagine it).
Federal Reserve does not want to lose control of $US.
Bingo!
Once the MMT lunatics get their way, the days of the Federal Reserve Note are numbered.
And we all know that Conservative judges on the Supreme Court always vote Conservative right? It’s hard to predict what someone will say/do before and after confirmation. Doesn’t matter if it’s a seat on the Supreme Court or the Fed, etc.
To the financial world, and most politicians, a gold standard is going to look like counting beans. That is not where they are headed though there is space for private enterprise to work using gold, and with a reset more so. So I place her as a voice to lend substance or credence to central bank digital currency, a new framework for that, maybe partly gold backed. When they move forward with this idea it will need a new conceptual basis that extends beyond the understanding of what a national fiat currency is, that of it being solely based on multipliers and taxation, because an individual value will not be able to be set that way so easily once a new international framework is established that is not based on the political/financial/economic conveniences that now direct matters.
“Shelton has favored a return to the gold standard although recently seemed to back off such a hard stance. “
…
No choice. Had to back off she wants to be on FOMC.
Is the worm turning (for now … as in before election … )?
Vice Chair Quarles last week (msn):
In his letter, Quarles also warned of the risk of renewed turmoil to financial markets, notwithstanding the unprecedented support already provided by policy makers.
“We may be seeing significant pricing disconnects between the market and economic fundamentals, which could result in sudden and sharp repricing,” Quarles wrote.
…
3 out last 4 weeks Federal Reserve’s balance sheet has shrunk. Buying has been concentrated in mbs and treasuries … while currency swap lines and repos have declined … the corporate stuff has been treadmilling at relatively low level.
is Trump any worse than Hillary? To be sure in some ways, but on average?
Regardless Shelton is just one opinion unless she is elevated to Fed Chair, which I hope
At any rate, there is a chance she will be heard
Is Trump any worse than Hillary? Yes. Yes. Yes. Yes. Yes.
I guess we will never know.
It will certainly be interesting to see. Alan Greenspan was also once a huge advocate of the gold standard. Yet today he is the figurehead for the modern Fed cult of market manipulation. This will likely (hopefully) be looked at by future generations as a prime example of how power corrupts
I cant believe a self-proclaimed libertarian would want a gold standard.
Isn’t this the justification people used when voting for Trump?
Also, per inflation, what do you say to the argument that Japan proves that a shrinking population is highly deflationary? With the average American women having 1.5 kids were in for some pretty significant population shrinkage as well.