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Home / Business / Judy Shelton, the choice of Trump's Federal Reserve, relies on a gold standard

Judy Shelton, the choice of Trump's Federal Reserve, relies on a gold standard



Trump's two recent potential candidates, conservative analyst Stephen Moore and businessman Herman Cain, advocated a return to the gold standard. But Shelton is far more identified with her endorsement of the idea, which is based on the belief that the gold price is stable and makes the dollar less vulnerable to inflation or other volatility.

"It sounds kind of convincing if you have not completed a degree in economics, but it's counterfactual for a good reason," said Darrell Duffie, a finance professor at Stanford University. "Gold is an incredibly volatile asset to the US dollar as we know it today, it's just a false assumption that we would have more stable prices if we switched to the gold standard."

The gold standard has a long history in the republican economy.

In the 1

980s, President Ronald Reagan founded the first Gold Commission under the leadership of monetarist Anna Schwartz, who eventually opposed the venture with her colleague Milton Friedman.

But the Republican Party revived the idea on its campaign platforms in 2012 and 2016 and called for a new commission to investigate the feasibility of a return to the gold standard system. Former GOP presidential candidates, including Senators Ted Cruz of Texas and Rand Paul of Kentucky, supported the idea.
As a candidate, Trump told GQ magazine: "It would be very difficult to get the gold standard back, but, boy, it would be wonderful, we would have a standard on which to build our money."
Last year, Shelton called for a "new Bretton Woods conference," referring to the famous business meeting held in 1944 to establish a post-war monetary system. "We're making America great again by making America's money great again," she wrote in the journal of the Cato Institute, a libertarian think tank.

"It's an old idea," said Michael Bordo, an economics professor at Rutgers University who worked under the Schwartz Gold Commission. "This is part of the tradition associated with the Republican Party, there is a group that believes in the gold standard, there is a group that is skeptical of the Federal Reserve from the start, and nothing like that surprises me."

Shelton did not respond to an interview request from CNN.

She holds a PhD in Business Administration from the University of Utah and has been a scholarship holder at Stanford's Hoover Institution for many years. Trump appointed her at an early stage in his presidency as a US member of the Board of Directors of the European Bank for Reconstruction and Development.
Trump tweeted earlier this week that he also wanted to appoint Christopher Waller, an economist who runs the research director at the Federal Reserve Bank in St. Louis.

Given the Fed's criticism of Trump

Shelton, former economic advisor to the 2016 Trump campaign, has recently pleaded for interest rate cuts as well. based on the President's criticism of his own Fed Chairman Jerome Powell. It has also openly questioned the effectiveness of the members of the Fed's interest rate policy committee.

"The Fed is not omniscient, you do not know what the correct rate should be," Shelton told the Financial Times recently.

Trump has led an unprecedented public pressure campaign against his hand-picked Fed chairman Jerome Powell. In interviews, he has called Powell "loco", asked if he could be fired, and only last month refused to rule out a downgrade of Powell, if he does not lower interest rates Shelton because of their views on interest rate policy and not gold, "said Duffie.

However, while loner nominees like Shelton would likely create additional turbulence and insecurity and offer shattering views in speeches and interviews, they would be in the minority "The fact that he has selected two people, one of which is extremely good and the other is problematic, "said Bordo," that's better than picking out two people who are problematic. "


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