During the financial crisis (and, coincidentally, while a Democrat was president), Shelton rebuked the Fed for ultra-low interest rates, claiming that loose money would stoke “ruinous inflation.” But today, although the economy is stronger, she advocates slashing rates “as expeditiously as possible.”
It’s also clear that Shelton wants to politicize the Fed, because she explicitly said she wants to. In an op-ed last fall, she argued that the Fed should “pursue a more coordinated relationship” with the White House.
Just as troubling as her many opportunistic policy reversals, though, are the ideas Shelton still hasn’t reversed herself on. Especially: her desire to bring back the gold standard.
While popular among the right-wing fringe, the gold standard has been resoundingly rejected by economists and was abandoned worldwide. For good reasons.
If we want consumer prices to remain stable, we should probably pay attention to what consumers actually buy. And consumers generally aren’t buying large quantities of gold; they’re buying clothes, housing, cars, health care — that is, the broad basket of goods and services whose prices the Fed currently targets. What’s more, pegging the dollar to gold could restrict liquidity just when the economy needs it most, as happened during the Great Depression.
No matter. By letting the Fed rather than the quantity of gold determine the money supply, Shelton claims, Congress has created an institution no different from the “Soviet State Planning Committee.” At times, she has even appeared to suggest the Fed should be eliminated.
In short, Shelton is an opportunist and a quack. Senate Republicans seem to know this — but they still may be too craven to oppose her nomination, for fear of crossing Trump.
When asked last summer about Shelton’s views on gold, Sen. Tim Scott (R-S.C.) ducked the question: “I don’t think it’s relevant,” he told Politico. There was no need to focus on “controversial statements,” he said, when “she has decades of work that we can actually look at.” But those “decades of work” mostly comprise . . . exhaustive treatises fawning over the gold standard.
Last week, Sen. Thom Tillis (R-N.C.) told my Post colleagues that Shelton’s support for the gold standard doesn’t matter because the United States isn’t likely to return to it anytime soon. Likewise, Sen. Kevin Cramer (R-N.D.) has said that Shelton is wrong on gold but that he supports her nomination anyway.
“I kind of like having somebody that challenges status quo like Judy on it,” Cramer said. Then he added, “I wouldn’t want five members like her.”
The subtext: Shelton may want to blow up the economy, but it’s not like she could do it on her own. Right?
That should not be the bar for candidates to join the world’s most powerful economic institution. And, until recently, it hasn’t been. Most of Trump’s Fed picks — including the other nominee the Senate Banking Committee hears on Thursday — have been qualified, competent candidates.
More to the point, even without the power to unilaterally reinstitute the gold standard, Shelton could still wreak a lot of damage.
She has made clear that she would tattle to (sorry, “coordinate with”) the president about Fed meetings. This would make candid discussion — and, therefore, independent policymaking — impossible.
What’s more, she would almost certainly be viewed as a Fed chair-in-waiting if Trump gets reelected. Trump won’t reappoint Jerome Powell, whom the president regards as an “enemy”; Shelton’s confirmation to the Fed would place her on a glidepath to replace him.
Nine years ago, Senate Republicans blocked a Fed Board candidate nominated by President Barack Obama on the grounds that the candidate was supposedly unqualified — despite the fact that that nominee, Peter Diamond, had a Nobel Prize in economics. Surely these same lawmakers can be at least 1/100th as picky today.
The global economy depends on it.