The Fed's policy of excessive money creation is the main driver of inflated housing prices, inflated stock markets, rising income inequality and widespread urban homelessness. They have overstepped their bounds, and destabilized sound currency.
48
We have TBTF banks whose CEOs are thumbing their nose at everyone. If we had a Fed that really worked then the rapacious bankers on Wall Street would have never crashed the economy in 2007 and would have never been bailed out. The Times is worried about the constitution of the Fed? Yes the Gold Standard is an insane choice but why is that worse than Lloyd Blankfien and Jamie Dimon? Getting off the Gold standard only briefly helped the middle class for a few decades until Clinton came along and demolished Glass Steagall. Low interest rates only help bankers to keep Casino Capitalism going to put more and more money in their pockets without making real things or creating real jobs or actually investing in something that benefits society. Lets talk about demolishing banking as it is currently structured. Lets talk about what the Fed really is - a private collection of Bankers who shill for their fellow Bankers. We need to completely ban Bankers and Economists from the Fed and make it a truly Federal organization which will convert banking into a public utility that will really benefit the nation and not a small collection and coterie of the 1%.
32
@Paul Art Elizabeth Warren is constantly talking about the outsized influence of big banks.
15
The Fed under Janet Yellen became far more sensible and stressed the slow job growth. Trump has given massive tax cuts at the top end which, along with low interest rates are fostering money and asset bubbles.
Trump also reduced controls on Wall Street.
Low interest rates cannot really be raised because of high household debt - this is certainly true of other countries. I suppose Shelton's preference for the always deflationary gold standard is only less worse than Bitcoin and these kinds of set assets, prone to bubbles and busts.
I am quite sure Trump does not understand money, he just treats it wrongly as a 'thing' to be amassed.
49
I'm a moderate, fact-based and highly educated voter who has voted red and blue, depending on the candidate. I voted for Giuliani and Bloomberg as republican candidates for mayor while supporting Bill Clinton and Al Gore for potus.
IMO, the best thing Obama did was to re-appoint Bernanke as Fed chair. Bernanke, with his program of Quantitative Easing, is probably the person most responsible for saving the economy from obliteration.
But QE did accelerate inequality. And while the program was certainly better than the republican alternative of austerity, as with all policies there always are negative unintended consequences.
27
@Chris Manjaro Although some of what was done by Bernanke truly helped us not slide into a great recession. I take exception at him demanding that AIG pay 100% to the dollar on all of their Credit Default Swaps. Most of the big banks knew how bad all of their Mortgage Backed Securities were and hedged them with Credit Default Swaps. By forcing AIG (who was still selling CDS after the crash just for the cash flow) to pay 100% to the dollar, it provided the Big Banks with the means to salvage all of their profits without any restitution to the American Taxpayer who will ultimately pay for this for decades of interest on the Treasury Securities sold to bail them out.
9
@Chris Manjaro I'd argue that Janet Yellen was an even better pick: She'd come up with many of the techniques Bernanke used to respond to the economic crisis, and also resisted calls to stop once Wall Street had recovered (on the grounds that unemployment and the real economy hadn't recovered).
11
Trump's answer for a dysfunctional economy is to continue priming the pump. The Fed rescue in 2009 was $4 trillion, more recently $400 billion of Fed money has been pumped up the banks. We have massive bankruptcies and many challenged businesses, gasping for air. But we have another luxury apartment building, hotel, sandwich shop, while we starve for many public goods and services. In the words of the immortal John Kenneth Galbraith, we live in a sea of private goods, a starvation of public services and goods.
16
This is in general a broader symptom of our culture - it does not matter how correct someone is, the people who get heard are the ones that scream the loudest. Why would the WSJ even publish her garbage? How does she even have a career as an economist in the first place?
5
"the Fed benefits from intellectual diversity on its board." As long as that diversity does not agree with Mr. Trump. that is.
2
In evaluating Supreme Court nominees, strict Constitutional constructionists can be compared with looser interpreters of the Constitution. Since many Supreme Court nominees rise from the appellate courts, usually an extensive "stare decisis" record of their prior rulings and dissents exist to get a good read on a justice. But, with Fed nominees, probably more inferences and guesses must be made about the nominees' economic leanings for future monetary policy decisions.
Former Fed chairs Greenspan, Bernanke, and Yellen have all stated that they were late in appreciating how the US economy could so closely approach full employment, at about a 3.5% unemployment rate today, while generating so little in CPI increases. Probably, since high CPIs destroy the value of debt, and many of the rich not only own much debt; but, also are large political donors, tight monetary policies protecting the "status quo ante" are the norm. Since most middle-class people owe more debts and give pols less, they usually must repay the full principal owed with little reduction via inflation, to bank on.
In economics, a field that is in constant flux, to have a track record that is not transparent is probably more common than in law. And, if this record camouflages a dismissive attitude toward change, such logic can easily lead to an erroneous model for evaluating the cost and benefits of policy innovations, such as with an achievable full employment level, cited above.
2/12 W 3:11p Greenville NC
2
How's that again? You have a question as to whether Senate Republicans are willing to shake up the Fed? If Donald Trump told them to sacrifice their first-born, it would be "So long, Isaac; it's either you or me, and that means it's you."
7
During times of economic expansion, low unemployment and low inflation, we should have very low deficit and maybe a surplus to pay down some federal debt. This is done so in a recession we can run deficits and low interest rates to pump the economy, pay unemployment and social benefits. It's actually very simple, even I as an engineer understand it. By the way I have never seen so many participant with extreme views based on discredited theories.
89
Fiscal stimulus through annual fiscal deficits & monetary easing by a central bank are appropriate tools to limit the depth & length of a recession if used at the right stage of the business cycle & not to excess in the conditions that then apply.
However, the projected 2020 trillion dollar US federal deficit together with a prolonged level of unprecedented monetary easing by the US Fed for the purpose of prolonging for a few more months the recovery from the 2007-9 financial crisis and from the credit crunch that happened in response to that crisis is inappropriate.
That mix at the current stage of the business cycle promotes distortions within the domestic economy at great cost. Further, when an economic downturn does occur, as it must & probably within a couple of years, deficit spending & monetary easing because of earlier inappropriate use will be ineffective tools. This being the case, that downturn could be deep, long & more destructive.
Short term expedients are no substitute for sound fiscal & monetary policy.
107
@bob adamson
I seem to remember a $2 trillion (or more, it seems now) 10-year-deficit tax-cut law passed by Republicans in December of 2017. Right there is a major source for your concern.
58
@bob adamson Deficit spending and monetary easing won't just be ineffective tools for the next downturn, they won't even be available.
There's only so much deficit spending we can do before creditors start calling in their chits. And interest rates cannot effectively be reduced below 0%.
10
@Justin Creditors? There are no creditors. Not that I approve of it, but the money can and will be created by issuing treasuries which the Fed buys, or the primary dealers buy with digits created by the Fed. How and when that ends is anybody's guess, but it can go on for a lot longer than most reasonable people think possible
1
"President Trump, by contrast, has made it clear that he wants the economy to grow as fast as possible in the short term, even if that increases the risk of an eventual crash."
Why not? Trump is just running the country like he ran is businesses after getting over $400 million from his father to survive. He will throw the country into a recession and walk away laughing.
9
The Fed has had crazy governors before and survived. My favorite was Wayne Angell from Kansas, appointed by Reagan as a favor to Senator Dole. The other Governors listen politely and ignore them. It happens. This one sounds nuttier than most, just like this president.
2
By the time the economic and environmental collapse is upon us I'll be too old to care any longer. Pity the younger folks.
3
And, of course, the entire GOP will fall in lock-step behind their leader, whose only interest is self-interest, and not that of the country. When will this nightmare end?
3
Of all the trump dangers that lurk within and without, this is the most inconsequential. The Federal Reserve is not a democracy. Yes, the Board of Governors vote but they always defer to the Fed chair on policy. They always have. Jerome Powell is the one to watch. Over a year ago, Powell started raising rates and the economy started to go soft, the markets dropped and trump banged his rattle on the side of his crib. Powell reassessed and lowered rates while starting a new brand of quantitative easing. trump or not, what self-respecting Fed chair wants to do-the-right-thing and preside over a protracted recession long overdue from the financial crisis? We are stuck in this alternate reality where company profits are steadily falling but due to low interest rates and momentum trading on Wall Street (justified by the self-serving mechanism called price-earnings multiple expansion) the market continues to rise and we find ourselves in an addictive 401k Ponzi bonanza. Where is the end game? When the music stops is the only, inadequate, answer. In the meantime, interest rates and the US dollar will never go low enough to make other exporter countries lose their trade advantage. So, let trump pick Judy Shelton. It's small potatoes compared to what the 401k Ponzi bonanza has in store for investors - again.
4
@Otis Opse Where have you been and why don't you have a louder voice?
1
From Libertarian Von Mises Institute
There is good news and bad news regarding President Trump's nomination of Judy Shelton for one of the two vacant positions on the Federal Reserve Board of Governors. The good news is that Ms. Shelton is not a technically trained academic economist, indoctrinated in the prevailing orthodoxy. She holds a doctorate in business administration from the University of Utah and has spent most of her career in the world of free market policy think tanks, including stints at the Hoover Institute and the Atlas Network. She also writes refreshingly and articulately in favor of the gold standard, or some version of it.
The bad news is that she leans heavily toward supply-side economics, which is deeply flawed on monetary policy. Like most supply-siders, the position she advocates may be summed up in the motto, “I favor sound money—and plenty of it.”
In her 1994 book Monetary Meltdown, from penning proposals for an updated version of Bretton Woods. This article contains my critique of an earlier supply-side proposal for a monetary system based on a gold price rule.
Overall, I consider Judy Shelton among the most politically palatable (at least to Republicans) candidates for the Federal Reserve Board of Governors. But, unfortunately, this is weak praise, given that the very existence and function of the Fed is a destructive influence on the US and global economy.
There's intellectual diversity and then there's intellectual dishonesty. Pair that with her partisan fervor and she has no place on the Fed, now or ever.
The gold standard?! Seriously?!
But you just know Trump's pitiful toadies in the Senate will dutifully fall in line despite their "misgivings". Just another day for them ignoring their sworn duties.
14
Dear Susan Collins, Mr Kramer & all of your colleagues who believed Trump would act cautiously after his impeachment gave him license to abuse our country.
If one Trump sycophant is allowed on the Fed Reserve she will become its leader.
You have debased our country, the constitution rule of law and common sense. Will you now debase our currency further to serve your selfish political fortunes?
21
More trump chaos to keep us under his control.
4
The NYT editorial board seems to suffer from the same problem as Dr. Paul Krugman, a frequent contributor to the NYT. Both are long on detailing Trump malfeasance, long on Trump excess, destruction of democracy and the environment but woefully short on solutions.
After three + years of Trump madness, we're painfully aware of the problem. The mere suggestion that Trump might be reelected causes night sweats but in addition to regaling us with endless rotten examples, why not sprinkle in some ideas how we rid ourselves of him.
I've visited the NYT office, seen the amazing operation and visited the giant conference room where important stories are developed. Help America survive the wretched. Please use your extraordinary talent to offer ideas and solutions.
4
The risks of run away government debt and low interest rates if an economic crash occurred raise the specter of deflation which is far more deadly than inflation. Trump's disbelieve in showing fiscal restraint in tax cutting and tolerating tax cut abuse schemes has produced Keynesian stimulus that keeps the economy from slowing down. At a certain point there is not enough stimulus in the world that can dig out of such a self inflicted recession. The idea that tax cuts pay for themselves is recklessly wrong. Low interest rates also are useless when the economy becomes sufficiently imbalanced. If the Democrats win the election and the inevitable downturn occurs it seems likely that Shelton and the GOP with their tea party politics will call for all out austerity. Hopefully the Democrats win in 2020 to prevent Trump from hurting the long term prospects of Americans through his ruthless gutting of necessary domestic programs and cutting taxes with huge raises in defense spending.
2
Yes, current economic growth is good, but not great. Inflation, and interest rates, remain low, which creates an illusion that using debt remains opportunistic. However, as stated, rising levels of non-productive debt has negative long-term economic consequences.
Before the deregulation of the financial industry under President Reagan, which led to an explosion in consumer credit issuance, it required just $1.00 of total system-wide debt to create $1.00 of economic growth. Today, it requires $3.97 to create the same $1 of economic growth. This shouldn't be surprising, given that "debt" detracts from economic growth as the "debt service" diverts income from productive investments and leads to a "diminishing rate of return" for each new dollar of debt.The irony is that while it appears the economy is growing, akin to the analogy of "boiling a frog," we accept 2% economic growth as "strong," whereas such growth rates were previously considered near-recessionary.
Another conundrum is that corporations and financial institutions appear to be healthier, not to mention wealthier than ever. If such is indeed the case, then why is the Federal Reserve still needing to engage in "emergency monetary measures" to support the financial markets and economy after more than a decade?
We are going to regret these artificially low rates when the next downturn begins. The next recession is going to make the next one look mild.
7
The Fed is irrelevant at this point but it is probably not a good idea to appoint a low quality hack.
1
@Chris Martin how do you get to that conclusion?
"Senator Kevin Cramer of North Dakota said he planned to vote for her, adding, “I wouldn’t want five members like her.” Mr. Cramer, are you a coward to stand up and vote against Trump's candidate even though you know she is not qualified? Is that why people from North Dakota sent you to the Senate? Shame on you.
21
The gold standard: an idiotic idea of yester centuries.
8
Not only is she an unqualified quack, she wants to abolish FDIC insurance.
17
"Senator Kevin Cramer of North Dakota said he planned to vote for her, adding, “I wouldn’t want five members like her.”
Absent a strong historical record for her policies, and even a theoretical basis for them, why would you want even _one_?
As a chemist, if I make a mistake in the lab, I risk blowing myself up. As a husband and father, if I make a mistake on finances, I risk blowing eight people up. If Shelton makes a mistake, she blows up 300 million people. But I guess this just falls in the category of "Stuff happens."
47
Trump manipulates fiscal policy through unprecedented deficit spending during a non recessive economy. He wants loyalists on the Fed board to drive reckless management of monetary policy by imprudently lowering interest rates. Trump applies artificial stimulants to spur economy growth in an election year. By acting in this manner, Trump is hardly the first political operator to place self-interest above national interest. Equity and bond investors have lots to feel good about. Some will vote their pocket books come November. Looking ahead, an unpredictable event such as the collapse of the CMO market in 2008 will spark the next recession. When that occurs, compromised fiscal and monetary policies will lack the dry powder to respond effectively. And that mess will be Trump’s ultimate legacy to our country.
69
@Stu Sutin Correct! Total debt (Governments+Corporate+Household/Consumer) is FAR higher by any measure than in 2008. In the case of corporate debt, it's an all-out bubble ready to burst.
And the feckless Fed (and other Central "banks") have virtually no powder in their collective kegs... hang on tight folks, this party is gonna make 2008-2009 look a walk in the park!
7
Ms Shelton was right earlier in her career - interest rates were kept too low for too long. This culminated, together with the de-regulation of banking mortgage rules, in the 2008 financial collapse. They are too low today. If we don't reign in, they'll be no where to go when inflation hits. And it will hit.
1
Of course he likes her policies. Lower interest rates means more profits on his properties. Just like the R's keeping the carry forward for a basis for no capital gains in the Tax Bill. CORRUPT!
3
Ttrump and Rupub's are on a one way, go for broke suicide mission to totally collapse the American and world economies while seizing power for the next millennium.
Why else would they want to add trillions more to our debt to pass even more funds to the top 0.1% while slashing everything else to the bone.
4
Shelton is poorly equipped enough that she does not understand her two positions directly contradict each other. The purpose of low rates in the present regime is to stimulate modest inflation. But the gold standard would be clearly deflationary. And in the ultimate joke, deflation would completely destroy the Trump Organization.
6
Senator Kevin Cramer of North Dakota said he planned to vote for her, adding, “I wouldn’t want five members like her.” Why would you want one?
Because this is an obedient private army in GOP uniforms, so they have to march as one... or else.
3
" “I wouldn’t want five members like her.”
Why would you want one?
Easy, because he is a new brand of Republican. " I don't have to think. I just follow the man who knowledge of economic policy is limited to stiffing a competitor."
6
Congratulations to 'our' vulgar bully in-chief, another sychophant for the Fed. What could possibly go wrong? The politizacion of the economic body that, for it's own health, demands independence from the Executive, is being trampled upon. One more nail in the casket of this suffering democracy. Trump's revolting action is an assault to reason, and the complete loss of what the people consider a huge asset, the trust in democratic institutions. What a farce!
4
I am not an economist but it sounds likes a good plan to me:
Go back on the gold standard, get rid of the Federal Reserve and reset our calendars to 1901.
What could possibly go wrong?
From a quick look at Shelton's c.v. she appears to be a political hack. Fits right in with other Trumpeters.
7
Dr. Martin Luther King, Jr. warned against the malign evil danger to the survival of our divided limited different power constitutional republic of united states posed by inextricably intertwining capitalism, militarism and racism that has made America first in money, arms and prisoners.
Left- wing socialist community organizer Jesus of Nazareth proclaimed that it is easier for a camel to pass through the eye of a needle than for a rich man to get into Heaven.
Jesus proclaimed that He was always the poor, homeless, sick, imprisoned, hungry, thirsty, naked, depressed and afraid outsider stranger.
5
Danger lurks everywhere with Trump and his appointees.
5
"nations are prospering at the expense of the United States" - that's plutocratic-speak like the poor are prospering at the expense of the rich.
Shelton is "loudly supporting low interest rates." How about lower CC interest rates which keep going up? Lowering those rates would juice a consumer market more than lowering the cost of money to the banks gouging their card holders. High CC rates compounds insult to sickness as obscene drug costs are paid for with CC. Before long we'll need to take out a medical-mortgage to buy meds.
Trumpians are accelerating the subjugation of centers of power and wealth - guided by Putin? - subverting the Constitution turning our democracy into a capitalistic-fascist state.
Lesson learned by trump is he has no constrains whatsoever. It's HIS base that's missing the lesson of how democracies die as they enable a criminal authoritarian government that no amount of guns could defend against. Before long they'll miss the government they hated and distrusted before, as all power is centralized under trump - through fear. Won't be long until the fascists have completed their takeover of our government - how they will like it then?
"better off without a central bank." - Typical trumpian lie as they subvert and centralize the Fed entirely under the trump. Gold standard could lead to trump plundering other countries' reserves. Staying off the gold standard works better for trump as he can manipulate the government numbers as he wishes to hold power.
2
So... Big surprise that Trump will do everything and anything to remain in power including inflating the stock market with as much "free" money as he can manage to get printed.
If he can just keep things pumped up until after the election he would care little if at all for the consequences. And that goes for any way he can maintain power. ANY WAY HE CAN MAINTAIN POWER. Just wait for his cries of foul play and rigged election if he should lose. He will have to be forcibly removed from the White House before he will let go of the presidency. This sociopath is dangerous. And worse are his Republican enablers.
3
This is the type of central bankster that King trump prefers.
1
Prediction: 53-47.
1
The gold standard by all means. Makes a lot of sense for a country running trillion dollar deficits. Solar heat? Nah just burn your fiat currency.
4
Dear Editorial Board,
One of the reasons offered for the formation of a central bank was to be the "lender of last resort". They failed that role during the Great Depression when the New York Fed refused to intervene in the Bank of United States.
From the Federal Reserve History website:
"By the 1970s, the gold standard had been abandoned and the worsening inflation and unemployment experience called into question the conduct of monetary policy. The 1977 Reform Act amended the original act by explicitly directing the Federal Reserve to ”maintain long run growth of the monetary and credit aggregates commensurate with the economy’s long run potential to increase production, so as to promote the goals of maximum employment, stable prices, and moderate long-term interest rates.”"
https://www.federalreservehistory.org/essays/fed_reform_act_of_1977
In addition, the Fed was initially 12 autonomous banks. That change during the 1930s when the Federal Reserve had a headquarters built in Washington. Maybe the Fed should get back to just being a lender of last resort, cut the ties with Washington and quit trying to tinker with everything else.
She’s a bad choice? Why do you think she was nominated? On the contrary, she’s perfect and will fit right in.
1
The Times Ed Board wastes column inches babbling about what R Senators might or might not do on certain issues. The only real questions are what will Mr. Trump tell his Senators to do on these issues and, most important, how much marginal revenue will covering Mr. Trump's attention to these issues bring in for the Times.
"President Trump, by contrast, has made it clear that he wants the economy to grow as fast as possible in the short term, even if that increases the risk of an eventual crash."
And why not? He's treating the economy as if it were his own personal piggy bank--just as he played with investor funds which he rarely paid back--ripe for the taking. Amd if he leaves office having unleashed a monster depression, what does he care?
The closing paragraph says it all, in stating that Republican senators know how poor a choice Ms. Shelton is but plan to vote for her "anyway."
And so it goes in Trump's America.
51
I would vote for anyone who would give me a 4% interest rate on a savings account. Of course no need for banks to attract depositors with attractive interest rates when Uncle Sam will lend them money for free.
Funny how the Republicans are all for free markets and low government interference, except when they are not.
7
@Hugh G It's not a Republican thing, it's a political thing and both parties pander to keeping interest rates low; de-regulation of banking laws took place in the late nineties.
1
In Verhagen 2012"The Tierra Solution: Resolving the Climate Crisis through Monetary Transformation" (www.timun.net) I begin chapter 7 on the monetary architecture of the Tierra carbon-based international monetary system with a quote by Judy Shelton about the “need for an international monetary standard-a monetary unit of account” on account of “the expansion of free trade, the increased integration of financial markets, and the advent of electronic commerce”. I agree with her that we need a monetary standard, not a gold standard, but a carbon standard. In fact, a carbon monetary standard of a specific tonnage of CO2e per person.
She wants to do away with the US Fed and other central banks. I see the structure of the Fed as a possible model of a global federated bank. I also consider the Bank of International Settlements which is the Central Banks’ central bank but without any provision of credit or liquidity creation.
As monetary sustainability sociologist I strongly oppose the politicization of the carefully calibrated balance of tensions in the US Fed and thus I oppose her being confirmed. Her monetary turncoat on interest rates on account of political winds is also highly undesirable, because, as Charles Kindleberger shows in his Manias, Panics and Crashes, the oversupply of credit in the four dozen financial crises during the last 400 years was a major reason of those economic crises.
4
The lickspittle GOP now fears any disagreement with Donnie Trump. So standing up on a minor issue like this will just not happen. Shelton will be confirmed, even if on a party line vote. However, this does not prevent the Board from putting her on the bench and ignoring everything out of her mouth. How one can go from the gold standard to demanding lower rates with no cause amazes me. I wonder what her papers are like. I say to the quislings in the GOP select her if you must, but to the Board ignore every word out of her mouth.
2
Another ‘opportunity’ for Republican Senators to refuse to endorse a nomination for someone endorsing misguided, problematic policies. They failed to do so with nominees to the EPA and the Interior Dept. And their approval of Barr to be AG has proven to be problematic. Will they ever show any backbone with a President who is consistently out of touch with commonsensical ideas?!?
4
The problem is more than Ms Shelton. Trump and the Republicans need to juice the economy so it looks rosy on November 3rd and he get reelected. Short term goal with disastrous long term results.
9
The only solace I can think of if trump were to be reelected is that the damage he's done to the world's economy will likely catch up with him. If the crash comes under trump's watch, it will truly be the end of the republican party and good riddance it would be.
4
Shelton wants to end FDIC bank deposit insurance.
What would have happened in 2008 recession if there had been no FDIC.
What did happen in early 1930's when there was no FDIC.
Vote against confirmation.
22
@david: "What did happen in early 1930's when there was no FDIC."
One of the reasons the Fed was established was to be the "bank of last resort". The New York Fed failed to rescue the Bank of United States in 1931 after private banks refused to help. That may have started the general run on banks nationwide. On the other hand, the Salt Lake City branch of the San Francisco Fed bank bailed out two local banks facing runs of their own. The crisis passed within 48 hours and the banks were fine.
3
@david
FDIC insurance is a subsidy for banks so they can use our savings to gamble on speculative investments. A sound banking system would require the bank not touch your savings or limit its exposure to risk free assets as before the repeal of Glass-Steagal. Some economists suggest a ban on fractional reserve banking where banks must hold 100% of your savings in a secure vault instead of the current "fraction" of 5% or even in the extreme, less than one percent. This would end bank runs and make the FDIC unnecessary. If banks want to use your money for risky investments, they can offer CDs, which would allow savers to share in the profits fully aware of the risks.
We need to curtail the power of banks, and end the increasing financialization of our economy which now comprises almost 20% of our GDP, and get back to manufacturing - making stuff, not pushing paper around, and printing more money.
The Federal Reserve Bank is a public-private corporation that has become too powerful to allow it to continue without oversight or audit. Remember when Hank Paulson and Timothy Geithner came before Congress for one trillion dollars, no questions asked, to rescue the banking system in 2008? Expect more of the same if we continue business as usual.
Shelton is NOT an sconomist, except perhaps by avocation. She has a BS in Education from Portland State and an MBA/PhD from Utah.
Her major qualifications seem to be her decade of indoctrination at the Hoover Institution and working on Bob Dole’s campaign in ‘96.
A look at CSPAN shows that at some time between 1996 and 1999 she became described as an economist, clearly without obtaining a degree in the field.
Her goldbug fantasy should disqualify her, and her lack of training should be the nail in the coffin.
But not in this administration, where an inadequate background and a weak resume are valued, not scorned.
45
By definition, Trump's choices tend to be flawed. Most of all, because Trump chooses persons with a cult-like fidelity. Mercantilism was something Spain was very good at when it had the most colonies in this hemisphere. The world has evolved since.
"As Senator Richard Shelby, an Alabama Republican, told Politico: “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.”
Do not get your hopes high. Senator Shelby and all required GOP senators will approve Shelton. What Trump wants, the GOP will grant. Remember acquital. Except Romney. Maybe.
8
With the impeachment trial Americans got to see that the Republican controlled Senate is as dangerous as Trump. In part it walks in lock-step with his authoritarian instincts. McConnell goes further, demolishing democratic norms.
But Shelton runs counter to the banking industry's desires. And the Senate banking committee was historically a place where Senators (like Shelby) get power, because they're a banking lobbyist's dream. From states where electoral competition isn't costly (like Alabama,) big bank money makes those Senators very comfortable.
North Dakota's Kramer is another Senator whose state isn't a major banking hub, yet serves on the banking committee. He's trying to walk a fine line between the Republican commandment to appease Trump, and the call of lobbyists. Of course the lobbyists will understand; they're so enamored by Republican tax cuts they'll swallow almost anything.
So Shelton will probably get confirmed. These same Republicans tanked Obama's economic advisers if they strayed from neo-liberal orthodoxy, but they'll embrace this gold bug.
Shelton's hypocrisy is so odious it's a parody of self-interest. That makes her the perfect economist for Trump. I hope every second of this administration's behavior, and it's embrace by Republicans, is recorded. Historians will marvel.
4
Why don't we just go back to an economy based on tulip bulbs? That worked out pretty well....didnt it?
9
Isn’t the gold standard about fiscal and income tax rate discipline?
Didn’t Trump bust that with these huge tax cuts?
Appointment of a gold standard advocate will only be lip service.
That coming vote within the Federal Reserve will not be helpful unless the a Trump tax cuts are eliminated.
9
This is No Way to Run a Country called the United States.
To function, our country is dependent upon our Constitution, elections, judiciary, central bank, our intelligence services, our police & military, a free press and our alliances.
Trump and Republicans in the House and Senate have been undermining the pillars of our country.
Trump was impeached for abusing the powers granted him by the Constitution but acquitted by Senators
Republicans have undermined elections by gerrymandering, voter suppression, and Trump attempted to cheat in elections.
The Senate has been packing Federal courts with extremists. Trump has installed a political supporter as AG and is now pressuring prosecutors to go easy on defendants who lied to protect him from being held accountable. Trump is also threatening to prosecute those who testified about his activities.
Trump has repeatedly criticized and pressured the Fed to support low interest rates which help him get re-elected. He is now appointing (gold standard!) political supporters to the Fed.
Since his election, Trump has criticized and even attacked our intelligence services and our free press.
And, Trump has undermined our military by protecting soldiers who are war criminals and by overruling military leaders with rash and self-defeating actions such as in Syria, Saudi Arabia, Yemen, etc.
He has not supported our allies.
He must go
26
I guess having the Justice and the State departments made over in his image isn't enough for the president. Why not the Fed too?
27
Donald Trump has proven himself to be an expert at one thing for sure: bankruptcy. I mean the economic kind, although he is clearly a fantastic example of the moral kind as well. So if we want our economy to go bankrupt, we should definitely continue to follow his economic proscriptions.
89
The gold standard. Floating currency values. Hardly new ideas, but still out there in economy- land thinking, but their impact is off my understanding radar.
So here’s my own continuing lack of economic savvy; why is there only one interest rate, give or take a ....micro percentage difference ....for everything? On the tax side, there are different tax rates for gas, for property, for sales, for income.
Why not have a low interest rate for first-time home buyers, a higher return rate for CDs, Treasuries, for retirement purposes. A high interest rate for purchasing a gas-guzzler, a low rate for energy efficient cars. A low rate for loans to purchase ...solar panels, energy saving insulation for homes....and on and on. Banks could even out the high-low rates for profitability, with the Central Banks setting parameters for each type of loan, savings vehicles.
A billionaire buying, building, a mansion, paying the same interest rate as a ....23-year old new teacher trying to buy a modest two-bedroom, 20-yr. old house. Which should be encouraged, discouraged?
As for our low interest rates, again, it only helps purchase items now priced too high to actually buy. Affordable houses, cars, rents....this economy is already unsustainable. And this nominee is into gold standards? But with this Senate, I’m sure she’ll be passed with flying colors. They love that near 30,000 Dow, which only reminds me of Japan’s economy of a few decades ago; around that same level.
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@Jo Williams I like the concept but I think floating interest rates based upon the item/thing purchased is a flawed idea. Mostly because the whole idea is to incentivize spending (new home buyer) or shape spending (gas guzzler vs. EV or fuel efficient car) to meet an economic or political goal. The private industry that loans money isn't going to ignore the benefit of loaning money to people to buy clean fuel or efficient cars if they can make more money lending for SUVs or someone purchasing their second or third home. I think a better idea would be to have a tax on those SUVs that have worse gas mileage than the national average and that money directed by law to plans and programs dedicated to combating climate change. If you buy a second home, a portion of what you pay every month (maybe $20) goes to homelessness and drug addiction causes. Having simply higher interest rates will just push the money back to the banks who will have no incentive to dissuade the consumer from making less impactful choices in their spending habits.
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@Jo Williams
The interest rate is basically the price of money today in terms of money tomorrow. That price does vary based on the risk associated with the borrower (credit history, ability to pay, is the loan secured with collateral). But beyond that the price of money is basically going to be the same across the economy. If not, I'd engage in arbitrage--buy money where it is cheap and sell it where it is dear.
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@Jo Williams the only interest rate the fed controls is the overnight rate for banks to borrow or lend the Federal Reserve. All the other rates are determined by the financial markets, but will never be lower than that Fed rate, which is short term and risk free.
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From the Federal Reserve Bank website:
"The Congress has directed the Fed to conduct the nation's monetary policy to support three specific goals: maximum sustainable employment, stable prices, and moderate long-term interest rates. "
Considering how infrequently the Fed has met their stated goals does it really matter? Keep in mind that the Fed is PRIVATELY OWNED by member banks and serves them first and foremost. We never did get an accounting of where all the money went that they handed out during the last crisis.
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@cynicalskeptic
The Fed is not “owned” by the member banks. Those banks hold stock of the regional fed banks as a condition for membership in the system—a formality. The Feed is accountable to the Congress.
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@Javier
Very good response. Should also note that the vast majority of the "profit" generated by the Fed's operations is voluntarily returned to the U.S. Treasury every year.
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Yes, it matters a lot. Cynical replies like yours are dangerous. If there was no Federal Reserve as Shelton argues, then 2008 would have been the start of the second Great Depression.
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To get re-elected Trump needs members of the FED who will blindly obey his orders to juice the economy.
Shelton will follow those orders.
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Trump provides a stellar reason why we should take power from the Fed! Another good reason is that the Fed is anti-capitalistic (manipulating the macro economy for a few Banksters) and un-democratic (I've never had the chance to vote for a Fed Governor/Chair).
There's obviously no capitalistic basis to peg interest rates, especially based on lagging indicators of questionable value. Interest rates should be a function of the supply and demand for money. If market players don't want to lend (or borrow) then interest rates go up (or down) accordingly which clearly is the self-lubricating means of production capitalism needs.
IOW, instead of worrying about whether the Fed's policy is right, if it's too political, etc... let's take away their self-imposed faux power to manage the economy "Soviet-style". If debt infusion is needed to pull out of a protracted recession, then buy/sell government bonds and increase/decrease government spending as the Founders intended.
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Judy Shelton is a perfect exemplar of the fact that economics is not a science at all, though like the actor in a commercial, it plays one on TV. Yes, economists use economic models but if we compared an economist to an engineer we would see the difference. Judy is a political actor now who wants the power of a position of the Fed. We don't need the Fed politicized.
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@Terry McKenna
Judy Shelton is no more reflective of economists as a whole than flat-earthers are of geologists as a whole.
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@Z I would agree with you except that we still have trained economists talking about pro-growth tax cuts and so on. She is certainly not an economist at all but the profession is full of views that, if this were a real science would not happen.
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@Terry McKenna To continue Z's argument, there remain talk-show scientists who deny global warming. In every profession, people make baseless claims that are not reflective of the whole profession.
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Diversification is a good thing. Opinion from a female economist with different point of view may bring fresh air into a stale room. It is time for FED to change.
If the gold is really that useless, then we won't have a need to keep and store millions of tons of gold in our government vault. Gold in fact is an important and invisible part of our credibility in international finance.
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@Usok - yeah, but we don't have $23 trillion of it in our vaults to secure our debt, nor are we likely to acquire another trillion each year to support our deficit. Moving to a gold standard will certainly force us to live within our means, at catastrophic cost to our economy.
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@Usok I'm guessing you weren't extolling the virtues of female economists (as if they were somehow wildly different than male economists) when Janet Yellen was being considered.
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Uh, what does her being female have to do with it?
Before China originating Coronavirus stubg world economy casts its pale shadow on the US economy and spoils Trump's November party, he desperately wants to turn even the Fed into his echo chamber as he did with the other constitutional and political institutions like the Republican led Senate or the Supreme Court. The nomination of Judy Shelton to the Federal Reserve board is simply to achieve that goal however damaging this might be to the Congressional mandate or to the US economy specially in relation to the monetary policy stance. This is sure to reverse the economic recovery path heralded by the Obama administration and seen over the last decade.
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Trump’s economic agenda will eventually destroy the Democratic Party by simply appropriating some of its original policies. First his pro-labor usmca trade agreement. Now, he’s proposing Shelton to the board of the Federal Reserves and she believes that there should be no central bank and we should return to the gold standard. These are fundamentally progressive ideas that go back to the presidency of Andrew Jackson and his “specie circular” and his struggle against central banks. Jackson also happened to be the founder of the Democratic Party!!!! Today, the Dems are now lost in neoliberal global policies and addressing social and racial inequality only as political pageantry. Be warned, if Shelton receives congressional approval, the political collapse of the Dems will be sooner than some supposed economic crisis, which they have predicted the moment Trump took office.
@Michel, Trump has already destroyed what was the Republican Party. It's just a personality cult with disdain for the Constitution and all governing norms.
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The purchasing power of the minimum wage peaked in 1968 when the wage was a mere $1.25 an hour.
Nixon took us off the Breton Woods version of the gold standard in 1971. Inflation immediately soared and those in lower income brackets have never caught up.
The only way to tame inflation and begin to solve income inequality is to constrain the Fed's power to print money that is not backed by a tangible asset.
The Fed was able to keep inflation in check for most of the period when the gold standard was still in place. As soon as the standard was abandoned, the printing presses went wild and so did the federal deficit.
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It’s the triumph of the new MMT (Modern Monetary Theory) which is based in two facts: first, the readiness with which you can print your currency, and second, no war in sight, let’s say no physical war, the real war... tariff war is permitted. The last point, about real war is extremely important because neither Europe, nor Russia or China want a war between Powers, so U.S. is left ‘free’ to print endlessly its currency, the dollar which is the dominant currency, and free to sanction any other who dares do the same even China, coronavirus notwithstanding.
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At some point very soon, the American version of capitalism will be stretched to a breaking point from which it won't recover. Thanks to the inmates having overtaken the asylum. I, for one, think that's a good thing.
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@Hammer Me too!
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During the first debate with Hillary in 2016, Trump accused Yellen of using monetary policy, keeping the interest rate low, for political reasons.
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The gold standard, right. And then we can adopt Bitcoin as the official currency.
How much damage will the 0.1% tolerate before they get rid of Trump?
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@Richard Schumacher It is a shame, is it not, that we have to depend on the 0.1% to do the right thing?
When did we become an oligarchy?
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Many decades ago, when I was a child, I heard my father argue for the international gold standard just like Ms. Shelton. I haven’t really heard anyone argue for it in the decade-and-a-half since my father’s passing. He was an avid John Bircher and disputed the occurrences of the Holocaust and the Apollo 11 moon landing, among other things (although he was proud to be one of the first people to own a color tv on which to watch the Apollo launch). He believed in many obviously implausible, contradictory and magical things. It’s too bad he could not live to see someone in the White House with whom he could so well relate. My father would have been very optimistic about the future of the USA.
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Politicizing the federal reserve board is precisely the type of existential risk at the macroeconomic level that America's enemies are counting on Trump to produce.
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Hmm...I thought the Fed's ONLY mandate was to keep the stock market propped up using every accommodative measure possible, including cutting interest rates, infusing cash into the market through QE (direct or through repo) and, reportedly, direct purchasing of equities.
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@Zara1234 The stock market plays only a small role in the Fed's decision-making process. Federal Reserve economists are far more concerned about household debt, business investment (of private firms make up a large part), trade wars, and much more--all to keep American inflation low and employment high. In fact, the stock market enters the equation primarily in concerns about financial stability.
So, while you may not agree with the Fed's decisions, it is simply unfounded to describe their mandate as "propping up the stock market." Should Donald Trump continue to crimp the Fed's independence, this might become an issue, though.
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