In early July of 2019, President Trump announced his intention to nominate Judy Shelton to the Federal Reserve Board.
Shelton, a longtime sound money advocate and current economic advisor to the Trump Administration faced a brutal confirmation hearing last week.
What’s at stake is not only her Fed nomination but more importantly, the prospect of sound money advocacy within the narrow corridors of the Federal Reserve Board.
Not surprisingly, Shelton was hammered hard, being the controversial figure that she is. Think about it:
- She’s nominated to participate in the very institution that she’s railed against for years.
- She has been a harsh critic of monetary policy and interest rate manipulation–pretty much, the Fed’s main operation.
- And she’s a strong proponent of revising and re-establishing the gold standard, something that can potentially usurp the Fed’s power and monopoly over money.
Most of the critics were Democrats, though there were a few Republicans who also voiced concerns and opposition to Shelton’s confirmation.
Throughout the hearing, members of the Banking, Housing and Urban Affairs Committee accused Shelton of holding “radical” economic views.
Radical? Considering Article 1 Section 10 of the US Constitution–” No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts–perhaps “conservative” might be a better description?
But nevertheless, like all politicians that comprise the Washington “swamp,” the status quo is the name of the game.
The views under scrutiny and mostly opposed were drawn from Shelton’s writings, her work at economic think-tanks, and her time as a senior advisor at TheGoldStandardNow.org.
She was accused of advocating a return to the gold standard, for wanting to abolish FDIC insurance as she believes it encourages moral hazard in banking culture, and for opinions that the Fed should not be completely independent but instead work closely with Congress and the White House.
Shelton also has strong views on the National Debt, calling the government deficits run up by President Obama following the mid-2000s financial crisis as “unconscionable.”
While at the same time–and they did call her on it–Shelton has advocated for the U.S. to consider following other countries when they devalue their own currencies. To this, they accused her of opportunistically “flip-flopping” her position.
To be fair, during the confirmation hearings, Shelton did show a softening of or a shift in some of her views, specifically on the Fed’s independence and FDIC insurance.
But this only led members of the committee to question her sincerity. “The problem is, you’ve got a lot of writings, strong writings of a very political nature, and now your responses are totally inconsistent with the positions you’ve taken in the past,” said Sen. Chris Van Hollen, (D-MD). “The only thing that has changed is who’s in the White House.”
So not only was Shelton a controversial pick, to begin with, her shift in views only added more fuel to the fire upon which the committee members attempted to roast her credibility.
Another Democratic Senator, Doug Jones (D-AL) echoed this sentiment saying he believed Shelton had a “confirmation conversion” and that once she was confirmed, “what we will get is the authentic Judy Shelton.”
As sound money advocates ourselves, we wouldn’t mind such an outcome, despite the insincerity of the tactics she’d use to get there. But since when has politics been the domain of the sincere?
As we said earlier, it was not entirely Democrats who seemed to have concerns about Shelton’s past views at the hearings.
Sen. Richard Shelby (R-AL) asked Shelton pointed questions about whether her views make her “an outlier” and “not mainstream.” Shelton responded that she simply considered herself an “outside the box thinker.” So now we have a volley of rhetoric.
The vote now goes to the committee where Republicans have a one-seat majority.
With the vote expected to go along party lines, any Republicans voting against Shelton will most likely mean she will not make it to a full Senate vote.
Three Republican Senators, Shelby, John Kennedy (R-LA), and Pat Toomey (R-PA), have not indicated which way they plan on voting.
This is not the first time that President Trump’s Federal Reserve nominees have run into roadblocks during the confirmation process.
Prior to nominating Shelton and a regional St. Louis Federal Reserve official, Christopher Waller, his last two nominees were forced to withdraw themselves from considerations. Herman Cain and economic writer and TV pundit Stephen Moore withdrew their names from consideration citing lack of Senate support.
So now, it’s a “wait and see” moment. If Shelton’s confirmation doesn’t pan out, we can expect more of the same from the Fed.
But if Shelton does get confirmed, then we can see the beginnings of a potential restructuring of monetary policy. We may even begin to see a re-emergence, however small, of a gold standard.
And if this does happen, the repricing of the dollar to gold can potentially become something of a cataclysmic event–one in favor of gold and all investors holding the yellow metal.