President Trump has nominated Judy Shelton for a position on the Federal Reserve Board of Governors. The White House described Shelton’s experience:
Dr. Judy Shelton most recently served as United States Executive Director of the European Bank for Reconstruction and Development. The United States Senate confirmed her by voice vote in 2018. Dr. Shelton previously served as Chairman of the National Endowment for Democracy in 2017, having served as Vice Chairman from 2010 to 2014 and on the board from 2005 to 2014. She was also a founding member of Empower America and a staff economist for the National Commission on Economic Growth and Tax Reform chaired by Jack Kemp from 1995 to 1996. Dr. Shelton began her career at the Hoover Institution at Stanford University, serving from 1985 to 1995. She is author of The Coming Soviet Crash: Gorbachev’s Desperate Pursuit of Credit in Western Financial Markets and Money Meltdown: Restoring Order to the Global Currency System. Dr. Shelton earned her B.S. from Portland State University, and her M.B.A. and Ph.D. in Business Administration from the University of Utah.
Despite her long and diverse experience, Shelton is being blackballed by GOP senators who seem reluctant to allow anyone outside the mainstream of economic thought on the Board of Governors. Democrats are backing up these rogue GOP senators, either because they agree or simply to annoy the President. The Hill’s Alexander Bolton and Sylvan Lane report that while some senators have told them Shelton’s nomination will be pulled, the White House has maintained its support for the nominee. The main criticism of Shelton by the senators is her support for the gold standard, an economic system the United States used for most of its history. Bolton and Lane report:
Lawmakers from both parties criticized her at the hearing for supporting the gold standard, reversing her views on interest rates after Trump’s election and defending the president’s attacks on the Fed and its chairman, Jerome Powell.
“I don’t claim to be in the mainstream of economists,” Shelton said in her defense.
She vowed to “strengthen the discussion” and work closely with the Fed’s leaders.
Asked to rate Shelton’s performance Thursday, Sen. Richard Shelby (R-Ala.), a senior member of the Banking Committee, replied tersely: “She performed.”
“I have a lot of concerns, especially even after the hearing. I’m thinking about it, talking to some of my colleagues,” he said.
Shelby said Shelton’s unorthodox views on economic and monetary policy are among his “primary concerns.”
“I’m not satisfied that she’s mainstream at the moment,” he said. “I’d like to support her. I’d like to support the president’s nominees. I haven’t always done that. I think the Fed should be independent and we should have mainstream people on there, and I don’t think she’s a mainstream economist,” Shelby told reporters.
Shelby, however, declined to say how he would vote or speculate on what would happen to Shelton’s nomination.
Asked when the nominee might receive a confirmation vote, Shelby said, “I don’t know.”
Republicans control 15 seats on the Banking Committee, while Democrats control 13.
If two GOP lawmakers vote against Shelton, her nomination will be defeated in committee.
So far, Shelby and Sen. Pat Toomey (R-Pa.) have raised serious concerns with her nomination. A third member of the panel, Sen. John Kennedy (R-La.), is undecided.
Toomey on Thursday warned that Shelton’s advocacy for cutting interest rates to prevent the dollar from strengthening any further, which could hurt exports, is a risky strategy.
“That’s a very, very dangerous path to go down. This beggar-thy-neighbor mutual currency devaluation is not in our interest, and it is not in the mandate of the Fed to pursue it,” Toomey said.
Other Republican senators — even lawmakers not on the Banking Committee — have raised concerns about Shelton’s views.
“I share Sen. Shelby’s concern,” said Sen. Pat Roberts (Kan.), when asked about the prospect of returning to the gold standard.
Shelby on Wednesday said returning to the gold standard “is kind of like the barter system.”
“Hard to get out of a recession with that,” he said. “Not enough gold in the world. Our [gross domestic product] GDP is worth so much more than gold.”
Shelby’s “barter” remark shows his complete ignorance of how the gold standard actually works. It’s no wonder he can’t come to support a Fed nominee who argues for the gold standard, he doesn’t even know what it is.
Given the herd mentality of the Senate and the momentum against Shelton’s outside-the-box views, her nomination will probably be blocked. This is the thanks she gets for believing in sound monetary policy.
