07-24-2020, 03:15 PM
Quote:Conservative think tanks spent the Obama years warning darkly that monetary stimulus was “debasing the dollar.” Paul Ryan called on the country to altogether abandon discretionary monetary policy and move to a “commodity-based currency” that would serve as a kind of updated version of the gold standard. Trump himself argued that the strong stock market performance under Obama was a kind of unreal bubble induced by low interest rates. Since Trump took office, mainstream conservatives have been quiet on this front. And Trump has made it clear — over and over again — that he wants and expects low interest rates to support his reelection bid. In early April 2019, he laid out a plan to gain control of the Fed by appointing Cain and Moore to two board vacancies.Judy Shelton’s nomination to the Federal Reserve Board, explained - Vox
Cain was a plainly unqualified pick with little relevant experience and a scandal-plagued past. He took himself out of the running a couple of weeks after the story of his potential nomination broke, citing the idea that he could earn more money — and skip the “cumbersome” vetting process — by avoiding government service. That left Moore, whose nomination collapsed after the revelation of a long series of misogynistic writings offered a plausible pretext for Senate Republicans to spike him.
So now we get Shelton, the American director of the European Bank for Reconstruction and Development who served as an adviser to Ben Carson’s 2016 before hopping on the Trump train. Shelton is the author of the 2009 book Money Meltdown, which warned that the global monetary system was dangerously inflationary and urged the world to convene a new international conference to return to the gold standard and restore “sound money.” In reality, inflation has been persistently low since 2009 in the US, Europe, Japan, and several smaller developed countries. During a 2016 interview, however, she criticized former Fed chairs Ben Bernanke and Janet Yellen for keeping interest rates too low for too long, saying, “I would have gotten back to normalization of interest rates much more quickly.”
Yet by 2019, Shelton was mysteriously telling the New York Times that she thinks interest rates are too high and would support cutting them back to the near-zero levels that she denounced as too stimulative when the unemployment rate was much higher than it was last year. Perhaps most tellingly, when the Financial Times interviewed her for a May 2019 article about her monetary policy views, she chose to do the interview at the Trump International Hotel in Washington, DC. She also suggested that Mar-a-Lago, Trump’s private resort in Florida, might be an ideal place to host her proposed international conference on the gold standard. She was saying, in other words, that she’s a Trump loyalist beyond all else. And while on one level she should be more confirmable than Moore or Cain, having already received Senate confirmation for her current lower-profile job, she poses all the same risks of politicization and lost independence as they did. But Republican senators seem increasingly unbothered..
Whether Shelton will succeed where Cain and Moore failed is unclear, but she does present the same problem that’s bedeviled Trump: He wants to keep interest rates low so that the economy soars and helps him win reelection in 2020. He certainly could find a well-qualified person with a reputation for integrity who holds this principled view on interest rates, but he doesn’t seem to want well-qualified, principled people. Instead, Trump seems to want loyalists who will support whatever it is he happens to say or want at the moment. And Shelton — who spent the Barack Obama years railing against the Federal Reserve’s efforts at economic stimulus but now says she favors low interest rates to stimulate the economy — very much seems to be cut from that cloth.