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With President Donald Trump’s two previous nominees to the Federal Reserve Board of Governors - Stephen Moore and Herman Cain - having withdrawn in the face of stiff resistance in the Senate, the president has nominated two economists - Judy Shelton and Christopher Waller - to those posts.
Waller’s nomination seems safe. He’s an insider, the current executive vice president of the Federal Reserve Bank of St. Louis.
Shelton - Hand - Resistance - Choice - Opponents
Shelton, on the other hand, is encountering some resistance because she’s an unconventional choice. Her opponents condescendingly scorn her as a “goldbug,” because of her minority viewpoint that the dollar should be backed by gold.
Greg Ip, the erudite economics writer for The Wall Street Journal, questioned whether Shelton is suitable for the position in his most recent column. (It should be noted that the Journal’s editorial page unhesitatingly supports her nomination.) Monetary policy and its political ramifications are incredibly complex, far from an exact science, and people of goodwill can disagree strongly about them. Let me say that while Ip makes some valid points, he’s off target on others, and so I disagree with the doubts he raises about Shelton’s nomination.
Ip - Statements - Contexts - Truism
Ip diplomatically starts off with two balancing statements, the first true (in certain contexts), the second an indisputable truism:
“Mainstream economists have no monopoly on truth.”
Standard - Today - A - Standard - Country
Is a gold standard “impractical”? Yes, it is today, but it shouldn’t be. A gold standard is unsustainable, thus impractical, in a country such as ours where the government doesn’t control spending and balance its budget. Gold is “honest” money. Is it “dangerous”? Yes, but only to power structures that depend on fiat money (i.e., money unbacked by anything of real nonmonetary value) for their perpetuation.
One reason why Shelton favors a gold standard is that it has a virtue that Ip acknowledged in his article:
Countries - Gold
“When all countries were on gold,...
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