Wednesday, July 03, 2019 11:04:31 AM
Mike Shedlock Mike Shedlock |Posted: Jul 03, 2019 9:12 AM
https://finance.townhall.com/columnists/mikeshedlock/2019/07/03/trump-fed-nominee-says-yes-to-0-interest-rates-and-yes-to-gold-n2549463
Return to Gold Standard
In addition to wanting 0% rates, Shelton seeks a return to the gold standard and has written that central banks ‘are the world’s biggest currency manipulators’
Her Own Words
Please consider Judy Shelton in Her Own Words.
Monetary Policy
Ms. Shelton argues that central banks’ interest-rate moves cause economic disruptions by manipulating currencies in ways that affect global trade.
Curiously, she must think that 0% rates do not cause economic disruptions.
CARTOONS | CLOSE TO HOME
VIEW CARTOON
When asked in a recent interview with the Journal’s opinion page whether the Fed should cut interest rates now, she said, “The answer is yes,” a view that aligns with Mr. Trump’s recent public comments. She said, “When you have an economy primed to grow because of reduced taxes, less regulation, dynamic energy and trade reforms, you want to ensure maximum access to capital.
Monetary Stimulus
Ms. Shelton opposed the Fed’s efforts to stimulate the economy in the aftermath of the recession, arguing that the central bank’s low interest rates and asset purchases enriched the wealthy while putting everybody else at risk of a sharp increase in inflation or a new asset bubble. “It is ironic that concern for wage earners serves to justify money pumping by the Fed that ends up largely benefiting people who have hefty stock-market portfolios, especially at a time when “income inequality” is a major White House theme,” she wrote in a 2014 Journal opinion article published after then-Fed Chairwoman Janet Yellen had addressed Congress. “Perhaps one of our elected representatives on Capitol Hill can explain to Ms. Yellen that when the low-grade fever of perpetual inflation becomes a full-blown economic malady—when the next financial bubble bursts with horrible consequences for the real economy—average Americans will pay the biggest price.”
Once again this is peculiar because 0% interest rates also cause bubbles.
The Gold Standard
Ms. Shelton has repeatedly called for a return to the gold standard, a monetary regime that pegged the value of the dollar to the value of gold. That would make it impossible for the Fed to affect the strength of the dollar through monetary policy, she writes. “For all the talk of a “rules-based” system for international trade, there are no rules when it comes to ensuring a level monetary playing field. The classical gold standard established an international benchmark for currency values, consistent with free-trade principles.
Sorry Judy. You cannot peg the dollar to the price of gold. It does not work.
You can however, make the dollar redeemable in a fixed amount of gold as long as these conditions hold.
The dollar is 100% gold back.Banks cannot lend money into existence.
There is no fractional reserve lending nor MMT madness.
Banks cannot lend money for terms that exceed deposit rights (e.g. Issuing a 2-Year CD and making a loan for 10 years)
The Dollar
Ms. Shelton favors a hard dollar, by which she means one whose value doesn’t fluctuate depending on monetary policy.
Sorry Judy, this is also impossible as stated. The three conditions above again apply.
Think Back to Nixon
For those who do not understand why you cannot peg the dollar to the price of gold, think back to Nixon.
He ended convertibility of dollars to gold because the Bretton Woods agreement pegging an ounce of gold at $35 blew sky high in a mass flight of gold to France.
You cannot have a fixed price of gold with budget deficits and monetary printing out the wazoo.
You can, under strict conditions noted above, allow a dollar to represent a fixed amount of gold. That's the correct way.
The dollar will then buy what it does. Yes, it will be very stable.
Convoluted Thinking
Shelton has clearly convoluted thinking, but arguably she is no worse than anyone else on the Fed.
I welcome the choice if for no other reason than to get gold back into discussion.
https://finance.townhall.com/columnists/mikeshedlock/2019/07/03/trump-fed-nominee-says-yes-to-0-interest-rates-and-yes-to-gold-n2549463
God Bless
Recent NGT News
- NOVA COMPLETES ACQUISITION OF ROYALTY ON NEWMONT'S SADDLE NORTH DEPOSIT IN BRITISH COLUMBIA • PR Newswire (Canada) • 07/13/2023 11:00:00 AM
- L'Organisme canadien de réglementation des investissements permet la reprise de la négociation - NGT • PR Newswire (Canada) • 06/08/2023 07:46:00 PM
- Canadian Investment Regulatory Organization Trade Resumption - NGT • PR Newswire (Canada) • 06/08/2023 07:44:00 PM
- Suspension de la négociation par l'Organisme canadien de réglementation des investissements - NGT • PR Newswire (Canada) • 06/08/2023 06:50:00 PM
- Canadian Investment Regulatory Organization Trading Halt - NGT • PR Newswire (Canada) • 06/08/2023 06:47:00 PM
NanoViricides Reports that the Phase I NV-387 Clinical Trial is Completed Successfully and Data Lock is Expected Soon • NNVC • May 2, 2024 10:07 AM
ILUS Files Form 10-K and Provides Shareholder Update • ILUS • May 2, 2024 8:52 AM
Avant Technologies Names New CEO Following Acquisition of Healthcare Technology and Data Integration Firm • AVAI • May 2, 2024 8:00 AM
Bantec Engaged in a Letter of Intent to Acquire a Small New Jersey Based Manufacturing Company • BANT • May 1, 2024 10:00 AM
Cannabix Technologies to Deliver Breath Logix Alcohol Screening Device to Australia • BLO • Apr 30, 2024 8:53 AM
Hydromer, Inc. Reports Preliminary Unaudited Financial Results for First Quarter 2024 • HYDI • Apr 29, 2024 9:10 AM