Trump’s next Fed nominee wants a gold standard. It’s an idea past its time.

The Washington Post
The Federal Reserve building in Washington Post James Alexander Michie

The Federal Reserve building in Washington. (Chris Wattie/Reuters)

It is important to note that for January of 1986, Ronald Reagan entered a meeting of his economic advisory council and relieved inflation. Previously I used to pay $ 50 for a suit, however, now, $ 50 will hardly be cleaned. As a culprit, Reagan identified the idea of ​​a fiduciary currency, a currency that is not backed by gold or other merchandise, and that, therefore, can be printed at will, in unlimited quantities.

As a result, a question arises: Is it possible for simple human beings to decide how much money should be spent? Likewise, the way the president saw things, the remedy for inflation was to return to a simpler time, when money was gold and mortals could not manipulate it. That being the case, if Reagan’s nostalgia for the gold standard was curious, the survival of this sentiment in 2019 is even more disconcerting. From the point of view of the 1980s, the irresponsible response of the Federal Reserve to the stagflation of the Ford and Carter years was still a recent memory. However, it is necessary to emphasize that from today’s perspective, in contrast, the Fed has a remarkably good track record in delivering price stability. Despite this, the absence of disease has not prevented the successor of Reagan yearning for a cure.

Candidate almost confirmed

Currently, Trump seems ready to nominate Judy Shelton, who is an advocate of the gold standard, to serve as one of the seven governors on the Federal Reserve Board. It should be noted that unlike the last two candidates in which Trump seemed interested, Shelton already has a job confirmed by the Senate. Consequently, it could be said that his path to confirmation may be easier.

Now, it is necessary to indicate that although Shelton’s only vote would not alter Fed policy, its elevation would give voice to a non-conformist perspective, encouraging other gold believers to speak more freely, as well as Senator Ted Cruz (R-Tex.) Or Senator Rand Paul (R-Ky.). In this way, Shelton makes two arguments for the gold standard. She suggests that tying the dollar to the more or less fixed supply of precious metals would prevent the Federal Reserve from evoking money out of thin air. However, the last decade has witnessed a transcendental experiment in monetary evocation, and the verdict is in force.

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Source: Sebastian Mallaby | Washington Post

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