President Trump Fed pick’s push for gold troubles lawmakers

July 28, 2019

Washington (July 28)  Decades after the U.S. abandoned its policy of tying the dollar’s value to gold, President Donald Trump’s latest pick for the Federal Reserve, Judy Shelton, wants to bring it back into style.

Shelton’s longtime promotion of a return to a gold standard is so out of the mainstream that it’s likely to be an obstacle on her road to Senate confirmation. Yet it’s only one of several ideas she has espoused that would redefine — and diminish — the Fed’s role in the economy. And that matters because, while Shelton would be only one of seven Fed governors if confirmed, she could be in line to chair the central bank if Trump wins reelection.

A gold standard would make deficit spending much more expensive. It would limit the central bank’s ability to take the kind of extraordinary measures that it did during the financial crisis to stop the economy from going into freefall. And it would link the Fed’s interest rate decisions to gold market fluctuations rather than to its current goals of fighting inflation and maximizing employment.

“The gold standard would probably shatter a lot of people’s dreams around the world right now,” said Sen. Richard Shelby (R-Ala.), a key member of the Banking Committee, which will vet her nomination. “There was a reason to get off of it.”

“I’ve gotta see where she’s at on a lot of other stuff, but this is not necessarily something that I would give her high marks for,” added Sen. Jon Tester, a centrist Democrat who also sits on the Banking Committee and has voted with the GOP majority on some important legislation.


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