February 23, 2019

Dr. Judy Shelton Calls on Trump to promote monetary system reform “linked in some way to gold”

By Larry White

Dr. Judy Shelton was an adviser to the Trump campaign back in 2016 and at one point was suggested as a possible appointee to the Federal Reserve. Instead, she has accepted the position of US Executive Director for the European Bank for Reconstruction and Development. 

Dr. Shelton has long been an advocate for monetary system reform based on linking it in some way to gold, but perhaps in a more modern way. She repeats this call in a new paper published in the Spring edition of the Cato Journal. Below are a few excerpts. You can read the full paper here.

“How often do we hear references to the notion that we live in a
rules-based global trading system? Addressing the World Economic
Forum at Davos in January 2017, British Prime Minister Theresa
May praised liberalism, free trade, and globalization as “the forces
that underpin the rules-based international system that is key to our
global prosperity and security” (Martin 2017). Chinese President Xi
Jinping likewise extolled the virtues of a rules-based economic order
at Davos, winning widespread praise for defending free trade and
globalization (Fidler, Chen, and Wei 2017).
But could someone please explain:

What exactly are those rules?  . . . . .

. . . . .

“Today there
are compelling reasons—political, economic, and strategic—for
President Trump to initiate the establishment of a new international
monetary system.”

. . . . .

“The new approach that emerged in the vacuum left by the dissolution
of Bretton Woods was to have no international monetary
system—that is, no rules or coherent mechanism for maintaining
exchange-rate stability among national currencies.”

. . . . .

“Just as the United States rose to the challenge of providing inspiration
to desperate nations (at Bretton Woods) with a promise to establish stable and
trustworthy monetary rules to undergird international commerce in
compliance with free trade principles, the needed initiative falls
once again to America. And just as then, the advantages of a sound
money approach to ensure a level playing field that maximizes the
rewards from true competition—by preventing currency manipulation
through government intervention—will serve our own best

. . . . .

“If the United States does nothing to restore a rules-based
approach to international monetary relations, our values come into
question. We lose credibility by failing to challenge an international
monetary anti-system that condones cheating by governments and
central banks. We acquiesce to the fiction that enforceable rules exist
to ensure against currency manipulation—even as we complain
about trade imbalances contrived through exchange-rate targeting.”

. . . . .

“President Trump’s economic imperative now is to initiate reform
both at the Federal Reserve and in conjunction with the international
community to redefine monetary relations.”

. . . . .

“What’s needed is a comprehensive approach for linking the money
supply to increases in productive output—the restoration of sound
money principles for economic growth. It’s time to reassert the primary
functions of money as (1) a medium of exchange, (2) a unit of
account, and (3) a store of value.”

My added comments: When President Trump was first elected and Dr. Shelton was mentionned as a potential appointee to the Federal Reserve, it seemed as though Trump might have some interest in a return to gold in the monetary system. As time passed, it seemed as though nothing along those lines was in his mind.

Now we have Dr. Shelton once again calling on President Trump to think about monetary system reform “linked in some way to gold” (see page 387). This time she is speaking as a voice working inside the Administration. So I felt this paper should be featured to make readers aware of this. 
As I follow this situation over time, it feels like that I see a number of proposals for monetary system reform out there sort of competing for attention in the event that something comes along to disrupt the current system. So my goal is to make readers aware of the serious proposals I see out there that could be put forward at some point in the future. I’ll add the link to this paper to the page of monetary system reform ideas that I keep archived here on the blog.

This article (Dr. Judy Shelton Calls on Trump to promote monetary system reform “linked in some way to gold”) was originally published on The View from Our White House and syndicated by The Event Chronicle


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