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High Stakes for 2016: Judy Shelton for Fed Chair to Make America Great Again

The Federal Reserve headquarters in Washington, DC (photo credit: Dan Smith, CC BY-SA 2.5)

In The Daily Caller, freelance writer Johannes Schmidt writes “On November 8th I’m Voting For Our Next Fed Chair.” It’s an especially astute column.

While many commentators correctly have focused on the effect of the election outcome on appointments to the Supreme Court, too few have focused on the next president’s appointments to the Fed. This also is of capital importance. Schmidt writes:

The policies implemented by the Fed are especially important (albeit often insidious) because money is our society’s most basic medium of exchange. The manipulation of its value affects every day citizens both in the short and long terms. Decisions taken by central banks–be it to toy with negative interest rates, engage in endless rounds of quantitative easing, or pay banks to keep loanable funds in sterile depository accounts—inevitably impact the value of the dollars we use to buy groceries today or pay off our mortgages over the next couple of decades.

Perhaps more daunting still is the fact that a lack of rules or central bank predictability makes international trade and cooperation difficult, at best. Without central bank coherency, monetary disorder will continue “to undermine the logic of competitive markets and the notion of free trade,” as was previously noted in The Hill.

But do our candidates understand the gravity of their 2018 Fed chief appointment? Are they satisfied with our current discretionary regime and adherence to the failed dual-mandate, or do they think that a return to a rules-based monetary system is critical?

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Are Fed Policies Hurting the Middle Class?

The Federal Reserve headquarters in Washington, DC (photo credit: Dan Smith, CC BY-SA 2.5)

In his post earlier this week on Chris Christie’s tax reform remarks in New Hampshire, Steve Wagner drew attention to some interesting comments the governor made on the Federal Reserve.  To wit:

The Fed’s easy money policies and the president’s anti-growth policies have made the rich even richer and made our middle class work longer and harder for less pay and less promise for their future.

Steve writes that Christie’s criticism of the Fed may have been motivated by his sensing an opportunity to seize on the issue, given other candidates’ lack of attention to it.  This may very well be the case.  However, intentionally or not, Christie may also have put his finger on the most important economic issue affecting the middle class which is not (as yet) being widely discussed this campaign cycle.

On Wednesday, Dr. Judy Shelton, an Atlas Network senior fellow, wrote a column for The Hill validating Christie’s Fed claims with some rather compelling observations:

It’s been nearly six years since the recession officially ended in June 2009. Still, the Fed continues to pursue its zero-interest-rate policy in the name of supporting the recovery, even as the negative aspects of this approach are imposing significant economic costs.

According to a report issued in March by Swiss Re, the world’s second-largest reinsurance company, the Fed’s policy of financial repression has cost U.S. savers roughly $470 billion in lost interest income. Other unintended consequences described in the report include “crowding out viable private markets” and “lowering the funds available from long-term investors to be used for the real economy.”

[…]

So in crafting its monetary strategy to stimulate economic growth, it seems the Fed has given short shrift to the middle-income Americans who fuel the private sector — the true engine of productive economic growth.

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