Judy Shelton Gets a Green Light For Vote by Senate

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The New York Sun

The vote of the Senate Banking Committee to confirm Judy Shelton for a governorship of the Federal Reserve marks an important step in the right direction for our central bank. It was a party-line vote, but it sends the nomination to the floor with a favorable signal — amid a Covid crisis that has put great strains on the economy. The Washington Post reckons the nomination “will likely be assured through a vote by the full Senate.”

We certainly hope so, though we take nothing for granted. As the vote neared in the Banking Committee, there was a flurry by the Democrats to try to reopen the debate on Ms. Shelton within the committee. “The last thing we need right now,” said Senator Sherrod Brown, the ranking minority member, “is more price volatility and instability that will only end up hurting working families and businesses more.”

Price volatility? One has to pinch oneself to remember that as Senator Brown was speaking, the value of the Federal Reserve’s one-dollar electronic irredeemable paper ticket note was plunging yet again — to less than an 1,840th of an ounce of gold. That means that the value of the scrip America’s “working families” use as their money is off 35% since President Trump acceded to office. It’s nigh the weakest dollar in history.

Which brings us back to Ms. Shelton. Were she confirmed as a governor of the Fed, we’re confident, she’d been a completely collegial and knowledgeable member of the Fed board and its committees. And extraordinarily valuable should the Fed get to the point — which we hope it will — where it starts to look up from tactics and begins to focus on the strategic question of the merits of a system of fiat money.

Contrary to nearly two centuries of American law, the dollar is no longer defined by statute today. That ended in the 1970s. At some point, we predict, the Fed will want to take its own look at whether that was wise. It doesn’t make any sense for Congress to fret about this. For it is to solely the Congress that the Constitution grants the power to coin money and regulate its value in the first place.

Meaning, Congress, as a matter of constitutional law, gets the final say. So the way we think of the Shelton nomination is as a modest step in the right direction. It would add to those who govern our monetary policy a brilliant and exceptionally articulate individual who has been thinking, and writing, about the question of money for years and whom the Congress is finally getting to know.

Ms. Shelton quoted the Constitution at length during her testimony before the Banking Committee. She spoke of money as a standard of value. Then, in what may become famous words, she said: “I think that money has to work the same for everyone in the economy, and it’s important that it serve that purpose as a reliable measure, so that people can plan their lives.” In a sense, she said, it’s a “moral contract.”

We don’t often hear that kind of talk in the discussion of monetary policy in America. We’d like to think it’s one reason the Banking Committee chairman, Senator Crapo, brushed aside efforts to relitigate the nomination of Ms. Shelton. It was a leaderly move. We wish him and Ms. Shelton luck as the nomination is taken up in the full Senate. It couldn’t be called for a vote at a more apropos time.


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