The Shelton Monetary Plank

Economist Judy Shelton’s new book, “Good as Gold,” will hit shelves as the presidential race enters its final stage with neither candidate having made an issue of monetary reform. Voters, though, are frustrated with the Biden-Harris legacy of inflation. So — with the dollar having collapsed to under a 2,600th of an ounce of gold — Ms. Shelton’s book is a timely reminder of the role of sound money in any pro-growth agenda.Ms. Shelton puts front and center the connection between today’s economic woes and our 53-year-old experiment with fiat money. Even as economic statistics and home prices advance steadily and the stock market surges, she observes, “the growth of financial assets” is being “measured in diminished monetary units.” That means Americans are in effect treading water economically — an insight that would appear ripe to put before the voters. After all, while President Trump’s platform gives top billing to the goal of defeating inflation, and promises a return to the low-taxes and deregulation that sparked low-inflation growth, he has yet to advance the kind of pro-sound money vision that, say, Senator Cruz did during the 2016 contest. Vice President Harris promises to repeat the high-tax, high-spend, pro-regulation policies that fueled today’s inflationary wave in the first place.To achieve “real economic growth,” Ms. Shelton explains, a “stable monetary foundation” is required. “Uncertainty over the value of money,” which sums up today’s climate, leads to “financial dysfunction and economic dislocations.” Yet in the gold standard’s heyday, from the late 1870s to 1914, Ms. Shelton notes, “investors willingly purchased bonds issued by railroad companies with maturities” of 50 and 100 years, a testament to economic stability.Sound money isn’t merely a practical imperative though. Ms. Shelton articulates, as well, the philosophical arguments for honest money. She points to Alan Greenspan’s insight that “gold and economic freedom are inseparable.” The effort to restore sound money, she observes, “does not constitute a fringe movement.” She explains that “having access to dependable money should be deemed a basic human right that deserves broad support.”When a nation’s circulating currency is tied to specie at a fixed rate by law, as it was in America until 1971, that means “money provides a reliable pricing tool,” Ms. Shelton explains, and “an unchanging standard for measuring value.” In the absence of that link to gold, the soaring asset valuations and inflation that follow lead not to tangible prosperity, but what these columns have described as “the illusion of wealth,” as Senator Bennett of Utah put it decades ago.So how to “unleash the power of sound money?” Ms. Shelton calls for a gradual restoration of a role for gold in the global economy as a “common benchmark” to prevent the kind of currency distortions that tilt the field of world trade. She envisions “a stable exchange rate system anchored by gold-convertible sovereign debt instruments.” Such gold bonds would require America to disavow “fiscal and monetary policies that debase the value of the dollar.”“Linking the dollar’s value to gold,” Ms. Shelton observes, would offer “the ultimate simple rule for regulating the money supply in accordance with individual rights and free-market principles.” The prerequisite is “a bold political leader” who can “challenge the presumptuous attitude” that working Americans “can be tricked into believing their wages are rising through the inflationary ruse.” Ms. Harris and Trump can consider the gantlet to be thrown down.

The Shelton Monetary Plank

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