The Democrats may be celebrating this evening their success in at least temporarily blocking the Senate from voting on the nomination to the Federal Reserve of Judy Shelton. It might not be the end of the line, though. For it looks like Ms. Shelton has the votes ó if they can only get to the Senate floor before the end of November. Senator McConnell and the White House seem determined to stick with it, and we certainly wish them luck. Itís an important moment in Americaís long debate over monetary reform.
The vote in the Senate this afternoon against ending debate on Ms. Shelton was 50 to 47. Mr. McConnell switched to the Democratic side at the last moment, a maneuver that preserves his right to move to reconsider, which he promptly did. Two other Republicans were quarantining, either because of Covid (Senator Grassley) or because of exposure (Senator Rick Scott). If they can get back, the odds on reconsideration are for a vote of 50 to 49 in favor. Thatís without Vice President Pence having to come back from vacation to break a tie.
Itís amazing to us that three Republican senators ó Susan Collins, Mr. Alexander, and Mitt Romney ó have fallen away on this issue. Ms. Sheltonís positions on the Federal Reserve, after all, strike us as fitting in fine with the GOPís, as outlined in the party platform on which Mr. Trump stood in 2016. The platformís most important feature relating to the Fed is the establishment of a monetary commission ó similar to one President Reagan and Congress convened ó to consider the feasibility of a metallic basis for U.S. currency.
We suspect Ms. Shelton supports that, as well. And why not? Weíre coming up on the 50th anniversary of fiat money, meaning money that is not defined in law and is not backed with specie, such as gold or silver. How does the era of fiat money compare to, say, the era of the gold-exchange standard that obtained during Bretton Woods? That was the worldís monetary system between 1945 and 1971. America redeemed dollars held by foreign governments at a 35th of an ounce of gold.
The record of that period ought to be the envy of Democrats as well as Republicans. Unemployment averaged something like 4.6%. The much-discussed inequality rate, which economist Thomas Piketty made famous, was low. As was the personal bankruptcy rate, on which Senator Warren is an expert. All three indicators started soaring after we entered the era of fiat money. Why in the world would either party rule out of consideration for the Fed a nominee who has studied this for a whole career?
Itís easy to see of what doctrinaire Democrats are so scared. The vast deficits and government debts Congress has been racking up would be harder to take on under a sound money system. Itís much harder to comprehend the opposition to Ms. Shelton by the several members of the GOP who are voting against her or failing to vote at all. Are they going to stand by while this nominee fights for mainstream Republican principles? Are they prepared to let a Republican nominee go down if Covid sidelines two confirmation votes by GOP colleagues?
We donít question anyoneís good faith. It strikes us, though, that the better part of valor come reconsideration would be for Ms. Collins and Mr. Romney either to support Ms. Shelton or to abstain, as Mr. Alexander effectively did by being out of town Tuesday, rather than vote against Ms. Shelton. Abstaining would enable them to make their point but offset the fact that Messrs. Grassley and Scott may have to quarantine. Their party is about to enter some difficult years of testing. The period will be, however exhilarating, hard enough politically without members of the Republican Party turning against its own nominees.