In our quest for the details of what we can expect in the way of monetary policy over the next four years, we stumbled upon this little known CSPAN video dating from 2010.
In it we find now Vice President Mike Pence, Speaker of the House Paul Ryan, and economic advisor to the President Judy Shelton shell-shocked by the proximity of the financial crisis and singing the praises of the gold standard.
While one might still question just what kind of "gold standard" the two politicians have in mind, the economist seems a little more clear-headed. In response to our concern that the Trump administration might favor an SDR partially backed by gold in place of the dollar, Ms. Shelton has something very different in mind, as her article in the Wall Street Journal around the same time makes clear:
The U.S. should not replenish the coffers of a multilateral bureaucracy ...Instead, Congress should call for the IMF's dismantlement and restitution of its assets.
Zhou Xiaochuan, China's powerful central banker, has authored a proposal for international monetary reform that would replace the dollar with 'a super-sovereign reserve currency managed by a global institution.' Citing 'the inherent deficiencies caused by using credit-based national currencies,' he suggests the SDR could assume this role. In the view of Mr. Zhou, the way to enhance international monetary and financial stability is to have member countries gradually entrust their reserves 'to the centralized management of the IMF.'
Before anyone gives any credence to the notion of having the IMF take on the task of issuing a new global currency, however, we need to remember that the original Bretton Woods system worked precisely because the dollar was convertible into gold at a fixed price. And gold is real money.
Congress should just say no.Let's hope that in addition to the President, Ms. Shelton still has the ears of the Vice President and Speaker of the House. And that she can stick to her guns.
End the IMF. And then, End the Fed.