Why Is the Fed So Afraid of Judy Shelton?
In spite of fierce opposition from numerous US Senators—and countless screeds against her issued by pundits and establishment economists—Judy Shelton still has a chance of being confirmed to the Fed’s Board of Governors this week.
The Associated Press reported yesterday what in spite of three GOP Senators coming out against Shelton, she may still win confirmation in a close vote.
But why so much opposition? On one hand, some oppose her because she reportedly opposes the Fed’s alleged and generally mythical “independence.”
I suspect the real opposition to Shelton stems from her past comments about the role of the Fed, and since she has, in the horrified words of economist Laurence Kotlikoff: “advocated for a return to the gold standard … she has even questioned the need for a central bank at all.”
The reality of what policies Shelton would actually push if ensconced in the Fed cannot be known at this time. But it is clear that the Fed’s backers don’t want to even risk it. Although Kotlikoff, for instance, rather unconvincingly claims he values a “diversity of viewpoints” on the Fed board, this “diversity” must fit into a very narrow window of acceptable opinion.
But this raises a question: so what if a solitary member of the Board of Governors takes views seen as unorthodox by the technocrats who currently control the Fed’s board?
Before we can answer this question, we must first take a what the Fed and its backers consider to be “orthodox” policy.
The Economists’ Technocratic Facade
We’ve seen it at work in recent years. It consists of repeatedly ratcheting up the central bank’s asset purchases, funded with newly created money. This is done to prop up banks and other financial institutions deemed “too big to fail.” The orthodoxy consists of keeping interest rates at rock bottom levels, also accomplished through printed-money-financed asset purchases. This is done both to punish savers and to promote additional lending in the name of inflating prices so as to achieve the fabled two-percent inflation standard. These ultra-low interest rates, of course, are also lauded by the regime which can engage in more and more deficit spending so long as interest on the national debt remains low.
The technocrats on the Fed board, posing as “scientific” economists, have created a façade in which they are data-driven, and committed to certain principles of economic analysis.
The reality, however, is something far different. The real strategy is simply one of repeatedly hitting panic buttons every time it appears a new economic crisis is on the horizon. This occurred with the financial crisis and Great Recession. It began again with the repo crisis in late 2019. And it was taken to new unprecedented level
Article from Mises Wire