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The US finally abandoned the gold standard in 1971. Since then no mainstream expert has thought it was a good idea to go back. Incredibly, in February 2009, at the height of the financial crisis and Great Recession, Judy Shelton wrote: “Let's go back to the gold standard.” 1/6
The quality of ideas matters. Expertise counts. Evidence and historical experience—both domestic and foreign—carry weight. These are some of the values at stake in Shelton’s nomination to serve as a member of the Federal Reserve Board. 2/6
There is no way to predict with confidence how the stance of monetary policy would have adjusted to the unfolding COVID-related economic collapse if the US had been on the gold standard at the beginning of this year. 3/6
But there is no guarantee that the Federal Reserve would have moved—as they did—with historic speed and force to ease financial conditions as much as they could; and no guarantee that the Fed would have introduced emergency programs to restore financial market functioning. 4/6
If gold had been at the center of the monetary system, the US and global economies might well have driven over a cliff. Shelton’s support for the gold standard is not the only reason why she should not be confirmed by the Senate, but it is high on the list. 5/6
