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Shelton the Charlatan

Like most of US President Donald Trump's earlier picks for the US Federal Reserve Board, Judy Shelton has no business even being considered for the job, let alone winning the support of self-respecting conservatives. But in the Trump era, up is down, and quackery is the new expertise.

BERKELEY – Back in September 1994, the Nobel laureate economist Milton Friedman actually wrote about one of US President Donald Trump’s current nominees to serve on the Federal Reserve’s seven-member Board of Governors. “In a recent Wall Street Journal op-ed piece,” Friedman observed, “Judy Shelton started her concluding paragraph: ‘Until the US begins standing up once more for stable exchange rates as the starting point for free trade …’” Stopping there, Friedman noted that, “It would be hard to pack more error into so few words.”

“A system of pegged exchange rates, such as the original [International Monetary Fund] system or the European Monetary System,” Friedman went on to explain, “is an enemy to free trade. It is no accident that the 1992 collapse of the EMS coincided with the agreement to remove controls on the movement of capital.” In Friedman’s view, the idea that monetary policymakers should turn away from the internal balance and focus instead on preventing market-driven exchange-rate movements was a recipe for disaster. Such an approach would require all economies to abandon free trade and return to managed trade, thereby beggaring not just their neighbors but also themselves.

More than two decades later, Shelton’s views are no less erroneous or incoherent. Her arguments about monetary policy do not follow any consistent thread, because she is merely a political weathervane, pointing in whatever direction is most convenient for securing her next job.

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