Trump’s federal nominee advocates a gold-backed currency, even a crypto

President Donald Trump’s candidate for the Federal Reserve Board of Governors is reiterating his defense of the gold standard, and adding digital currency into the mix.

In a May 20 interview, Judy Shelton told reporters

„I don’t see it so much as going back [to the gold standard], but more as ‚going back to the future‘. I think what a gold standard represents is monetary discipline itself. Money is supposed to be a unit of account, a reliable measure and a store of reliable value. It should not be subject to who the chairman of the Federal Reserve is.“

According to Shelton, a „futuristic“ view of the gold standard may involve a digital currency component. He said that central banks „are not serving the private sector to provide that reliable unit of account … Under the gold standard, you had that stability, and I think that’s what’s missing … It could be used in a very ‚cryptomoney‘ way.

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Preserving the dollar as a global standard
Participation in the emerging digital currency sector is not entirely new to Shelton, who has previously championed the potential of the digital dollar to help „preserve the primacy“ of the U.S. currency around the world.

For Shelton, the United States needs a „reset“ away from the „distortions“ of the Federal Reserve over the past half-century. She has previously argued that the Federal Reserve’s independent status runs counter to a market-driven society:

„How can a dozen […] people who meet eight times a year decide what the cost of capital should be versus some kind of rate determined organically by market supply? The Federal Reserve is not omniscient. They don’t know what the right rate should be. How could anyone know? …] If the success of capitalism depends on someone being smart enough to know what the rate should be in everything … we are doomed. We might as well resurrect Gosplan.

Federal Reserve Chairman: „We have the ability to create money digitally“

Central bank activism, for Shelton, hinders the market’s ability to function without excessive central planning. Here he overlaps with advocates of Bitcoin (BTC) who argue that blockchain technology can ensure that the currency remains immune to attempts by any government to „manipulate“ its value.

Shelton may well sympathize with advocates of digital scarcity who claim that Bitcoin can induce deflationary monetary policy by serving as a reserve currency with a finite supply.

However, he has also said he is open to an approach in which the Federal Reserve would target a dollar price for gold, „linking the money supply and credit to gold:

„A linked system could allow for currency convertibility by individuals (as in the case of a gold standard) or by foreign central banks (as in the case of Bretton Woods). Either way, it could correct inflationary pressures.“