Shortly after Larry Kudlow and Peter Navarro tag-teamed the traditional NFP Friday propaganda blitz, Judy Shelton showed up on CNBC to chat with Rick Santelli about nations pegging their currencies to a convertible gold-backed bond.
In other words, if you were wondering whether things might take a welcome turn for the serious (and away from cartoon land) now that Stephen Moore and Herman Cain are no longer up for Fed board seats, the answer is: Judy Shelton talking to Rick Santelli about a return to the gold standard.
As usual, Rick pretended to be furious. Or actually, no. This time Rick is beyond angry. He’s flat out “depressed”.
Specifically, he’s very sad that people “snicker” at Judy Shelton when she talks about a gold standard. “Nobody seems open minded to protect what’s in our wallets”, an ostensibly incredulous Rick lamented.
Thank God for Judy Shelton. Because Judy Shelton is a woman who will bring fresh perspectives to the Fed. And by “fresh”, I mean antiquated notions that have absolutely no place in modernity and would leave policymakers hopelessly hamstrung in their capacity to rescue the economy in the event of a crisis. Here, I’ll let Shelton explain it to you:
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So, basically, that is Judy reading to you from an inspirational Barnes & Noble tear-off calendar.
Santelli can’t believe anyone would “snicker” at Shelton, and yet this is the kind of thing that comes out of her mouth when she opens it:
That people have a positive outlook. That people think it’s worth it to sacrifice today. To save instead of consuming. To invest that financial seed corn in the possibility of a greater harvest.
Who talks like that? Besides tear-off calendars, that is.
The best part is that Shelton, like Stephen Moore before her, is in the awkward position of having to reconcile nostalgia for the gold standard and pretensions to financial responsibility with Donald Trump’s insistence that the Fed cut rates and restart QE when the unemployment rate is at a five-decade low and the economy just created 224k jobs.
Note what Judy said Friday about monetary policy. To wit:
[Money] is not supposed to be just another policy instrument to try to engineer outcomes. And what we’ve seen is central banks trying too hard to do just that and they’ve engineered us right into a negative rate scenario which completely undermines the idea of having faith in the future which is the very virtue of capitalism.
Ok. Now, compare that to the bright-red chyron on the screen below Judy. See that? It says: “SHELTON: DON’T WANT FED TO PULL RUG FROM UNDER MARKET”.
That’s a reference to this quote, from the same interview:
When you consider that more than half of American households are invested through mutual funds and pension funds in the market, I don’t want the Fed to pull the carpet out from under them by taking a position that is not conducive to further providing the liquidity for this growing economy.
In other words, Shelton thinks the Fed should support the stock market. A cynical person might say that Judy is suggesting the central bank “engineer outcomes”, in this case, higher stocks.
Of course, the implication is that the Fed should cut rates. And that’s not exactly consistent with Judy’s professed aversion to experiments in NIRP and ZIRP.
But, hey, what do you expect, right? This is the same person who, in May, told the Financial Times that she’d like to convene a new Bretton Woods-style conference at Mar-a-Lago to reset the the international monetary system.
Maybe Santelli can provide the entertainment for the event. He could stand up on stage and shout about how it’s a shame that rich people (like himself) have to “subsidize the losers“. That would be a real hit with the Mar-a-Lago crowd.