Falling in love

Here’s Judy Shelton, recently nominated for a position at the Federal Reserve Board:

Ms. Shelton has been a vocal defender of the Trump administration’s foreign policy. In a December 2017 opinion piece in the Journal, she praised Mr. Trump’s efforts to invest more in the military to counter antidemocratic threats abroad.

“No one would accuse Mr. Trump of mushy sentimentalism when it comes to foreign policy,” she wrote.

And here’s a typical recent news story:

“I was really tough and so was he, and we went back and forth,” Trump told an adoring crowd of thousands at Wesbanco Arena in Wheeling. “And then we fell in love, OK? No, really, he wrote me beautiful letters, and they’re great letters. We fell in love.”

North Korea’s foreign minister, however, suggested the bloom may be off the rose. Ri Yong-ho, speaking to the U.N. General Assembly in New York on Saturday, said his country won’t dismantle its nuclear weapons program [without?] seeing “trust-building” measures from the U.S.

Thank God that Trump is not a mushy sentimentalist.

Actually, I feel bad even joking around about this subject:

Presented to the War Crimes Committee in Washington D.C. in 2016, the defectors’ testimonies included accounts of prisoners being tortured or killed because of their religious affiliation, forced abortions, and infanticide. One account described a prisoner’s newborn being fed to guard dogs. Each year at one of the camps, according to defector testimonies, authorities deliberately overwork and starve to death between 1,500 and 2,000 mostly child prisoners. . . .

Before the report’s publication, former ICC judge Thomas Buergenthal, a child survivor of Auschwitz, told the Washington Post, “conditions in the [North] Korean prison camps are as terrible, or even worse, than those I saw and experienced in my youth in these Nazi camps and in my long professional career in the human rights field.”

Shelton has gone from favoring tighter money a few years ago to favoring looser money today, for reasons that I am not able to understand.

PS.  Christopher Waller of the St. Louis Fed was also nominated for a position at the Board.  He is appropriately skeptical of the utility of Phillips Curve models.



20 Responses to “Falling in love”

  1. Gravatar of Benjamin Cole Benjamin Cole
    3. July 2019 at 03:07

    And I thought I was wearing the tin-foil hat…

    Shelton…a gold bug who wants 0% interest rates?

    Okay, fine. She may get them, btw.

    Belgium sovereigns into negative interest rates today, joining France and Germany…and Japan and Switzerland. 10-year US Treasuries offer less than 2%.

    The BIS says tighter monetary policies needed. You know, you look at long-term interest rates from 1980 to present, and…well, I need my tin-foil hat. I see a pattern, a secular pattern.

  2. Gravatar of kav kav
    3. July 2019 at 03:10

    @Prof. Sumner:

    ‘Shelton has gone from favoring tighter money a few years ago to favoring looser money today, for reasons that I am not able to understand.’

    Could it be because 10Y yields were 100-150bpts above FF then and are nearly a full 50bpts below them now?

  3. Gravatar of Derrick Derrick
    3. July 2019 at 04:57

    So Shelton is an unprincipled nutjob, what a surprise that Trump wants to put her in an influential position.

    But holy crap I did not read that report about NK when it came out. It really makes you rethink the way Trump has been acting with Kim Jong Un.

  4. Gravatar of Jaap Jaap
    3. July 2019 at 06:02

    Shelton has gone from favoring tighter money a few years ago to favoring looser money today, for reasons that I am not able to understand.

    Why, it is quite simple. He knows Trump Will do even crazier things to threaten the world economy. It just makes sense.

  5. Gravatar of ssumner ssumner
    3. July 2019 at 07:57

    kav, That’s not the reason she gives. She’s been a gold bug for most of her career.

  6. Gravatar of foosion foosion
    3. July 2019 at 10:27

    “Shelton has gone from favoring tighter money a few years ago to favoring looser money today, for reasons that I am not able to understand.”

    This is sarcasm?

    A few years ago there was a Democrat in the White House. Now there’s a Republican.

    Similarly, we’ve moved from “reducing the national debt is vital” to “no problemo”.

  7. Gravatar of E. Harding E. Harding
    3. July 2019 at 10:30

    Sumner, do you understand the concept of the “joke”? Of course Trump is not a mushy sentimentalist.

    Anyway, Shelton’s a terrible pick.

    Defector testimonies are not reliable.

  8. Gravatar of Jeff Jeff
    3. July 2019 at 11:06

    A gold bug. If there is one single thing that just screams “Ignoramus!”, that’s it. Maybe the Senate will turn her down. If so, that will be an improvement since 1986 when they approved Wayne Angell.

  9. Gravatar of Benjamin Cole Benjamin Cole
    3. July 2019 at 18:05

    Shelton is getting the headlines, and properly perhaps.

    But who is Christopher Waller?


    He seems to have authored the sort of papers that are issued by the 12 branches of the Federal Reserve, and are reasonable and intelligent on many levels.

    To me, Waller is too much of a dyed-in-the-wool central banker who pontificates about “price stability” no matter what is happening outside his window on the street. As Luigi Zingale said, somehow the macroeconomics profession became a place where economists discuss profusely the topic of inflation and write papers about inflation with a lot of calculus in them to advance careers—-even when inflation is nearly dead.

    BTW, does it seem with each passing year the standard, or bar, for what is desirable “price stability” gets raised? If you told almost any economist from the 1980s that the US would have years and successive years of sub-2% inflation, they would have clapped their little hands with near-boundless joy.

  10. Gravatar of Michael Rulle Michael Rulle
    4. July 2019 at 04:42

    What happened to our country such that the most visible politicians, and those who have or seek the highest positions—-all seem like whack jobs—-or as the late radio host, Bob Grant, would say—“fake, phony, frauds”. That is not entirely true of course——but that seems to be the requirement to be President.

  11. Gravatar of Scott Sumner Scott Sumner
    4. July 2019 at 14:33

    Harding, You said:

    “Sumner, do you understand the concept of the “joke”?”

    Yes, and aren’t jokes supposed to be funny?

  12. Gravatar of Negation of Ideology Negation of Ideology
    5. July 2019 at 10:14

    I agree with the comment by Jeff. A gold bug is completely unqualified to be on the Fed, or to even teach high school economics. The vote against her in the Senate should be unanimous.

  13. Gravatar of Michael Rulle Michael Rulle
    5. July 2019 at 13:48

    Gold standard is no different than fiat, or for that matter, giant rocks in the ocean—(per the Micronesian island of Yap). We went to Fiat because it is a hassle to use a physical object as the baseline for money. The gold bugs somehow believe that it makes central bankers more disciplined—when of course rules on how to manipulate money relative to gold are just as easy to do as inflating with fiat money. Meanwhile we have zero to negative real rates and PCE inflation less than 2 percent. They forgot that money is anything people are willing to exchange for goods and that it can be anything including nothing–like fiat.

    As it relates to Shelton on Fed, I have no idea. It is hard to not notice , however, that anything Trump wants is converted to an exercise of how much of an idiot he, and anyone around him, is. I still love re-reading Krugman’s predictions on election night 2016. If Trump is a true moron, it just proves it does not matter who is president. At least he does not want to change our economic system.

  14. Gravatar of James Picerno James Picerno
    5. July 2019 at 13:56

    Shelton gone from a hard-core gold bug to being a yes-woman for Trump on monetary policy, plain and simple. Maybe there’s some grand theory behind her shift of late, but it looks like politics. Not a great sign for a possible Fed board member.

  15. Gravatar of Tommy Dorsett Tommy Dorsett
    5. July 2019 at 16:15

    From what I gather, it sounds like she wants the Fed to accommodate a positive supply-side shock from lower tax rates / reduced regulations. And she wanted a tighter Fed when the supply-side was supposedly being buffeted by Obamaonomics. In short, she’s advocating NGDP volatility seemingly along political fault lines.

  16. Gravatar of E. Harding E. Harding
    5. July 2019 at 20:29

    Re: the citizenship question: it has nothing to do with illegals and everything to do with reasonable allocations of congressional/state legislative districts.

    Also, the race/ethnicity questions on the Census definitely lead to a large undercount of the criminal class anyway.

    “And it looks like they are trying to use this question to push the population count closer to what it would be if the Constitution were written in the way they preferred.”

    Edgy, but probably untrue.

  17. Gravatar of E. Harding E. Harding
    5. July 2019 at 20:36

    “Yes, and aren’t jokes supposed to be funny?”

    I thought it was. The thought of Trump “falling in love” with any foreign leader who isn’t Netanyahu is, I think, hilarious, due to Trump’s perpetually combative nature.

  18. Gravatar of Patrick R Sullivan Patrick R Sullivan
    6. July 2019 at 05:58

    I remember being so pleased when Ben Bernanke was named Fed Chair. Thinking, Oh boy!, somebody who knows that interest rates aren’t the prices of money. A golden age of monetary policy was sure to follow.

  19. Gravatar of ssumner ssumner
    7. July 2019 at 08:26

    Michael, You said:

    “If Trump is a true moron, it just proves it does not matter who is president. At least he does not want to change our economic system.”

    I’ve said all along that 97% of the economy’s performance has nothing to do with the President. After all, the stock market soared under Obama, does anyone seriously think he caused that?

    And Trump certainly does want to change the economic system, but will probably not be able to do so. He favors the sort of system they had in South America in the mid-20th century. Corrupt and protectionist.

    Thank God for our system of checks and balances.

  20. Gravatar of Michael Rulle Michael Rulle
    11. July 2019 at 05:47

    Scott—-for sure I thank God, and the founders, for our system of government.

    But all his bluster on trade and protectionism, he sure does not try very hard to achieve those objectives. To me he acts more like a typical pol—-say what you need to get more electoral votes than the other guy.

    Since you are on record to prefer Warren or others over him, it proves how much you trust checks and balances. But these candidates now brag about “Executive Orders” to achieve their horrible goals. Courts have over ruled many of Trumps, but less of Obama’s. I fear they what they would do under Harris or Warren.

    I know you are hard core on this—-but I see them as far more dangerous.

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