Donald Trump has tried repeatedly to undermine the independence of the Federal Reserve. Some of his previous, ill-advised, nominations to the board of governors have foundered. One of his latest, Judy Shelton, an economic adviser to the president, poses a renewed threat. Appointing her would have worrying implications for the world’s dominant central bank, and for the power of US institutions in the face of a president who feels unconstrained by traditional checks and balances.
Until Mr Trump’s election as president, Ms Shelton was an advocate of hard currency policies. She wished for a return to the gold standard, advocated abandoning the federal system of insurance for depositors and described the Federal Reserve as “Soviet”. If enacted, such views would return the US to a system abandoned — for good reason — after the Great Depression.
Since the election of the president, whose campaign she joined in 2016, the Fed nominee has become a convert to easy money. Like Mr Trump, she now supports low interest rates and suggested cheap currencies elsewhere may be undermining US prosperity. Ms Shelton has publicly questioned the Fed’s independence, saying at an event last year: “I don’t see any reference to independence in the legislation.”