A goldbug for the Fed?

When I teach my Essential Macroeconomics for Managers course, I spend some time on exchange rates.  I emphasize the role of trade balances, inflation, and Federal Reserve policy, reflecting the consensus of economic research.  I spend no time on the gold standard, as research has shown that it makes economic growth and inflation less stable.  

President Trump has nominated Judy Shelton for a vacant position on the Federal Reserve's Board of Governors.  Dr. Shelton (PhD in business administration from Utah) advocates a return to the gold standard.  Greg Ip has a great WSJ column explaining her views, which are based more on politics than economics.  Her core belief is that the gold standard would impose fiscal discipline on Congress and the President and monetary discipline on the Federal Reserve.  She went ballistic in the aftermath of the Great Recession when quantitative easing led to a massive increase in the money supply and, she argued, an inevitable surge in inflation.  Guess what?  She and other goldbugs were dead wrong; inflation has been at rock-bottom levels for the last 10 years.

Now she is criticizing the Fed for keeping interest rates too high, claiming it is slowing down the economy.  This is hard to swallow in a world where 10-year Treasuries yield two percent and the June jobs report showed 224k new jobs last month.  Will she make it through tough questions at her Senate confirmation hearing?  Stay tuned.