from Gold Seek:
In a recent episode of the Money Metals podcast, host Mike Maharrey interviews economist Judy Shelton, a prominent advocate for returning to the gold standard and a former economic advisor to President Trump.
Shelton, who has a new book, Good as Gold: How to Unleash the Power of Sound Money, shares her views on how a stable currency backed by gold can restore financial integrity in the United States.
(Interview Begins Around 6:50 Mark)
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Who is Judy Shelton?
Judy Shelton
Judy Shelton (Judy Lynn Shelton) is an American economist known for her advocacy of the gold standard and her criticism of the Federal Reserve. Born in Los Angeles, California, and raised in the San Fernando Valley, she earned her Bachelor’s degree in business from Portland State University and went on to earn her MBA and PhD in business administration from the University of Utah.
Shelton has held prominent roles in both the public and private sectors. She was a senior fellow at the Independent Institute and worked with the Hoover Institution. Notably, she served as an economic advisor to President Donald Trump and was nominated by him to the Federal Reserve Board in 2019, although her nomination was ultimately unsuccessful in the Senate. Shelton was also appointed as the U.S. director for the European Bank for Reconstruction and Development in 2018.
An outspoken proponent of “sound money,” Shelton argues for a stable currency backed by gold rather than the current fiat system. She’s known for her stance against the Fed’s 2% inflation target, which she sees as a gradual reduction of purchasing power. Her views are considered controversial by many in mainstream economics, and she has frequently highlighted the benefits of returning to a gold standard, suggesting it would curb inflation and restrict government spending.
Shelton is also the author of several books, including Money Meltdown, The Coming Soviet Crash, and Good as Gold: How to Unleash the Power of Sound Money. Through her writings and public statements, she advocates for sound monetary policies and fiscal discipline, often challenging conventional economic perspectives on currency and government finance.
Why Gold Matters in a Modern Economy
Despite the dominance of Keynesian economics today, Shelton argues that gold-backed monetary systems have historically provided stability. Citing former Federal Reserve Chair Alan Greenspan and Nobel laureate Robert Mundell as influences, Shelton emphasizes that gold remains a key asset for central banks globally. This is a signal, she says, that gold is a trusted measure of value even today.
“Gold provides a level of monetary credibility that fiat currencies do not,” Shelton notes, criticizing the Federal Reserve’s current inflation-targeting policy.
The Federal Reserve’s 2% Inflation Target: A “Gimmick” on Purchasing Power
A primary criticism Shelton raises is the Federal Reserve’s inflation target of 2% per year. She argues this policy effectively erodes the dollar’s purchasing power, gradually costing Americans 2% of their wealth annually.
Historically, Shelton says, Congress’s mandate for “stable prices” aimed for 0% inflation, not 2%. She explains that the current policy undermines the dollar’s reliability as a store of value, while unfairly benefiting government finances over citizens.
“People should be upset about this,” Shelton asserts, calling the Fed’s policy a clear “expropriation of private property.”
How Fiat Currency Fuels Big Government Spending
Shelton believes that the fiat currency system enables excessive government spending. By auctioning debt at high interest rates, the government can continue deficit spending, regardless of mounting costs. She points out that debt financing costs now rival major budget items, such as defense, and are only projected to grow.
In Shelton’s view, fiscal accountability is impossible without sound money. High interest rates, while restrictive for private businesses, are manageable for government spending. The result, she warns, is that the fiat system props up big government, creating an unfair playing field between public and private sectors.
A Gold-Backed Solution: Treasury Trust Bonds
Shelton proposes a practical first step towards monetary reform: issuing “Treasury Trust Bonds” backed by the U.S. gold reserves. With the U.S. holding 261 million ounces of gold worth over $700 billion, Shelton suggests leveraging these assets to issue 50-year bonds, maturing in 2076. Such bonds would signal the U.S. government’s commitment to restoring fiscal and monetary discipline.
