On April 20th, the Kemp Foundation held a forum on Exchange Rates and the US Dollar at the National Press Club in Washington, DC. The forum featured a very distinguished list of speakers and contributors. Dr. Judy Shelton, who we have featured here recently, was one of the speakers. Dr. Shelton worked as an adviser to the Trump economic transition team.
Below is the video of her presentation followed by a brief bullet point summary of her key ideas. After that are a few added comments.
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Bullet Point Summary:
- many (including Dr. Shelton) agree that existing floating exchange rate system is flawed
- the current system needs to be changed to restore a fixed exchange rate system
- currency manipulation by governments or central banks is a problem in the existing system
- US should provide global leadership regarding monetary system integrity
- Dr. Shelton proposes the idea of a gold convertible US Treasury bond
- she provides a detailed example of how such a bond might work in the real world
- she asks: if the US were to do this how might it impact other countries?
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My added comments: The convertible gold bond is is an idea Dr. Shelton has talked about for some time. My take on it is that she views it as kind of a first experimental step towards a fixed exchange rate system based on gold or some kind of hard anchor. She uses gold in her example because central banks already own gold in their existing reserves and gold has a history in the world monetary system.
Her proposal would not be an immediate major overhaul of the existing monetary system as I understand it. It would be sort of a test to see how it would work out. If it performed well, it might encourage the US and other nations to move back towards a fixed exchange rate system based on a hard anchor like gold.
I am presenting Dr. Shelton's video first here on the blog because in a way it seemed like it kind of lays the foundation for a broader monetary system overhaul proposal made by Dr. Warren Coats later that day in the forum. Dr. Coats proposes using the SDR at the IMF to replace the US dollar as global reserve currency, but in a much different way than the SDR is currently used. He wants it issued based on market demand by a Currency Board rule and tied to a hard anchor. He does not oppose using gold as the anchor if that is what is desired, but thinks that a broader basket of goods would likely be a more stable anchor than gold by itself. We have covered Dr. Coats proposal here, but in his presentation he covers how a Currency Board would work in more detail. I think both Dr. Shelton and Dr. Coats are both strong advocates of a sound currency unit which was a major theme of this forum.
This forum is a great example of why it is important to get several experts like this together to exchange thoughts and ideas. I noticed how well Dr. Shelton and Dr. Coats presented very clearly what they are proposing in a short summary version all of us can understand. That is what this blog is all about. Trying to help the average person like myself get some understanding about these complex issues. These types of brief summary presentations laid out by highly credible experts in clear language is just what is needed to help us. I commend the Kemp Foundation and all participants for holding the forum and exchanging ideas. Well done!
Added notes: A thank you to Dr. Shelton for a retweet on this article.
This is the first of three articles on the Kemp Forum. Here is the article on Dr. Warren Coats presentation. On Wednesday there will be a review of the overall forum.
- US should provide global leadership regarding monetary system integrity
ReplyDelete- Dr. Shelton proposes the idea of a gold convertible US Treasury bond
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These are the some of the most ridiculous/dumb/naive? bullet points I have ever read. Yeah and Ghenghis Khan should have opened food banks.
The current system of American monetary exploitation is obviously by design. ''The dollar is our currency and your problem'', as De Gaulle was told. De Gaulle understood this corrupt dollar system profoundly enough to start converting his Bretton Woods dollars into gold. Why does she think Nixon abandoned the gold standard in the first place? ''A gold treasury bond''. Haha, grow up lady
Your comment is duly noted. I don't think Dr. Shelton is naive on the prospects of a US bond convertible to gold any time soon, but I understand your skepticism that it would get a serious look right now. Time will tell us as events unfold if people are willing to change their thinking and consider new ideas. I applaud her for putting the idea out there to think about. I have said for some time on the blog I don't expect major changes unless a new major crisis motivates change to take place.
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