Judy Shelton published a book 15 years ago advocating a return to gold-backed currencies. She has few credentials and no online presence or ongoing academic involvement that I have been able to find. But almost every month for the last year the Wall Street Journal’s editorial page has printed an essay by her that, ultimately, argues for a return to gold-backed currency:
- Is Inflation Baked Into the Budget Plan? — March 19, 2009
- Capitalism Needs a Sound-Money Foundation — February 11, 2009
- Stable Money Is the Key to Recovery — November 14, 2008
- A Capitalist Manifesto — October 13, 2008
- Loose Money And the Roots Of the Crisis — September 30, 2008
- The Weak-Dollar Threat to World Order — June 9, 2008
- It’s the Dollar, Stupid — March 5, 2008
- Security and the Falling Dollar — February 15, 2008
As I have previously written, concerns about dollar integrity are certainly justified: The central bank and government are colluding to try to print their way out of a financial crisis. And as our government compounds its borrowing it will face increasing incentives to simply inflate its way out of debt. Today’s WSJ has an article about the increasing money supply showing that money creation has been more than offset to this point by the Great Delevering of this crisis. No inflation will occur until the former overcomes the latter, although the more the money supply is built up in advance of that tipping point the greater the risk of a “snap” inflation that the Fed cannot easily unwind.
I agree that nobody with significant assets should count on the dollar or any other fiat currency to conserve value. But as I have explained before, the point Shelton and other gold-fanatics gloss over is that nobody has to: While fiat currencies are generally the most liquid and fungible medium of exchange, markets offer many practical means of avoiding currency valuation risk.
Derivatives markets for currencies and interest rates are enormous and efficient, allowing any particular currency risk to be priced and neutralized. Dollar inflation insurance can be purchased explicitly through inflation-protected bonds: Another article today quotes a bond fund manager reiterating my view that TIPS are currently bargain insurance.
Currency owners are also free to store and trade value using many other media — including gold. For small fees, an individual can convert dollars into gold, and then back into any currency to facilitate trade.
Governments cannot be counted on for “sound money,” but capitalism has given us efficient means to create it ourselves.
Federalist 
… And she’s back already on the opinion page! Guess what? She still thinks the gold standard “is the ultimate answer.”
While your argument is based on economic variables Shelton integrates morality into her article, good for you Judy. This higher level of integration elevates the concept of gold back money beyond simple economic assumptions. I’ll add a third variable, freedom. Fiat paper money takes away our basic human right of freedom. Gold backed currencies are the only way to keep us free from government intervention in our economic lives. To further the argument gold back money is the only currency compatible with our inalienable rights, no other alternative exist. All other attempts to introduce the alternatives are the figments of peoples imaginations. Gold is tied to reality. BTW I have no credentials nor can you find me online, does this mean my ideas are invalid?
Your ideas may be valid, but you haven’t offered any coherent argument for why gold-backed currencies “keep us free from government intervention,” or why gold “is the only currency compatible with our inalienable rights.” I’d be curious to hear reasoning in support of these claims, but since you have no credentials and can’t be found online I won’t get my hopes up.
federalist – Just found your blog. I like it and for the most part am in agreement with a lot of your views. Regarding Shelton, did you consider that it may appear that she has few credentials because she has no online presence? Perhaps online presence isn’t a priority to her. Regardless, I think what credentials you found are fairly impressive. More so than mine or the ones not found in the “About” page of this blog.
It’s interesting that you link to Cato’s site (Shelton is on the editorial board there) and Mises Institute (talk about a gold bug)!
Personally for me the jury is still out whether the buck should be tied to gold or some commodity. I’m still figuring out my stance on that. But while you and I are aware of the efficiency of the derivatives markets, 99% of most folks aren’t. If the government has the monopoly of printing money, it should protect the value of money for its citizens. To me it’s immoral to print money and then manipulate the heck out of it for it’s own purposes. Dealing with devaluation through the means you list (again – most people can’t or don’t know how) doesn’t deal with the root cause, it accepts it (and has a cost).
Again, love the blog!
Glad you have enjoyed the blog!
My primary complaint with Shelton is that it is cowardly to flog a thesis repeatedly in public but never stand up to defend it against critique. She obviously has at least one great connection who can put her in print. But in addition to sending rebuttals to the WSJ (never printed, but of course they can hardly print any of the volume they receive) I have contacted people at both the WSJ and Cato to see if anybody actually knows how to reach her, and none of them did. Barring some disclaimer I think it is reasonable to assume that anybody who (repeatedly) submits an essay for major publication is agreeing to enter the common discourse. It is not just that she is not “maintaining an online presence,” but rather that she makes a pretense of joining public debate but actually hides from it.
And yes, Cato and Mises, like most libertarian gatherings, seem to be infested with gold bugs. I don’t agree with everything at either place (I’ve even mentioned some of my debates with Mises folks in other posts), but they’ve still got a lot of good ideas and material!
Federalist, I stumbled on you while searching Judy Shelton’s name. I just learned of her while watching an hour long interview she had last night shown on C-SPAN. I was glued to her comments because of the perpsective she brings having studied the Russian government for the past 20 or so years. She is a self-admitted retreater back to her office on her farm about an hour away from D.C. to continue her studies and present them when offered the right opportunities. She also said her preferred style of communication is a forum like the in-depth interview she had last night; that her messages are not good “talking point” format.
Instead of dismissing her due to her limited online presence, why not treat her as an expert in her field of study like we would certain medical and scienfitic experts? We go to them for their expertise, but leave the debating for those who need to make decisions based on the facts gathered. I don’t view her as any less credible or useful in defending platforms such as yours: free markets and free people just because she has a limited online presence. I also wanted to add I would think having a PhD would be credential enough to present opinions on her field of study. Thanks!
p.s. I am just a citizen trying to stay current on the issues in order to be a knowledgeable voter; you won’t find any credentials online about me! :-)
Good arguments. And thanks for the pointer to the C-SPAN interview.
Rick Bookstaber calls the gold bubble.
Hopefully you have done a little better research in the last 10 years on Dr. Shelton’s credentials, ongoing works, followed her online presence and lastly I really hope that you have since found at least a decent understanding of currency manipulation and how that impacts different economies.