Taps Coogan – September 29th, 2021

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Dr. Judy Shelton, controversial former Fed Board Nominee and Senior Fellow at the Independent Institute, recently spoke with CNBC’s Joe Kernen to remind everyone what the Fed is actually supposed to being doing at a time of high inflation and labor shortages.

Saying what is now essentially central banking heresy, Dr. Shelton notes:

“The Fed’s job is to be lender of last resort and to provide liquidity in an emergency situation. They did that. They deployed the airbags. They threw the kitchen sink at saving the economy from liquidity problems. But where are we now? How is the Fed supporting the economy by financing overspending by Congress? What does that do to create jobs, which as I say is not the issue? What does it do to get people to take those jobs?”

“Of all the political comments that the Fed Chairman could make… should he comment on climate change or racial inequity? No. I don’t think he should be involved in any of those things. The one thing he could say to Congress is if you want to have the least distortion to price signals, if you want the private sector and an economy devoted to entrepreneurial capitalism to work optimally, you can’t have the government distorting these things. So, you have to have a balanced budget. That is really the goal. We got close to that in 2000. It is doable. You at least have to have a plan to get to some kind of fiscal responsibility…”

If there was a hawk on the Fed, that is how he or she would sound.