Read: In less than a year, the Federal Reserve could look dramatically different
Shelton is noted for her decades-long advocacy of fixing the value of currencies to gold. In 2009, for example, she wrote in The Wall Street Journal:
Now is the time to challenge the exclusive monopoly of Federal Reserve notes as currency. Buyers and sellers, by mutual consent, should have access to an alternate means for settling accounts; they should be able to do business using a monetary unit of account defined in terms of gold.
Advocates of the gold standard often talk about consent and convertibility—the ability of economic actors to switch back and forth from dollars to gold. But that is disingenuous. Americans or anybody else can go to market with every last dollar they own and buy as much gold as they wish. What gold-standard advocates mean by convertibility is that private citizens should be free to convert their dollars into gold at a price set by law, rather than by the marketplace. Congress would pick a price for this one commodity, and then the central bank would forever after raise or lower interest rates to squeeze the dollar into alignment with the price of gold.
That’s how things were done in the United States from 1873 until 1934, when the domestic gold standard was finally abandoned after causing one horrific economic depression too many.
Since the coronavirus struck in early 2020, the price of gold has risen from about $1,500 an ounce to the present $1,890. (In late summer, it briefly surpassed $2,000.) Most people would regard that movement as just one economic indicator among thousands, and not an especially important one. From Shelton’s point of view, however, the price of gold is an important indicator—arguably even the supremely important indicator. What has happened, in her view, is not that the price of gold has risen relative to the dollar, but that the dollar has declined relative to the price of gold. Money is being devalued, and dollar holders are being cheated. To redress this wrong, interest rates should spike to increase the value of the dollar until the gold price returns to some predetermined level.
Read: Why are Republicans so obsessed with the gold standard?
Businesses might be ruined and people might be pushed out of work by those rising interest rates, as they were during the gold-triggered depressions of 1873 and 1893, and when gold-protecting policies magnified the Crash of 1929 into the deep depression of the 1930s. But it’s all worth the sacrifice to preserve the ability of dollar holders to buy or sell gold at a government-fixed price.
There is, however, one asterisk beside the Shelton policy, and this is what has caused the most intense opposition to her nomination.
Shelton’s support for high interest rates fluctuates not only with the gold price, but also with the partisan identity of the presidential administration. During the tenure of President Barack Obama, Shelton endlessly fretted that the gold price was too high and interest rates were too low. Thus, in January 2013, when the price of gold was $1,600 per ounce and trending downward—it would break beneath $1,200 that summer—Shelton viewed the situation with alarm and urged immediately higher interest rates. She wrote that “loose monetary policy is bad for you and for your economic prospects.”