Market uncertainty doesn’t phase Judy Shelton, the former Treasury Department lead advisor for the first Trump administration transition.
The monetary economist has taken a bullish stance when it comes to a “dependable” U.S. dollar and the rising price of gold – and offers a unique pitch to ensure their fiscal stability.
“I’m skeptical when people doubt the future of the dollar or the role of U.S. currency as a world’s dominant reserve currency. I think the dollar has a great future ahead of it,” Shelton, Independent Institute senior fellow and author of “Good as Gold: How to Unleash the Power of Sound Money,” told Fox News Digital.
“I think that we need to be true to our founding principles and redouble our efforts to restore sound finances and sound money,” she continued.
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A “very smart thing” for America’s economy would be for the Treasury to issue a 50-year, gold convertible security which, at maturity, could be exchanged for a fixed amount of gold. Shelton hopes to see this done on July 4, 2026, on the 250th anniversary of the signing of the Declaration of Independence.
She notes that America is the world’s largest holder of official gold reserves, with the Treasury owning 261 million ounces carried at a book value of $42. As of Thursday afternoon, gold futures hovered around $3,300.
The U.S. dollar retained its strength against other major currencies like the yen and Swiss franc, after the Federal Reserve announced Wednesday it would leave rates unchanged.
“It would be a good way to ensure that nobody in the following administrations between now and then gets the bright idea to sell off those gold reserves. Let’s use them to warehouse, to serve as collateral for this long-term gold bond,” Shelton explained.
“And then the gold bond would become a barometer of whether or not the U.S., under people in the White House, under Congress, under people at the Federal Reserve, can really make progress toward balancing the budget, toward achieving sound money.”
Receiving “some positive feedback” thus far from the current Trump administration about the idea, and other business leaders like FOX Business’ Larry Kudlow and Steve Forbes, Shelton expanded her argument for a “solid” dollar under the 47th president.
“If the dollar’s strong, it makes it very difficult for our exports to compete in foreign markets,” the economist pointed out. “And it makes the cost of imported goods look cheaper when compared to domestically-produced goods. So I think people initially thought that because we were applying tariffs, we would automatically see our trade partners attempt to manipulate their currencies.”
“Their currencies being weaker means the dollar is stronger. It could also mean that if people do start preferring domestically-produced goods over foreign goods,” Shelton added, “because those imports have now become relatively more expensive, then there’s less demand for those other currencies.”
“I think the economy is ready, willing and able to make the transformation happen.”
“There really is no substitute for the U.S. dollar as the world’s reserve currency. So I expect to see the dollar strengthen in the future, not weaken.”
Shelton put the onus of any dollar uncertainty on the Federal Reserve, as “people realize that the Federal Reserve is not omniscient.”
“The Fed has not delivered… and I think the Fed operates on a false trade-off between growth and inflation. That’s not what the trade-offs should be,” she criticized. “The need is to have a yield curve that makes sense, not an inverted yield curve that we have under the Federal Reserve. You need positive rates of return.”
“The Fed, admittedly, is imposing a restrictive rate of borrowing. I don’t think that’s the way to go. I don’t think the Fed should be determining the cost of capital as if it were the old Soviet Gosbank, the state bank, and just stipulating that this is the rate of interest because we say so. I would rather bring market forces of supply and demand for capital into the equation,” Shelton said.
Using one word to describe the state of the economy today, the economist claimed it’s “ready” for the full impact of President Donald Trump’s supply-side growth agenda.
“I think the economy is ready, willing and able to make the transformation happen. And the transformation is the vision of President Trump to go from being an economy that I think was increasingly shifting toward being government-managed and government-fed, to one that will be driven by private sector initiative,” she said, “which would be so much healthier, so much more productive, which could deliver genuine prosperity.”
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