Posted on Nov 18, 2020 at 9:00 a.m.Updated Nov 18, 2020 9:01 AM
Setback for the Republican majority in the Senate. The American institution rejected on Tuesday the appointment of Judy Shelton, a controversial economist, among the governors of the powerful American Federal Reserve (Fed). A new vote could be organized soon.
In detail, three Republican senators voted against and three others were absent for quarantine and personal reasons, preventing the nomination from being approved. The Democrats, for their part, united against the arrival at the Fed of this former adviser to Donald Trump.
Kamala Harris, vice-president-elect, who still occupies her senator’s seat, said she spoke against it. “We need a reliable Federal Reserve to help our economy in this pandemic. Judy Shelton’s dangerous ideas would devastate our economy, and her lack of commitment to use the full force of the Fed to provide support in the face of Covid-19 is unacceptable, ”she said in a tweet.
Lack of independence
Judy Shelton “is, without a doubt, one of the least qualified appointees I have seen for our central bank,” Senate Democratic Minority Chairman Chuck Schumer said in a statement. Beyond his positions on the economy, “the most worrying thing about his appointment” is, according to him, “his staggering lack of independence”, while “the Federal Reserve must make its decisions from ‘economic analysis and objective judgment, not based on what is good for a party or for an occupant of the Oval Office.
Conversely, Republican Senator Marco Rubio explained, in a press release, having voted in favor of his appointment, believing that the Fed “plays too big a role in our economy. I believe Judy Shelton shares my belief that relying on the Federal Reserve to raise asset prices is no substitute for a strong US economy. ”
An economic policy deemed unrealistic
Judy Shelton, 66, advised Donald Trump during his 2016 campaign and questioned the Fed’s need for independence from political power. She had also severely criticized the way in which the central bank had fought the great recession of 2008, and she defends the return to the gold standard – which consists in making a currency correspond to a fixed weight in gold -, a strategy considered unrealistic and outdated by the majority of modern economists.
Donald Trump proposed his appointment to the Fed in July 2019, after a refusal by the Senate to confirm his two previous candidates. The Republican billionaire’s mandate was marked by regular spat with the Fed, which he accuses in particular of not lowering rates sufficiently. And whose officials he even described as “morons”, breaking with the tradition of independence of the institution vis-à-vis political power.