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If Judy Shelton is confirmed to the Federal Reserve next week, she’ll be one of only 6 (probably soon 7) board members. But she’ll have a vote on policy. What do we know about what she’d actually do? A short thread. 1/x
A big question is whether she will start to push for changes immediately or if she will wait for the economy to heal more. But a related question is, what changes would she push? I obviously don’t know, but I have an educated guess. 2/x
Beyond helping Trump’s “pro-growth agenda,” a reason she advocated 0% rates was she thought that would be necessary to shrink the Fed’s bond holdings & therefore the cash supply in order to stop paying banks interest on their reserves (how rates are now set, post-2008 crisis) 3/x
She wants the Fed’s role in the economy to be smaller. This would also put more of a limit on how much U.S. govt debt the Fed can buy (increasing impetus to rein in govt spending). This could be where she focuses her efforts rather than rate hikes. But I may be wrong! 4/4
