Trump vs Powell – New Gold-Backed Sound Money Plan Revealed (Uncut) 04-19-2025

Trump vs Powell – New Gold-Backed Sound Money Plan Revealed | Judy Shelton

The Fed today is too political, too prominent in credit markets, and too powerful. Can the chairman of the Federal Reserve be fired by anyone? By anyone. The argument is, well, not by a president, by Congress, by the people.

Here you have someone with so much power in a position to channel financial rewards to some segments of society at the expense of others, who can make interest rates be zero, so that people who save a little bit every week in their bank account get zilch. Hello and welcome back to Soar Financially, a channel where we discuss the macro to understand the micro. My name is Kai Hoffman.

I’m the EJR mining guy over on X and of course, your host of this channel. And I’m really looking forward to this conversation with Dr. Judy Shelton. She’s a former economic advisor to the first Trump administration.

And she’s also a senior fellow at the Independent Institute. Really looking forward to chatting with her because it feels like today we will talk about some solutions. We often talk about the problem, the problem is the debt bubble that the US is sitting on and many other things.

But it feels like today we will talk about a few of the possible solutions. Definitely I want to talk with her about the 50 year gold back bond, and much, much more. Before I switch over to my guest, you guys know the spiel, hit that like and subscribe button.

It helps us out tremendously bring phenomenal guests on to the show. And it’s a free way to support us. So thank you so much for that.

Now, Dr. Shelton, thank you so much for joining us here on Soar Financially. It’s a true pleasure to have you on. Thank you for inviting me.

I’m happy to be with you. Yeah, I’m really looking forward to the next 3540 minutes with you. Because as I said, like we often discuss the problems, but we never or rarely talk about solutions.

I mean, you’re like, what could everything you know, end the Fed is a big topic. And nobody really has an answer to what that looks like. End the Fed plus one.

So we’ll get there. We’ll set the scene first a little bit because we need to understand how we got to this point in the first place. Maybe I’ll ask you, you know, my basic opening question here is, Dr. Shelton, what’s your assessment of the economy right now, given everything we’re seeing? Well, first, Ty, you can call me Judy.

I look forward to our conversation. And I think the U.S. economy has shown that it’s on a good, solid footing. We’re in the middle of a critical transformation, which has an element of risk, but I think it’ll be well validated.

We need to do something. We were entirely too dependent on government spending, and that means overspending. So from a fiscal point of view, it’s readily noted that we were on an unsustainable path.

And I think under the Trump administration, it’s clear that we’ve charted a new course aimed at empowering the private sector and trying to unleash the energy of individuals who haven’t had financial assets, who haven’t been beneficiaries of an economy that was becoming increasingly financialized, increasingly dominated by the latest Federal Reserve Act or even statement. So I think that will end up a more powerful, more solid economy, one more true to American principles, if I may say, that are based on individual liberty, lower taxes, less regulation, making the private sector the engine of the economy and reflecting those American values. So I’m optimistic in the long run, but I recognize that the transitional part of this is challenging.

You could say that. Yes, it seems like there’s a lot of friction, and it really feels like the end game wasn’t clearly messaged, if I may say so. It feels like people don’t really know where this is all headed.

They’re all lost in the noise and not the signal. Would you agree with that? You know, respectfully, I don’t. And the interesting thing is, it depends who you’re talking to.

And a lot of us who watch the financial news cable channels and listen to podcasts of a high level, such as yours, which look at macro and micro issues, we live and breathe this. But it’s interesting, I guess you could dismiss it as anecdotal, but I watch shows, I try to make myself watch shows that just show what I might call everyday Americans, maybe being interviewed by a moderator who’s walking through a diner and they’re eating breakfast. And they’re quite pleased with the way the Trump agenda is unfolding.

They’re more comfortable with the emphasis on personal security, looking at immigration issues and trying to limit fentanyl as a threat to our people. And I think that they will stay the course with President Trump, even as he pursues these tariff policies, which to the financial world are immediately categorized as causing uncertainty, which is then seen as the worst possible thing you can do. And yet at least 40% of the American population, the ones who maybe don’t have portfolios connected to stock market performance, are applauding it.

And they sense that our country has been somewhat hollowed out in terms of manufacturing capabilities, all those jobs and factories that disappeared, I think under intense unfair trade pressure, those wrongs are now being addressed. And I think they believe in the idea of fairness. So I applaud what the Trump administration is trying to do.

I would love to have a tariff-free international trading system, but you’re not going to have an Adam Smith situation until you deal with, from my point of view, the currency shifts. In fact, even tariffs, whether you’re talking 10, 20%, those tariffs could be exquisitely tailored to address these wrongs from the past that have had negative consequences for our economy. They can be overwhelmed in 10 minutes of trading in foreign exchange markets.

So I think like Paul Volcker, our former Fed chairman, who always said, you can’t worry about tariffs without addressing these currency shifts that affect the terms of trade more radically and with more uncertainty than a proper tariff regime could rectify. I’m in that school of thinking. Interesting.

It brings me to the Mar-a-Lago Accord a little bit, which President Trump seems to be following, not to the T, but he’s using Stephen Merrin, he’s part of his advisory council. I think he’s part of the economic advisors. The chairman of the economic advisors.

I hope I got this right. Which is an interesting read, because it really lays out the role of the US dollar and what the US wants to achieve here, saying, okay, we get it, we’re the world reserve currency, we’ll always be a bit more expensive, potentially, than the rest of the other currencies, because we compare ourselves, so then we’re the world reserve currency. But at the end, they also want a weaker currency.

I’m trying to find the balance here. Because I feel like maybe it’s the messaging, maybe that’s what I’m hearing. Some of the commentators, and not all of them, are confusing brand with monetary strength, if that makes sense.

Well, Stephen Merrin’s very thoughtful paper, from before he became a member of the administration, just talked about all of these elements you referred to, currencies in the context of free and fair trade. And actually, I remember in 2016, in September, I had an op-ed in the Financial Times, and in the end alluded to having some kind of an international monetary conference at Mar-a-Lago. And my idea was, that wasn’t in the immediate plan, but President Trump has always said, you need to think big.

And if we’re talking about, so often, when you discuss tariffs, what happened to the rules-based post-World War II system, let’s go back and see what that was really about. And it was about the Bretton Woods International Monetary Agreement, which was hammered out in July of 1944. And the main rule of that international monetary accord was that other nations who wanted to participate in trade and investment relationships with the United States would maintain stable exchange rates against the dollar.

And by stable, I mean, they had to stay within 1% above or below a pre-stated exchange rate value with the dollar. And the dollar, in turn, was to anchor this system by being convertible into precisely $35 per ounce of gold. That was the convertibility rate.

That was official. And that option was available to the central banks of the countries who wanted to participate in this system. It was only after Congress agreed to setting up this system that they went on to then address, how do we reduce tariffs? So, first, you had a stable international monetary foundation, and then we set up the General Agreement on Tariffs and Trade.

So, that was signed about a year and a half later. So, I think it’s a mistake to think that you can treat the trade with tariffs in isolation from this matter of currency manipulation, or as we might say, just a shift in currency values. I think it might be more helpful to call it a no-fault currency depreciation, because we know in the 1930s, and we’re hearing more about that, the Smoot-Hawley tariffs, which people are using to make comparisons with what we’re talking about today, that was the beggar-thy-neighbor era when countries were debasing their currency against the common reserve asset, which was gold.

So, the world had been on a gold standard, but to gain a trade advantage, countries were changing the rate at which they would convert their currencies into gold. And as soon as they made their currencies cheaper, we called it a competitive depreciation, although there was really nothing competitive about it. It wasn’t competing, it was cheating.

Because when you make your currency cheaper relative to the export market target, their currency, or relative to this neutral reserve asset gold, which all the countries were using to establish the value of their own currencies, you’re changing price signals. You’re making your product cheaper in the export markets, and you’re making exported products more expensive in your home market. So, it’s a clear unfair advantage, it’s quantifiable, and that is what we need to focus on to start.

No, I think that’s being addressed aggressively, especially with one counterparty, of course. But back in the 1930s, the world was a different place. It feels like we’re even more so in a multipolar world.

We have the US, we have the European Union. If you want to, you could even split the member countries up there. But then you have China, Japan, and to a degree, Russia, depending on who you talk to.

Some people include it, some don’t. And then India, perhaps, as well. Maybe even the BRICs we could throw in there.

What could a new Bretton Woods look like in that regard, in that agreement? What should it look like? I would just say, I think the US economy is the strongest. I think our consumer market is the most attractive. And that gives us some status in establishing a new approach.

And the dollar is clearly the dominant reserve currency. I do think it would be healthy if we used gold as a common denominator, as a reserve asset. That is, I don’t necessarily need to fault Mexico, our largest trade partner, although I could, for depreciating the peso against the dollar, 23% last year.

I mean, I consider that alone grounds to apply a tariff, just to even things up. But I’m willing to say, well, Mexico and every other country is free to pursue their monetary policy in a way that they think best serves their own national economic objectives. But they should be prepared to say, if that gives them an unfair trade advantage by cheapening their currency relative to our currency, and yet they want to export to our markets, there must be an adjustment.

So we can just call it no-fault currency depreciation. Because of course, they do have the choice. They could orient their monetary policy to target a stable exchange rate with the dollar.

But I’m not saying they have to do that. It’s their choice. It’s just they can’t have plausible deniability and say, well, we cheapened our currency relative to the dollar, but we didn’t mean it for that reason.

Well, you have the same negative consequences for our producers. So there has to be an adjustment. Maybe a bit of a controversial question there, Judy, but how does that fit in with the free market principles? I wouldn’t say Mexico deliberately, and maybe they have done some policy changes internally.

I’m not fully informed on this. But I’m curious, tariffs versus a free market in terms of currency devaluation. You brought up Mexico.

Does the question make sense that I’m trying to ask? Should we let the market decide what the rate for currency is, like the peso versus the dollar, for example? Because they had some elections, for example. And Scheinbaum, I’m not sure what her impact on the economy was, but I’d say the market reacted to it and maybe devalued the Mexican peso because of it. So I’m curious, free market versus forced markets for lack of a better term.

That’s kind of making my point, that it would be like saying we have the Olympics and countries from all over the world are going to compete. But whether the athletes are supposed to swim 100 meters or jump 10 meters or run or bike, a meter is a meter. That is the standard for performance is the same for all the countries.

If you allow the currencies to constantly change, money is a measure. So if the measure is changing and it’s to the advantage of a competitor, because you’re going to judge their performance in different terms now, that’s just inherently irrational. I think that’s what undermines the basic principles of free trade.

I’m completely for having trade based on comparative advantage. I think that works to everyone’s benefit. But it has to be based on this level monetary playing field.

You have to have that established foundation. So when people talk about the gold standard and I say, yes, there were good things about a gold standard, that’s one. Everyone was using the same standard of measurement of value.

And so it was the same across borders and through time. But when we talk about, I mean, my office when I was at the Hoover Institution was up a floor from Milton Friedman. And so I was very interested in the fixed versus floating exchange rate debates of earlier times.

And I tended to align more with Robert Mundell, who felt that gold be a component in a new international monetary system. He thought we should have adjusted the Bretton Woods system instead of just ending it in 1971 under President Nixon. And I’m certain Milton Friedman would hate what his idea of freely floating rates has turned into.

For one thing, you have countries, let’s just look at China, who accumulate dollars, many countries do this, accumulate dollars as reserves so that they can completely reverse any market tendencies that would affect the impact of their own currency. So if we’re going to have freely floating currencies, because that’s some kind of a free market approach, then I would say, first off, you have to forbid governments from intervening in currency markets, from having reserves that they can spend to change the value of the exchange rate, because obviously, you’re not going to get a free market solution. And what I have always thought with regard to the pure Milton Friedman approach, is at best, you’re talking about a cartel, because you can’t call it free competition and currencies if only governments can issue currencies.

I would find it much more interesting to talk about a Frederick Hayek approach of privatized monies. So the fact that cryptocurrencies are challenging these sovereign currencies as an alternative form of monetary payment is actually quite healthy. But until we’re willing to say that you have no barriers to entry, and that it can’t just be governments who allow to offer currencies that are supposedly now going to be purchased or sold in a free market, my point being that even Milton Friedman said that a gold standard would be in perfect keeping with free trade.

And he said, or at most, one central bank, because what you need is a unified monetary system. He did not trust governments to live up to their promises. That’s why he was very much against the Bretton Woods system, because he thought governments would not live up to their obligations.

And I have to say, he proved right in that. But I do think that we could design a more coherent, logical international monetary order than to continue with what we have now, the currency chaos that makes a mockery of tariff negotiations. I love the conversation.

And Judy, I know you can answer the question that I’m going to propose now. Is the US currently cheating? Sorry, just to use your own words, because I’m using just looking at the Dixie over here is around 99.5%. It’s down about 10% now. So is the US actively cheating right now? And I’m using that because you said it earlier that the term cheating.

Well, we’re not intervening in markets to make it happen. I think we’re seeing people registering their displeasure. They may be buying gold.

That might be an interesting signal in itself. They may be less enamored with US Treasury obligations. I bet you most major central banks would be very much upset if they thought that currency swap arrangements with the Federal Reserve would be suspended.

And I’m not suggesting they would. But there’s another example where the fact that our Federal Reserve, if there were disruption in the exchange rate between the dollar and other currencies, and other major central banks asked to be given or loaned massive volumes of dollars that they could then pass on to their own central banks to give to their private clients. And we would have no say as to how that money was loaned further after setting up a swap arrangement with the central bank of that country.

That would be another violation of any notion of a free market in currencies. Now, the United States is not trying to weaken the dollar. But I think probably what we really are seeking is a dependable dollar.

I think I would like to see an official link between the dollar and some kind of treasury instrument that offered gold convertibility at maturity, because I think then you’re starting to assert some monetary integrity. I would like to see that’s the only thing that really would guarantee the integrity of the dollar in terms of what has often been used as a monetary anchor, as a surrogate for the real economy. I think that would send a powerful signal that the US would be prepared to live by some kind of rule or some kind of market assessment that wasn’t just a faith in a Federal Reserve chairman or in the Federal Reserve’s ability to keep delivering slightly inflationary expropriation of the value of purchasing power as part of its deliberate monetary objective.

I think that people would be drawn to a treasury security that offered gold convertibility. And that could be a first step for the United States to challenge other governments to do likewise. But until you do that, I just see even every day, the European Central Bank, European Union is now retaliating on tariffs.

And what did they do today? They reduced their target interest rate by 25 basis points for the seventh time in a row. Meanwhile, our Federal Reserve remains in wait-and-see mode at a rate of 4.4%. And I think that tells you, it explains why a lot of foreign banks park their cash at our Federal Reserve where they can get this high return on cash. There are a lot of things that are carried out.

The methodology of central banks, I think, deserves to be questioned. I hope Congress will start looking more closely at the hundreds of billions that have been transferred from taxpayers, because that money would otherwise go back to treasury. The Fed is required to remit its earnings back to the treasury, and that would plug a lot of holes in our own fiscal outlook.

But instead, the Fed is making those payments to banks on their cash accounts. And 42% of those cash balances are held by foreign banks, another 40% held by our very largest banks, and only 18% held by our smaller banks, the ones that actually make loans to the private sector. Very, very interesting.

I have lots of follow-up questions on what you just said, Judy. But maybe we’ll start with the mechanics of what a 50-year or 100-year, or it doesn’t matter the year, actually, a gold-backed treasury note would look like. Run us a bit through the mechanics, and what would that do, A, to the value of the U.S. dollar, the value of gold compared to the U.S. dollar, and just how would that change maybe even the global currency system? Well, I started talking about gold-backed bonds quite a few years ago.

And at the time, I was thinking maybe five-year maturities, maybe slightly longer. Frankly, it’s an idea that I’m borrowing from Alan Greenspan. He wrote about gold-backed bonds in the Wall Street Journal in September of 1981.

And he thought it would be a good idea because it would put pressure on Congress and the White House to not engage in deficit spending. He thought that if the yield on gold-backed bonds was lower than on conventional, traditional, we’ll call them nominal treasury bonds, that would send such a powerful signal that Congress would essentially be embarrassed toward spending less and moving toward a balanced budget. What I’m finding now is the concept of the fact that gold has increased so much in value.

Since 1973, the United States, which is the world’s largest holder of gold reserves, we have 261 million ounces, has been carrying those gold holdings at a book value of $42.22 an ounce. So now at what, $3,300 an ounce, there’s a massive windfall profit in there approaching a trillion dollars. What I think would be very smart and what would serve as a barometer on U.S. progress on both the fiscal and the monetary front toward a balanced budget and a dependable dollar would be to have a much longer-term treasury offering.

And I say 50 years because I think the perfect time to launch this, this was long before President Trump started talking about ushering our country into a golden era. And also for the sake of the world economy, I think he’s quick to add. I now think that next year when the U.S. will be celebrating its 250th anniversary of the Declaration of Independence on July 4th, 2026, would be a great day, a day of tremendous visibility for the treasury to offer such a bond.

And I’m saying a 50-year bond, which is not really that out of the question. I mean, France has 50-year bonds. A number of countries have had 50-year and longer bonds.

It would be long for us, but it was considered. When I was on the transition team, when the first Trump presidency was about to be inaugurated, I was assigned to treasury, lead advisor on international affairs. And 30-year bonds were discussed, 50-year bonds were discussed.

And treasury just wasn’t sure whether there would be investor appetite for that. I think if you added this gold convertibility feature, there would be tremendous investor appetite. And it would be highly symbolic.

I mean, look at our outstanding debt. If we even can start reducing the deficit spending at the end of this 10-year window down to zero, if we can actually get to just a balanced budget, if you can imagine, which is now the stated goal of the Trump administration, we would need all of the next 30 years to start paying back the outstanding amount of public debt. So even if you could whittle that down a trillion a year, actually run a budget surplus and start paying back the debt, I would like to think that in 50 years, instead of our fiscal imbalances proving to be the undoing of our nation, that instead we’d be standing tall on our 300th anniversary of the Declaration of Independence with sound finances and sound money as our hallmark.

Sound money is really, really important. We need to get to that because it really will shape the role of the Fed going forward as well if we return to sound money principles here as well. Maybe a two-part question.

A, what is the role of the Fed today and is it being misinterpreted? And B, what is the role of the Fed moving forward based on the ideas you’re proposing here? I think the Fed today is too political, too prominent in credit markets, and too powerful. I’m concerned at the ratcheting up in the tensions between the White House and the Fed. I think this battle needs to be conducted by Congress, but definitely needs to be waged.

The Fed has become somewhat unaccountable. We’re looking at a legal question. Can the chairman of the Federal Reserve be fired by anyone? By anyone? The argument is, well, not by a president, by Congress, by the people.

Here you have someone with so much power in a position to channel financial rewards to some segments of society at the expense of others who could make interest rates be zero so that people who save a little bit every week in their bank account get zilch, while people who can afford to use margin accounts to purchase the stock market can make tremendous gains. I think that people feel the system has been rigged in favor of big investors, big corporations, big business, and big government. And I think the money has to work the same for everyone.

The way the Fed works today is it monetizes the debt, which represents the overspending, the deficit spending, which is why the government has to go into debt to pay in excess of the amount of revenues received by the government. So the Fed monetizes that, which allows the fiscal payments that go directly into the pockets of people. We certainly saw that during COVID.

We see all of these transfer payments to, in many cases, able-bodied people who nevertheless have figured out how to game the system of receiving subsidies from the government. So that increased purchasing power causes inflation. We saw it exceed 9% in fairly recent years.

We saw nobody fired at the Fed for that. So there’s your lack of accountability. And then the Fed uses a mechanism to corral that excess liquidity.

That excess liquidity are reserve balances that commercial banks keep at the Fed. That money is sitting, as of the last week, at almost $3.5 trillion in cash. And when the Fed says we’re raising rates or lowering rates, when they say we’re sticking at our current rate, it means they’re going to continue to pay 4.4%. That’s quite a hefty return on a risk-free, government-guaranteed cash deposit that a bank keeps at the Fed.

And I think if citizens knew how much of the $610 billion which the Fed has paid out to these private companies, banks, as I say, 42% of it going to foreign-owned banks, if the public knew that that money was used, that’s how the Fed carries out its monetary policy. That’s its chief instrument. I think they’d be outraged because the Fed is required by law to take the earnings off its own portfolio and remit them back to the Treasury.

The Fed can’t even cover its own operating costs at this point in September of 2023 because it takes all of the money off its considerable portfolio of $6.8 trillion and gives it all to the banks and then some. The Fed is now in debt for paying these interest payments of $226 billion. And until it starts earning enough to catch up to that, it won’t be paying another cent to the federal budget.

And meantime, interest costs have become the most expensive item on our fiscal spending. So something is really wrong. And I think it’s time for Congress to start asking these hard questions, not just about the way the Fed sees its mandate, but its lack of transparency.

I think if members of Congress questioned the Fed and said, where were those interest payments made? How many went to the top five largest U.S. banks? How much went to these foreign owned banks? I think the Fed would say, none of your business. And now since the Fed is a creation of Congress, that should send up alarms. And I think that we need to conduct this sort of a forensic audit of the Fed to find out how their mechanisms actually function.

And I think to the detriment of providing access to capital for the real economy, and even if banks wanted to, if the Fed ended that practice and banks wanted to put that money into treasury securities, that would help. That would bring down those yields and those rates on the two year, the five year, the 10 year do affect real people operating in the real economy. So I see nothing but good coming out of a congressional action to rescind the right it gave to the Fed under emergency conditions in October 2008 to pay interest on reserves.

That practice should have been ended many years ago. Very interesting. I probably have to rewatch our interview to catch all the nuances you’ve mentioned.

Really, quite honestly, really, really insightful. Judy, talking about sound money, the unit was of discussion for the longest time during the summer in particular. It’s disappeared from headlines.

And I think it has to do with the BIS sort of ending its project or its involvement in the project. My point is, though, any currency or any currency that comes out potentially saying, hey, we’re going to be gold backed now would be the new world reserve currency. Is that why? And I’m trying to phrase it in a way that makes sense.

Is that why the US potentially was afraid of the unit? Does that make sense? Well, you know, not really to me. I guess I’d want you to expand more on what you think the BIS was trying to bring about. I mean, to say that there would be a gold backed currency issued by another government, like who and what does that mean? Because here we are, I think I already mentioned, we’re the world’s largest holder of gold reserves.

But let’s say those are even worth close to a trillion. We have much more than that in outstanding federal reserve notes. So even if we’re just talking about the currency outstanding, 70 percent of which paper money issued by the US is held outside our own borders.

Does that mean that the government stands ready to convert those federal reserve notes into physical amounts of gold? And who gets it? No, what I think is better is to use our gold holdings as specific collateral that would be warehoused even separately. I know people even have this. This hurt my feelings when I realized how many people don’t even trust our government to have the reserves in Fort Knox, where as Americans were promised that that’s where they are currently being held securely.

A lot of people don’t even trust that. I was sad to think our government has reached such low levels of confidence among the populace. I think the gold is there, but I do think an audit is required and I would keep that gold warehoused and it would be explicitly pledged to be used to redeem the convertibility privilege as people exercise that right as bond holders.

And I think what you would find is by comparing the yields on a gold convertible treasury security compared to a nominal traditional treasury security, that would really show the aggregate expectations of investors about the future purchasing value of the dollar. You know, this would be a very similar concept. You asked about the mechanics.

Think of how a TIPS bond works, a treasury inflation protected security. It compensates the holder for unexpected inflation based on a change in the consumer price index. What a gold back bond would do is compensate the bond holder for the unexpected change in the value of the dollar’s purchasing power, but as measured in the price of gold.

So people who think that the dollar is going to continue to lose value relative to gold would pay a premium for such an instrument. And then all treasury and the Fed would have to do is perform better than market expectations, but it would reflect market expectations. The goal would be that maybe at maturity people would rather have the dollars.

I mean, that would be a wonderful result for saying that the Fed and our Congress and White House lived up to the responsibility to restore sound finances and sound money. But let’s bring investors into it to harness the power of those market expectations. And then let’s challenge other governments to do the same, to offer sovereign debt instruments redeemable in a fixed amount of gold.

Then we start to see who’s serious about a level international monetary playing field. I should have asked you that earlier, but what would the yield potentially be on such an instrument? How would you calculate that or what would you say is fair? I think it’s unpredictable and it depends if it’s set up. It’s the structure of the bond and the face amount on the bond.

If you accept that 2% annual inflation means stable prices, I don’t. I think zero inflation means stable prices. But for some people, they might say if the dollar only loses 2% a year for 50 years, then at what point would I be indifferent to getting either the face value denominated in dollars for this bond or some market value of gold likewise scaled up 2% a year, let’s say.

You could set it up that way. Or you could put, it just depends what value you have to have a face value on the bond. If you put today’s market price of gold and then told people if you purchase this, you’re either going to get $3,300 or an ounce of gold in 50 years, what would they pay for that? I think now you’re talking about the interest rate comparable to say a 50-year treasury bond without that convertibility plus the value of that option to purchase gold.

It’s like a gold futures contract and I think it would have tremendous appeal. So I just say the pricing and the yield depend on the parameters of the bond instrument. But I would say that my guess is there would be a premium for the certainty.

And that’s why I say you have to have the gold collateralized and warehouse that there’s certainty that it is deliverable as promised at maturity at the option of the bondholder. That makes a lot of sense and I fully agree with you there. One last topic, we do need to talk about the gold price as today, like $3,300 as you said per ounce.

But what caused that aggressive move higher here in gold? What do you make of the gold price? What is gold trying to tell us perhaps? I think it might be geopolitical in the sense that central banks around the world are acquiring gold. So it’s just pure demand. Gold is becoming more popular in exchange traded funds in the United States.

So a lot of gold was imported to the United States to be part of an investment option for people in the United States that involves physical possession of gold. But I also think that the fact that big wholesale outlets like, say, Costco, very popular with American buyers, are making it easy to purchase gold. And I think a lot of people see it as a good alternative, as a good addition, say, to their investment portfolio, and they’re comfortable with it.

I have always seen it as a surrogate for the integrity of our currency, but there’s no official link there. That’s why I hope there will be in the future. But you have former central bank chairmen such as Alan Greenspan referring to gold as the only real global currency.

And I think to the extent that the dollar is under some duress, that may also be reflected in a higher price for gold. No, thank you so much. I really agree with that.

And we’re seeing a lot of uncertainty in the market as well that’s just leading to a flight maybe to real assets and some money to a degree. Judy, what a wonderful conversation. I have one last question, because I feel like I’m going to get that question below this video.

And it’s Kai, you had Dr. Shelton on your program, but you didn’t ask her this. The point is, what is that question? What am I forgetting? What should we have talked about? Well, let me answer that with a question. The one I think we should be discussing.

The one I think is a fundamental question that should be discussed in Washington, DC, especially at a pivotal moment when I see our Fed chairman is squaring off against the agenda of an elected president. What is the proper role of a central bank in a free market economy? Is it correct to have a rather small committee of monetary officials decide, literally dictate what should be the cost of capital? And I say dictate because I’m going back to this instrument the Fed uses, its tool for conducting monetary policy. It no longer does it the way Paul Volcker did.

The Fed doesn’t intervene so much through open market operations where it would really have to engage with suppliers of capital and those seeking capital. It doesn’t try to influence the rate of treasuries by buying or selling treasuries from its own portfolio. It primarily just states we will pay this rate of interest on bank reserve balances.

And I think that’s too much like, if I may say, I started my career by analyzing the internal monetary and financial condition of the Soviet Union in the 80s. And that is the way Ghost Bank channeled deposits from the population. People who received their earnings were required to put their earnings in the system of Soviet banks where that money was channeled back to the government, which increasingly began spending more than it was taking in.

And I don’t like to see our banking system similarly made into appendages of the central bank. We see an explosion in private lending, private credit, in non-bank financial institutions funding more than half of small and medium-sized business loans. I think that presents both a regulatory problem, but also should challenge the Fed and their concept of stability when this is being undertaken outside of the banking system.

The banks are enjoying playing putsy with the Fed too much and getting hefty interest for letting money sit dormant in risk-free cash accounts. And I think the Fed needs to pay attention and see what’s really happening. And those are the questions that we should be asking in Washington from a financial stability point of view, as well as from whether or not the Fed should be in a position to undermine a president’s agenda that would like to bring down inflation and bring down interest rates, and probably doesn’t appreciate a Fed chairman who comments on a trade policy by asserting that that will cause more inflation and slower growth.

I think that was an inappropriate comment by the Fed chairman, but indicative of this power that the Fed has assumed. – Yeah, he doesn’t dare say stagflation for some reason. Or the fear of stagflation.

Judy, one very, very last question. – Well, he does. He does.

But then scapegoats would make it someone else’s fault, even as the Fed always proclaims responsibility for price stability, whether or not they deliver it. – Yeah. Very last question.

If the position of Fed chair becomes available tomorrow, would you raise your hand? – I would be honored to be considered. That’s as much as I would say. – Okay, fair enough.

That was the last question. Judy, I tremendously appreciate that conversation. And maybe we should catch up in about six months’ time, see how the government has progressed, how Doge has had impact in cutting the deficit spending here as well.

It’d be great to have you back on. Really enjoyed it. – Hey, let’s do it.

Let’s do it. Thank you so much for having me on. – Is there a way where you can send our audience to follow your work or follow you more closely? – Independent Institute does a great job of aggregating my policy pieces.

And you can also follow me on X, at Judy Schell, at J-U-I-S-H-E-L. You’ll hear my latest comments on monetary and fiscal matters. – Fantastic.

We’ll definitely link to that down below as well. Thank you so much for coming on. It was a true pleasure and honor to have you join us here on SOAR Financially and everybody else.

Thank you so much for tuning in. I hope you enjoyed this conversation with Dr. Judy Schell. I tremendously have, and I’ll have to rewatch this episode to catch all the nuances, a lot of good information, a lot of good ideas from Dr. Shelton here in this interview with her.

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Thank you so much for tuning in. We’ll be back with lots, lots more here on SOAR Financially. Thank you.