Judy Shelton on Fed Policy, Interest on Reserves, and Potential Fed Chair Candidacy

Federal Reserve Policy and Inflation

• 💡 Chair Powell is criticized for being intellectually outmaneuvered, as data shows inflation is steadily decreasing, yet the Fed abandoned its approach to lower rates.
• ⚠️ The concept of tariff-caused inflation, promoted by Powell, is presented as a "bogeyman," as evidence suggests Americans would make substitutions or go without rather than simply pay higher prices for imported goods.
• 📊 Despite collecting significant tariff revenue, the U.S. has not seen a corresponding rise in inflation, undermining the Fed's logic.

Interest on Reserves and Congressional Scrutiny

• 💰 A potential congressional move, supported by Senator Ted Cruz and President Trump, aims to scrutinize the Fed's practice of paying interest on reserves.
• 🏦 Since September 2022, over $600 billion has been paid out to commercial banks, private companies, and money market funds instead of going to the Treasury as remittances.
• 🌍 Over 40% of these payments are reportedly going to foreign banks, raising concerns about the commingling of functions between the Treasury and the Federal Reserve.
• 📉 This practice is described as perverse, as banks may be receiving these payments to offset losses from not lending to the general public.

Future of the Federal Reserve Chair Position

• 📈 Judy Shelton is noted as a candidate for the next Fed chair, with a 14% chance on Polymarket.
• 🏆 Shelton expresses appreciation for being nominated to the Fed's Board of Governors by President Trump and is honored to be considered in the rankings for the top job.
• 🗣️ She is recognized as a consistent voice of reason in discussions about economic policy.