Trump economic adviser: The Fed has entered a "revolutionary moment"!

Former Federal Reserve nominee and economic advisor to Donald Trump, Judy Shelton, said that supporters of rate cuts should calm down first.

The seasoned economist stated, " Rate cuts should not be a major event. What I mean is, we shouldn't all be discussing what the Fed is going to do. I think this could be a revolutionary moment because those who have never really experienced inflation, those who have never really experienced a decline in purchasing power, may pay more attention to the Fed, and I think they will start to question a system that relies on a dozen people voting eight times a year."

Shelton was nominated as a Fed governor in 2020, but her nomination was ultimately stalled due to strong criticism from primarily left-leaning lawmakers. Some believe that her economic ideas are too extreme to be included in the Fed's consensus. This concern mainly stems from Shelton's long-standing support for the gold standard.

Under this system, a country's currency is pegged to the value of gold, with the government setting the price of gold and buying and selling gold at that price, thereby linking the value of the country's currency to this fixed gold price.

The St. Louis Fed explained that during the Great Depression, the gold standard came under attack as people hoarded gold during financial crises instead of depositing it in banks. As a result, gold reserves of countries around the world depleted. Eventually, they were forced to abandon the gold standard.

The United States officially abandoned the domestic gold standard in 1933 and ceased the international exchange of the dollar for gold in 1971.

Today, the value of the dollar is no longer backed by gold, but rather derives from the government deeming it as an acceptable form of payment.

Despite acknowledging the controversial nomination process and the harm it brought her, Shelton remains steadfast in her beliefs about monetary policy. Shelton said, "I hope people start saying, we want our money back, we think money should be as good as gold. It should be equally effective for everyone, not allowing central banks to skew economic and financial benefits to certain groups of citizens at the expense of others."

The Fed on Thursday kept interest rates unchanged, but it paved the way for a rate cut in September, citing "some further progress on inflation." Fed Chair Powell told reporters after the rate decision that a rate cut in September "is certainly in the range of possibilities."

Ryan Detrick, Chief Market Strategist at Carson Group, said, "The reality is that inflation is slowing, and the Fed no longer needs such high rates. In fact, a very real concern is that the economy may slow in the coming quarters, which is why rate cuts are necessary. We believe three rate cuts this year are quite likely."

However, Shelton believes that a rate cut before the election would also highlight that the Fed is a more politically charged institution than people think. She said, "This is political. What I mean is, a rate cut will send a very positive signal to the market. People will feel better. It will start to lower borrowing costs. People hoping to get a mortgage will say this is good When asked if she would consider serving as the Chair of the Federal Reserve if Trump wins the presidential election and nominates her, Shelton expressed an open attitude but refused to explicitly say "yes." She said, "Of course, it would be an honor."