The Sound Money Project takes on Fed at Jackson Hole Summit

This past weekend, down the road from where the Kansas City Fed held its yearly Economic Policy Symposium, the American Principles Project (APP) hosted the first ever Jackson Hole Summit.

There, economists, policy makers and sound money advocates gathered to “challenge the policies of the Federal Reserve System and to hold the Federal Reserve accountable for the impact of today’s monetary policy on the nation’s economy,” as Steve Lonegan, Director of Monetary Policy at APP and summit organizer stated in his welcome address.

The organizations represented at the Summit included the Heritage Foundation, the Council on Foreign Relations, the Cato Institute, the British Parliament, the United States Congress, and the Atlas Network’s Sound Money Project.

Atlas Network Sound Money Panels included:

• “What if Central Bankers are Wrong?” by Dr. Judy Shelton
• “A National Monetary Commission to Chart the Uncharted Monetary Territory” with Dr. William Luther
• “The Impact of Federal Reserve Policy on Millennials” with Johannes Schmidt
• “The International Monetary System and the Frontiers of Reform” with Dr. Alejandro Chafuen and Dr. Judy Shelton

This conference, the first of its kind, was by all measures a success. Not only did it sell out two weeks in advance and attract press from across the country, but also brought together advocates of monetary reform and challenged them to address monetary policy in a way that could easily reach the general public.

The Jackson Hole Summit took an important first step in making monetary policy, formerly the “currency debate,” a mainstream issue once again.

This is important because, for years now, politicians have made monetary policy an issue that is incomprehensible for the majority of Americans, although it affects their day to day lives, both in the short and long terms. From buying bread at the grocery store to paying off mortgages, the value of money plays a fundamental role in the lives of hundreds of millions of Americans.

Furthermore, discretionary policies mean that Americans cannot plan ahead and instead waste time and resources all because the purchasing power of money is not stable.

Unfortunately, money has become so far removed from the public debate that everyday citizens seem to have forgotten the importance that the Federal Reserve plays in their lives and in their futures. It should be noted that this was not always the case and elections have been won and lost over monetary issues.

That is why “it is so important to challenge the privileges, prerogatives, and the power of central banks,” as Dr. Judy Shelton, Co-Director of the Sound Money Project stated in an interview with the Wall Street Journal in Jackson Hole. “I think that having a conference to bring up the possibility that central banks are not the solution, but actually the problem in terms of regaining real economic growth is vitally important.”

Luckily, throughout the course of the Summit, speakers did just that.

The first lecture, “Government & Money: A Historical Perspective,” was given by Dr. Lawrence White of George Mason University. There, Dr. White explored the history of money in the United States and set the tone for the conference by suggesting that the inflation rates under gold remained relatively stable and that “price level uncertainty has been much higher under the “Federal Reserve than during the pre-Fed period.”

Certainly, such conclusions were not likely be reached by central bankers just down the road at the Fed’s Symposium (although some central bankers both here and aboard are beginning to question the effectiveness of central bank discretion.)

In the first Sound Money Project lecture of the day, however, Dr. Judy Shelton did raise that necessary, yet perhaps provocative question: “what if central banks are the problem and not the solution?” Throughout her lecture, Dr. Shelton noted that the world’s largest economies are currently operating under different monetary regimes, manipulating their currencies and undermining international monetary stability. Contrary to what some central bankers might believe, that does not constitute competition, but rather cheating.

The world needs rules, but as Dr. Shelton noted in a recent article published in The Hill, “there’s only one problem with warning nations not to manipulate their currencies and to play by the rules: There are no rules.” Because of this, the world has not known a system where free trade was based on genuine value since the collapse of Bretton Woods in 1971.

In a later panel titled “A National Monetary Commission to Chart the Uncharted Monetary Territory,” Dr. William Luther of the Sound Money Project along with Dr. Thomas Hogan, Chief Economist of the US Senate Banking Committee and former Sound Money Project fellow, Ralph Benko of APP and Dr. Norbert Michel of the Heritage Foundation, discussed the plausibility of reestablishing a national monetary commission where experts could provide testimony on the Fed’s performance in terms of output, prices, employment and overall financial stability. Such a commission could garner public interest in the Federal Reserve’s record and also put pressure on politicians to analyze the Fed’s performance as a lender of last resort.

As Dr. Luther sagely noted, if we had had such a commission in 2008, “perhaps it would have allowed us to avoid or at least mitigate some of the monetary missteps that we experienced during that period.”

Later, in a panel titled “The Impact of Fed Policy on Millennials,” I had the opportunity to join Jared Meyer of the Manhattan Institute, Jiesi Zhao of the Young America’s Foundation and Julie Borowski, a well known libertarian blogger, in a discussion on how the Fed’s discretionary monetary policies affect young people. Here, the panel concluded that Fed discretion and economic activism disproportionately affects millennials and makes it harder to reach traditional milestones such as getting a first job, buying a house or even getting married.

As Jared Meyer noted, “the Fed picks winners and losers through its policies and the young are consistently the losers.”

The panel also offered me an opportunity to speak about the history of the morality of money and to call on millennials to help reclaim money’s moral high ground. As I stated in a recent piece published in Town Hall Finance, “for those who are interested in living in a just and moral world, the idea that money should not be debased or manipulated should come as naturally as the idea that theft and plunder are wrong.”

The final Sound Money Project panel was moderated by Dr. Alejandro Chafuen, co-director of the Sound Money Project and president of the Atlas Network. There, Dr. Chafuen led Kwasi Kwarteng, a British MP, Dr. Judy Shelton and Maurice Mctigue in a discussion on “The International Monetary System and the Frontiers of Reform.” This panel provided the audience with an international perspective of the direction in which international monetary policy should take. One concept that was particularly well received was Dr. Shelton’s “gold convertible “ Treasury bonds. As Breitbart explains:

The bonds would be equivalent to regular 5-year Treasuries, but the face value would be redeemable at the option of the bondholder into dollars or a fixed amount of gold. Bondholders would gain protection from losing purchasing power, and the government would be able to pay much lower interest costs.

All in all, the Jackson Hole Summit was a success and proponents of sound money can rest easy knowing that there are individuals ready to once again bring the cause of money to the mainstream. The Sound Money Project is committed to being on the forefront of that public policy battle and, surrounded by such passionate allies, I am sure that we will see success in a not so distant future. After attending the Jackson Hole Summit, it is clear to me that the age of discipline and a rule based monetary system is once again on the horizon.