Cryptocurrency surge partly reflects declining trust in government: Economist Judy Shelton

Veteran economist Judy Shelton says the rise in cryptocurrency prices may not be driven solely by Trump’s bullish sentiment.

“The entire decentralized finance movement reflects less trust in government management of money,” Shelton said at Yahoo Finance. invest The conference is on Tuesday.

“I view it as a moral contract between citizens and government, where money serves as a meaningful unit of account and a reliable store of value,” Shelton added. “I think it is very healthy that we challenge the dollar’s ​​protected status as our legal tender by allowing continued innovation in the altcoin space.”

Her comments come as Bitcoin prices rose to nearly $90,000 following Trump’s election victory, which has had cryptocurrency followers salivating over the past few months. Possibility of lighter regulations.

Shelton was an economic adviser to Trump’s first transition team. in the past, It was critical Government bureaucracy and the Federal Reserve’s power over the economy and asset markets.

To that end, Trump’s nomination of Shelton to the Federal Reserve Board faltered in 2020 amid intense criticism from lawmakers, most of them on the left. Some saw her economic ideas as too extreme to be included in the Fed consensus.

This fear stems primarily from Shelton’s continued support of the gold standard over the years.

Under this system, a country’s currency is linked to the value of gold. The government sets a price for gold, and buys and sells it at the mentioned price. The value of the country’s currency is then linked to this fixed rate.

The gold standard came under heavy criticism during the Great Depression, as in the financial crisis people hoarded gold instead of storing it in banks, which was the Federal Reserve Bank of St. Louis. He explained. As a result, countries around the world ran out of gold. In effect, they were forced off the gold standard.

The United States officially chose to exit the gold standard for domestic transactions in 1933 and stopped the international conversion of dollars to gold in 1971.

Today, the United States uses a government-issued currency that is not backed by gold. Also known as paper money, its value is derived from the government deeming it an acceptable method of payment.

“I think a central bank digital currency would be a monopoly that would be terrible. But I think we should continue to encourage it in the private sector. And I welcome the incoming Trump administration’s openness to the cyber community and crypto,” Shelton said.

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Brian Susie He is the executive editor of Yahoo Finance. Follow Sozzi on X @Brian Susie And on LinkedIn. Advice on deals, mergers, activist positions, or anything else? Email brian.sozzi@yahoofinance.com.

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