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Trump Appoints Shelton as Fed Chair, Sparking Market Turmoil

  //house-home.news-articles.net/content/2026/02/2 .. helton-as-fed-chair-sparking-market-turmoil.html
  Published in House and Home on Sunday, February 22nd 2026 at 22:11 GMT by al.com
      Locales: Washington, Alabama, UNITED STATES

Washington D.C. - February 23, 2026 - In a move that has sent shockwaves through global financial markets, former President Donald Trump, now in his second term, has successfully appointed Judy Shelton as Chair of the Federal Reserve. The confirmation, secured late last week after a protracted and deeply divisive Senate vote, signals a dramatic departure from decades of established monetary policy and raises significant questions about the future stability of the US economy.

Shelton's appointment, first floated in 2020 and repeatedly blocked during prior administrations, was finally enabled by a shift in the Senate's composition following the 2024 midterm elections. Throughout her career, Shelton has been a vocal critic of the Federal Reserve's independence and its reliance on traditional, data-driven approaches to managing inflation and employment. Her advocacy for a return to a modified gold standard, a system abandoned in the United States in 1971, is particularly controversial and has fueled concerns among mainstream economists.

The Gold Standard and Modern Monetary Theory

Shelton's belief in the gold standard isn't a simple yearning for a bygone era. She argues that linking the dollar to a fixed quantity of gold would impose discipline on government spending and prevent the Fed from engaging in the "monetary debauchery" she believes has characterized recent decades. Critics, however, contend that a rigid adherence to the gold standard would severely limit the Fed's ability to respond to economic shocks, potentially exacerbating recessions and hindering growth. Modern Monetary Theory (MMT), gaining traction in some circles, posits that a sovereign currency issuer like the US can finance government spending without necessarily triggering inflation, a direct contrast to Shelton's core belief.

Politicizing the Fed: A Dangerous Precedent?

Perhaps the most significant concern surrounding Shelton's appointment is the potential for politicizing the Federal Reserve. For decades, the Fed has maintained a degree of independence from political influence, allowing it to make decisions based on economic data rather than short-term political considerations. Shelton's past statements and her close ties to Trump's administration have raised fears that she will prioritize the President's political agenda over sound economic policy. This concern is amplified by reports that the administration has signaled its intention to exert greater oversight over the Fed's operations.

"The independence of the Federal Reserve is paramount to its effectiveness," stated Dr. Eleanor Vance, a former member of the Fed's Board of Governors, in a televised interview this morning. "When monetary policy becomes subject to political whims, it undermines confidence in the dollar and creates instability in the financial system."

Early Market Reactions and Economic Forecasts

The markets reacted negatively to the news of Shelton's confirmation. The Dow Jones Industrial Average closed down 350 points on Friday, and the yield on the 10-year Treasury note rose sharply, indicating increased inflation expectations. Economists at several major investment banks have revised their forecasts, predicting a period of heightened volatility and potential inflationary pressures.

Some analysts suggest that Shelton might attempt to implement a form of "rules-based" monetary policy, where the Fed adheres to a predetermined set of guidelines rather than responding flexibly to changing economic conditions. While proponents argue this would increase transparency and predictability, critics fear it would render the Fed incapable of addressing unforeseen crises.

The Road Ahead: Inflation, Recession, or a New Economic Model?

The next few months will be crucial in determining the trajectory of the US economy under Shelton's leadership. The key questions are:

• Inflation: Will Shelton's policies lead to a resurgence of inflation, eroding purchasing power and forcing the Fed to take drastic measures to control prices?
• Financial Stability: Will the politicization of the Fed undermine confidence in the US financial system, potentially triggering a crisis?
• Growth: Can Shelton's unconventional approach stimulate economic growth without jeopardizing long-term stability?

The answers to these questions remain uncertain. What is clear, however, is that Judy Shelton's appointment marks a pivotal moment in the history of the Federal Reserve and a potentially transformative shift in US economic policy. The world will be watching closely to see if this gamble pays off, or if it ushers in an era of economic instability.