President-elect Donald Trump on Nov. 22 announced Wall Street financier Scott Bessent as his Treasury secretary following weeks of speculation.
“Scott is widely respected as one of the world’s foremost international investors and geopolitical and economic strategists,” Trump said in a statement on the nomination. “Scott’s story is that of the American Dream.”
Wall Street Veteran
Bessent, 62, is the founder of global macro investment firm Key Square Group and earned his fortune when he bet against the Japanese yen alongside progressive billionaire George Soros when serving as the chief investment officer of the Soros Fund Management a decade ago. He left the Soros-led firm to start Key Square, which received a $2 billion investment from Soros.Before joining the Soros Fund Management in 1991, he interned with legendary investor Jim Rogers. Following his graduation from Yale in 1984, he was later employed at Brown Brothers Harriman, Kynikos Associates, and other investment firms.
He was an adjunct professor of economic history at Yale University from 2006 to 2011.
Bessent also sits on the university council at Yale and has endowed three scholarships at the institution.
In 2022, he established two philanthropic foundations and launched the McLeod Rehabilitation Center at the Shriners Hospital for Children in Greenville, South Carolina. Bessent is a supporter of two hospitals in New York and London.
Bessent has largely kept a low political profile.
He hosted a fundraiser for Al Gore and his 2000 presidential campaign. Throughout 2024, Bessent hosted fundraisers for Trump’s campaign.
Cryptocurrency Advocate
Bessent has been a vocal crypto advocate, lauding Trump’s approach to digital assets.Bessent also touted Bitcoin’s influence over younger people and getting them into the financial markets.
“One of the most exciting things about Bitcoin is that it brings in young people and those who have not participated in markets before,” he said in the interview. “Cultivating a market culture in the US, where people believe in a system that works for them, is the centerpiece of capitalism.”
The president-elect ran on a campaign promising the federal government would be friendlier toward Bitcoin and the crypto industry.
Tariff Defender
Bessent has largely endorsed Trump’s pursuit of tariffs, though with some caveats.Trump has yet to endorse a specific tariff policy, but the financial markets have been given a blueprint based on the president-elect’s public comments.
This year, Trump proposed a universal 10 to 20 percent tariff and a 60 to 100 percent levy on Chinese goods.
Writing in an op-ed in The Economist in October, Bessent touted the benefits of “broad-based tariffs” that he thinks would be “more effective than microeconomic interventions like industrial policy that generally rely on the government to pick winners and losers.”
3-Point Economic Plan
In a talk at the Manhattan Institute in June, Bessent laid out his three-point economic plan to grow the economy and reduce the deficit.“Well, I might even advise him to campaign on three arrows,” Bessent stated. “It would be 3 percent real economic growth, and how do you get that? Through deregulation, more U.S. energy production, slaying inflation, and forward guidance on competence for people to make investments—so that the private sector can take over from this bloated government spending.”
According to Bessent, his three-point proposal was inspired by late Japanese Prime Minister Shinzo Abe’s “three arrows” economic recovery initiative, also known as “Abenomics.”
Bessent has also said he would urge Trump to publicly announce his aim to trim the deficit to 3 percent of GDP “by the end of his term.”
“He didn’t get us to the 6 percent or 7 percent [of GDP] deficit. They averaged 4 under him, so get that down to 3,” Bessent stated at a Manhattan Institute conference in June.
The U.S. government budget deficit is the largest among OECD (Organisation for Economic Cooperation and Development) nations, representing nearly 6 percent of GDP last year. The second highest are Japan (5.6 percent), France (3.8 percent), and the United Kingdom (3.6 percent).
A soaring federal deficit has occurred while the country has not been in an economic downturn.
“A strong economy usually means higher tax revenues for the government and lower expenditures on unemployment benefits, which in turn means better government finances,” said Torsten Slok, chief economist at Apollo, in a note.
“If growth slows and the unemployment rate rises, the US fiscal position will deteriorate even further.”
Over the last couple of years, the U.S. Treasury has flooded global capital markets with trillions of dollars in bonds. A large share of the issuance has been concentrated in short-term debt securities to manage rising deficits and surging interest rates.
The incoming head of the Treasury will face the same plight as incumbent Janet Yellen: increasing debts and deficits.
While the national debt was primarily absent from the 2024 election campaign, the Trump team believes the country’s fiscal health can be improved over the next four years.
He’s Called for a ‘Shadow Fed Chair’
Last month, Bessent suggested that Trump have a “shadow Fed Chair.” This would mean nominating Powell’s successor before his second term is complete.“You could do the earliest Fed nomination and create a shadow Fed chair,” Bessent said. “And based on the concept of forward guidance, no one is really going to care what [Fed Chair Jerome] Powell has to say anymore.”
If Trump were to employ his three-point economic proposal, the Fed could then transition “into a proper easing cycle.”
Wall Street is monitoring the relationship between Trump and Powell.
Powell told reporters at this month’s post-meeting press conference that he would not resign if Trump requested him to do so and a possible termination is “not permitted under the law.”
The president-elect has confirmed that he would allow Powell to complete the remainder of his term, which expires in 2026, “especially if I thought he was doing the right thing.”
Trump has stated that he thinks presidents should have a say in the Fed’s monetary policy decision-making, though he does not believe the commander-in-chief should have the final say.
That said, relations between the White House and the Federal Reserve could be volatile for the next two years, leaving investors concerned over uncertainty.
