Decoding Trump’s New Treasury Secretary, Scott Bessent
A “weak dollar” on the way to a strong dollar?

Two documents and a social media post provide some intriguing context and background about President Trump’s newly confirmed Treasury Secretary, Scott Bessent.
One is the January 31, 2024 letter from Bessent to partners in Key Square Capital Management LLC. “We have a highly differentiated view of what a second Trump term would look like. It is our belief that the prognosticators are wide of the mark in how another administration would run. Our analysis leads us to believe that it would look much more like the period 2017-18 in the first Trump presidency than the more tumultuous 2019-20 period — more Calvin Coolidge than Herbert Hoover.”
More: “a re-elected Donald Trump will want to create an economic lollapalooza and engineer what he will likely call ‘the greatest four years in American history.’ Economist Ed Yardeni believes that post-Covid America has the potential to have a boom similar to the ‘Roaring Twenties’ of a century ago. We believe that a returning President Trump would like this to be his legacy….The tariff gun will always be loaded and on the table but rarely discharged.”
The January 2024 Key Square letter also speaks to the issue of the “weak dollar” that The Editors flagged in a January 14, 2025, column (“Trump Economist Signals Weaker Dollar”) about Stephen Miran, Trump’s choice to be chairman of the Council of Economic Advisers. Bessent wrote, “Another differentiated view that we have is that Trump will pursue a weak dollar policy rather than implementing tariffs…. Weakening the dollar early in his second administration would make U.S manufacturing competitive. A weak dollar and plentiful, cheap energy could power a boom. … A strong dollar should emerge by the end of his term if the US reshoring effort is successful.”
Second is a transcript of a May 2024 discussion between Bessent and Kieran Cavanna. For laughs, but maybe without much bearing on Trump economic policy, is this: “So I entered Yale, and I didn't know whether I wanted to be a computer scientist or a journalist. At that time, being editor of the Yale Daily News, oldest college daily, was a big deal, and it was a straight ticket to Time Magazine, Washington Post, Boston Globe--most of which are now pamphlets. Junior year, in October, I was not elected editor of the Yale Daily News. And so for kind of the next two months, I locked myself in my room, went to class, did meals, and came back next semester and decided I better reboot, kind of put on my big boy pants, and think what I'm going to do with the rest of my life…” Bessent seems like a bright guy. We could have used him in journalism.
Also interesting is that Bessent worked for three years for “a Middle Eastern family… wonderful family and a very large investment portfolio.”
On the debt: “we need to at least signal that we're going to be serious about getting it under control. The number I would throw out is 100 days. Every 100 days, the US adds $1tn of new debt. Just in February, the US debt financing cost went over $1tn per year, just in interest payments. Put it in perspective, the defense budget is about $970bn. So now we're now spending more on interest cost than our entire yearly defense budget…Rogoff and Reinhart, in a seminal work that came out around the great financial crisis called ‘It's Different This Time’--they looked at debt crises. And in a huge portion of the crises, there were no indicators six months before the crisis happened.”
More on the deficit and debt and what to expect from a second Trump term: “Trump tax cuts expire in 2025. I would expect that if he wins, they will be extended or made permanent. We would see much lighter touch regulation, and a little less of the off the wall regulatory edicts that we see issued—just generally more market friendly. I think we see lower energy costs, and much more drilling in America. And my differentiated view is that I think we would also see President Trump try to tackle the debt, which is very at odds with the market view that he would be a profligate spender….I think that there is still the opportunity, if an administration, preferably Republican, were to freeze spending--you don't have to cut spending, you need to freeze it. I think if we do that, then interest rates would start coming down, and the market would start being attracted by this idea, the deficits--maybe the deficit could be cut in half over four years.”
And the third item is a post-confirmation social-media post from an X account with the handle “@Scott_Bessent” that said “As Treasury Secretary, I’m committed to eliminating income taxes, replacing them with a fair consumption tax, and adopting a gold-backed currency. We’ll erase debt, restore financial privacy, and unlock new technologies for a prosperous future. The golden age starts now.” That unverified account has since been suspended by X. It appears to have been an imposter fraudulently pretending to be speaking for Bessent.
What’s the bottom line on Bessent?
The overall bullishness is generally in line with what I’ve been saying for a couple years now, and have been correct about. See (“Step Right Up, Folks: When the Chips Are Down for 2024, Here’s the Logic for a Bet on America,” December 29, 2023, complete with an Ed Yardeni “roaring Twenties” reference of my own; “Pervasive Bearishness Looks To Be Unwarranted,” March 19, 2023, also with an Ed Yardeni “roaring Twenties” reference. Also, “Happy New Year — 2022 Was the Worst Year for Stocks Since 2008,” January 2, 2023.)
The dollar piece of it is interesting, though. Now we have the incoming chair of the National Economic Council, Stephen Miran, complaining about “persistent dollar overvaluation” and the new Treasury Secretary, Scott Bessent, writing that “a weak dollar…could power a boom” on the way to a strong dollar “by the end of his term.”
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