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Trump Appoints Wall Street Expert Scott Bessent as 79th Treasury Secretary: What It Means for U.S. Economy and Markets

Hannah Perry | November 25, 2024

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Trump Taps Wall Street Vet Scott Bessent to Run the Treasury Department

President-elect Donald Trump announced late Friday evening that he has chosen Scott Bessent to lead the Treasury Department, making him the 79th Secretary of the Treasury of the United States. In a statement posted on his social media platform, Truth Social, Trump expressed his pleasure in nominating someone he described as “one of the World’s foremost International Investors and Geopolitical and Economic Strategists,” emphasizing that Bessent’s story embodies the American Dream.

While Bessent did not respond to immediate requests for comments, the appointment marks the resolution of a week filled with uncertainty regarding this crucial, market-facing role. The transition team has experienced public infighting, even drawing criticism from Tesla CEO and Trump advisor Elon Musk, who opposed Bessent’s selection. Trump’s unpredictable Cabinet choices have left investors on edge, particularly related to his plans for the Treasury Department.

The selection of Bessent appears to align with investors’ desires for a seasoned professional adept at navigating complex financial landscapes. Early signs suggest that Bessent has managed to influence Trump into adopting more market-friendly policies compared to his campaign rhetoric. Such adjustments may help ease Wall Street’s anxiety as Trump prepares to enact some bold economic strategies, including proposed tariffs and tax cuts.

Background of Scott Bessent

Bessent, 62, did not hold a position in the first Trump administration but emerged as an early supporter and robust fundraiser after recognizing Trump’s viability as a candidate. He has played a mediator’s role between the outspoken president and the often-volatile markets on key issues surrounding the Federal Reserve, national deficits, tariffs, and currency policy. His approach has translated Trump’s audacious economic proposals into more traditional Republican fiscal language.

Raised in South Carolina, Bessent completed his undergraduate degree at Yale University and subsequently taught economic history there. He has been a longtime associate of the Trump family, primarily in fundraising roles, and currently manages Key Square, a macro hedge fund he founded after serving as chief investment officer for investor George Soros. Bessent’s ties to Soros frequently surface, although he noted in an October interview that the two have not spoken since 2016.

Controversial Economic Ideas

Bessent’s interest in reforming the Federal Reserve began to garner attention when he proposed creating a “shadow Fed chair,” designed to alleviate the potential conflict between the current Fed chair Jerome Powell and Trump. Given Trump’s historical criticisms of Powell’s rate-setting decisions, the prospect of this shadow position aimed to signal to markets where monetary policy might head under the new administration.

Despite Bessent’s initial enthusiasm for this concept, he later acknowledged that pursuing it further would be impractical. He did, however, engage Trump in discussions regarding the risks of interfering with the Fed chair’s operations, resulting in Trump seemingly accepting Powell’s continued leadership.

Policy Impact and Financial Stability

As Treasury Secretary, Bessent will play a pivotal role in upcoming tax negotiations. Given that Republicans have unified control over Congress, analysts worry about potential tax-and-spending measures that could escalate the federal deficit. With long-term U.S. debt yields already on the rise post-election, Bessent acknowledges the gravity of these risks and advocates for reducing the current deficit to a figure beginning with three by the year 2028.

Bessent argues that under Trump, demand shocks from tax cuts were countered by regulatory rollbacks, whereas current policies under the Biden administration have led to inflation due to excessive government spending coupled with increased regulations.

Trade and Tariff Management

Bessent has suggested that Trump’s tough stance on tariffs may soften as trade negotiations evolve. He anticipates distinctions between different countries, fostering a trade environment categorized by zones based on security interests and economic collaboration. While he acknowledges that a separation from China would diminish U.S. leverage, Bessent believes that better relations are possible, although contingent upon changes in leadership.

Currency and National Security

Bessent’s insights on currency policy affirm a traditional strong-dollar framework, contrasting previous inexplicit remarks by Trump regarding the desirability of a weaker dollar. His upcoming responsibilities could also encompass decisions on national security issues, such as imposing sanctions. Referring to the Biden administration’s approach as inadequate, Bessent has suggested measures to impose secondary sanctions on Chinese entities to reinforce U.S. strength in international relations.

The Road Ahead

The extent of Bessent’s influence and authority within the Trump administration’s decision-making processes remains uncertain. Senate confirmation would grant him legal authority, yet Trump often values advice from a diverse pool of individuals, which could lead to competing perspectives influencing policy direction. Nonetheless, Bessent’s market-oriented take has begun making waves, and his upcoming role poised at the helm of Treasury will be closely watched by both Wall Street and the American public.

With this strategic appointment, the newly formed administration under Trump may signal a shift in economic policy direction. Whether Bessent can effectively balance Trump’s assertiveness with traditional economic wisdom will be critical to shaping the future of U.S. fiscal strategies.