Trump’s Treasury Pick Isn’t Alarming, but He Is Unusual

Opinion|Trump’s Treasury Pick Isn’t Alarming, but He Is Unusual

Scott Bessent, Donald Trump’s pick for Treasury secretary, has some pretty unorthodox views. Unorthodoxy can be a good thing at times, and it’s conceivable that Bessent will end up a big success at Treasury. But deviation from the norm is not necessarily what you look for in a Treasury secretary, who is responsible for formulating the nation’s economic, financial and tax policies.

What Bessent stands for hasn’t gotten a lot of attention yet because he is a levelheaded, stable, congenial person, which puts him way above some of the other Trump picks. He’s also smart and knows his way around financial markets, a plus for the job. He became a billionaire by working for the prominent investors George Soros, Jim Chanos and Jim Rogers, and later founding Key Square Capital Management, a hedge fund.

But when you listen to him closely, you hear some surprising things. Let me take you through one fireside chat that Bessent had on Oct. 2 — that is, before Trump chose him, but while he was in contention for the job — with Michael Green, the chief strategist of Simplify Asset Management.

At one point, the conversation turned to Japan. Its central bank has kept interest rates low to stimulate its economy, going by the conventional economic wisdom that raising rates discourages borrowing by consumers and businesses, chilling growth. After two increases earlier this year, it has been reluctant to raise rates further. But Bessent told Green, “I believe that the Bank of Japan is actually going to stoke growth when they raise rates.”

Bessent’s logic is that Japanese households are big savers, and keep a lot of their money in bank accounts, so when rates go up, their interest income rises, allowing them to spend more. Himino Ryozo, a deputy governor of the Bank of Japan, said something along those lines in a speech last year, although that was back when its key interest rate was still negative. It’s also a tenet of modern monetary theory, a heterodox school of economics.

There’s no question that savers benefit from higher interest rates, but to say that higher rates stimulate the Japanese economy overall remains a minority view, even within the Bank of Japan. (Otherwise they would have raised rates sooner and faster, right?)