Treasury Pick Sees a “Global Economic Reordering”
James Rickards

President Trump’s pick for Treasury Secretary, Scott Bessent, has stated that he believes the world is on the cusp of a “global economic reordering”. And he would “like to be a part of it”.

He has hinted at the need for a new international agreement on the level of the famous Bretton Woods Agreement of 1944. Bretton Woods, of course, established the world monetary order over 8 decades ago.

It sounds like Bessent is thinking big. He will certainly need to, given the challenges the Trump administration will face over the next four years. Trump will come into office at a key moment in American history, and his administration’s decisions will echo over the coming decades.

The world order is indeed shifting, and if America is to thrive going forward, major changes will be required. “Economic surgery”, as Bessent refers to it.

Bessent has a deep understanding of international trade and finance. Along with George Soros, he famously profited from “breaking” the Bank of England while betting against the pound in 1992.

He also worked closely with Stanley Druckenmiller, one of the greatest investors of all time. Bessent eventually ran his own hedge fund and is a self-made multi-billionaire. He represents a substantial upgrade from the more academic Janet Yellen.

This man has a deep Rolodex and a wealth of knowledge when it comes to trade and finance.

Interestingly, Bessent is a major gold bull:

“I think we’re in a long-term bull market in Gold. We’re seeing reserve accumulation by central banks. I follow it closely. It’s my biggest position.”

A gold enthusiast as U.S. Treasury Secretary? Interesting. Ironically, gold fell more than 3% when Trump announced his appointment, apparently due to Bessent’s hawkish budgetary credentials.

Trump’s pick for Treasury is an advocate of cutting government spending and deficits. During the Biden administration he offered fierce denunciation of economic policies. And he was a strong critic of the Green New Scam, stating that the Biden administration has “repeatedly stretched its legal authorities to direct resources towards favored areas of the economy, often in direct contravention of statute.”

3-3-3 and China

Bessent has proposed the 3-3-3 economic plan for America, consisting of:

• 3% annual real growth
• 3% deficit-to-GDP max
• 3 million additional barrels of oil per day

These goals offer a nice start. If Trump can pull off all three, we’ll be well on our way to long-term sustainability.

Internationally, Bessent sees China as America’s prime competition. He believes the yuan is undervalued and that this is distorting the world economy by favoring Chinese exports. He says Chinese citizens save too much, and don’t consume enough, which is true.

A cornerstone of Bessent’s approach will be aggressive trade policies. Tariffs, and perhaps more importantly, the threat of tariffs. Threats can go a long way, as long as they’re prepared to back them up.

Tough trade policy will be key to dealing with growing worldwide economic imbalances.

Trump’s economic team believes strongly that higher tax rates are not the way forward. Bessent has stated that lower tax rates can actually create higher tax revenue through increased growth. Overall, his views on growth are encouraging:

“I decided to come out from behind my desk because I do believe in this election, there’s a big choice and we are going to decide whether we are going to grow our way out of this debt burden.

I think we can through deregulation, energy, independence and dominance in the US and a growth mindset. We can get back to growth. I feel very strongly that this is the last chance to grow our way out of this.”

This is correct. It is our last chance to change course on the economic Titanic. We’re headed for an iceberg and strong international trade policy and faster growth are the only ways to avoid it.

Of course, as Treasury Secretary there’s only so much Bessent can do. But he should act as a positive influence on Trump in terms of policy. It’s a prestigious position, and even with limited policy tools, he should be able to make his influence felt.

So far Trump’s economic team is shaping up to be a disruptive and powerful force. We’ll be monitoring this situation closely. Stay tuned.

 

James G. Rickards is the editor of Strategic Intelligence, Project Prophesy, Crash Speculator, and Gold Speculator. He is an American lawyer, economist, and investment banker with 40 years of experience working in capital markets on Wall Street. He was the principal negotiator of the rescue of Long-Term Capital Management L.P. (LTCM) by the U.S Federal Reserve in 1998. His clients include institutional investors and government directorates.

His work is regularly featured in the Financial Times, Evening Standard, New York Times, The Telegraph, and Washington Post, and he is frequently a guest on BBC, RTE Irish National Radio, CNN, NPR, CSPAN, CNBC, Bloomberg, Fox, and The Wall Street Journal. He has contributed as an advisor on capital markets to the U.S. intelligence community, and at the Office of the Secretary of Defense in the Pentagon. He has also testified before the U.S. House of Representatives about the 2008 financial crisis. 

Rickards is the author of The New Case for Gold (April 2016), and four New York Times best sellers, Currency Wars (2011), The Death of Money (2014), The Road to Ruin(2016), and Aftermath (2019) from Penguin Random House. And his latest book, The New Great Depression was published in January 2021.

 

 

 

 

 

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