David Stockman on Scott Bessent and Trumponomics

Go back to Wall Street, Scott.  You are clueless about economic policy.  Only free markets including in wages and labor, sound money and balanced budgets can actually revive economic prosperity, Trump-O-Nomics is just populist statism that will eventually generate an economic disaster for the long-suffering folks of Flyover America who mistakenly think the Donald is their savior.

~ David Stockman, tweet, August 5, 2025

 

Mike Whitney on Trump's trade war with China

One of the oddities of the tariffs dust-up, was the fact that the Trump team never anticipated China’s retaliatory response.  It’s actually amazing.  The administration lives in such an information bubble that they thought China would cave in after their comical “Liberation Day” announcement.  What were they thinking? 

We know what Secretary of the Treasury Scott Bessent was thinking because he made a number of public statements that the US had an edge on China because ‘we were the deficit country.’  Here’s what he said in an interview on CNBC: 

“We are the deficit country.  They sell almost five times more goods to us than we sell to them.  So, the onus will be on them to take off these tariffs.  They’re unsustainable for them.”  He cited estimates that China could lose 5-10 million jobs if tariffs persist, highlighting China’s economic vulnerability. 

This is idiocy.  This is like saying that the ragamuffin panhandler on the street-corner has the advantage over the flush businessman with millions in the bank.  The US is $36 trillion in debt while China has a $3 trillion surplus!  How does ‘being broke’ give us ‘the advantage’.  We’re lucky that China still accepts our currency at all, and yet, our Treasury Secretary thinks that being destitute gives us the “upper hand”.  A man like this should not be Treasury Secretary.

~ Mike Whitney, "Re-thinking U.S.-China Relations After the Tariffs Shipwreck," The Unz Review, May 20, 2025

Shaun Rein: "Hi Scotty Bessent, it's been 12 years since we last met to talk about investing in China"

Hi Scotty Bessent, it's been 12 years since we last met to talk about investing in China when you were still CIO over at Soros (btw, amazing how you moved from Soros' right hand to Trump's side despite MAGA hating Soros).

At the time, it was clear to me you underestimated China's economic rise & support for the CPC among everyday Chinese.  You were uber bearish on China because it adopted a communist political system, and you didn't think the growth rates were sustainable. You took an ideological rather than a data based view at analyzing China.  There was also a whiff of American superiority (let's be real and call it bigotry) in your analysis.

Boy, you were wrong obviously.  You should have listened to me then.  China became the world's largest retail market, powering the profits of American firms from Boeing to Nike, Apple, Estee Lauder, Buick, KFC.  It now rivals us in technology from DeepSeek to Huawei to BYD.

[...]

Now you're US Treasury Secretary. Congrats!  Again, you'll have to tell us how you switched from Soros to MAGA.

But now your underestimation of China is dangerous - it doesn't just hurt your returns for your LPs, now you're hurting the economic well being of me and my fellow Americans for being so arrogant and blind about China.

China has the resolve to push back hard against Trump's tariffs even though you think China doesn't have the cards.  Xi Jinping won't yield.  China views this as a once in a century opportunity to change the world order forever, at our disadvantage.  And the CPC's legitimacy doesn't come from a Democratic vote, it comes from making China strong again after a century of humiliation from American and European imperial powers.  In other words, the CPC has been preparing for a showdown like this since it's very existence.

China has derisked from America since 2017.  They are selling well into ASEAN and Africa.  Your America First strategy has alienated Europe and Canada so they are pivoting back to China.  We are isolated and friendless, just like you, JD Vance and Trump intended.

Xi Jinping, Wang Yi and He Lifeng won't take your call, but I will.  Maybe you'll listen to me to figure out how to extricate America from the economic and geopolitical mess you've gotten us in. 

Shipping volumes are down to covid era levels, farmers are demanding subsidies and Walmart and Apple's CEOs are telling you there will be shortages come the summer.  Our stock markets are like a casino, waiting for word from you or Trump that your tariff stupidity won't go on forever.

America and China both benefit from cooperation and mutual respect.  Let's get back to Bush era respect.  I'll even take the Obama era.

You ignored my advice once 12 years ago, don't ignore it again. 

~ Shaun Rein, Twitter/X post, April 23, 2025

Shaun Rein on Scott Bessent's view of China

It's not going to be an easy win for Trump's tariffs and trade war.  Scott Bessent, the U.S. Treasury Secretary, says that China isn't holding the cards and is going to fold quickly.  Now on a slight personal anecdote, I've actually advised Scott in the past when he was still at Soros Investment Management and he was investing in China.  He has been bearish and negative on China for 12-13 years, ever since I met him.  Basically, his view of analyzing the Chinese equity markets was "It's a communist country.  Thus, from an ideological standpoint, China will fail."  Well obviously in the last dozen years since I advised Scott, China's economy and political system has grown.  So Scott was not looking at data, was not looking at facts about China's strength then and he's not looking at facts and strengths now.

~ Shaun Rein, "'Made in USA:' A Wishful Scheme Dressed Up As Policy," 4:00 mark, Thinkers Forum, April 23, 2025

Scott Bessent: "Our trading partners have taken advantage of us"

This has been years in the making, this unsustainable system.  Our trading partners have taken advantage of us.  We can see this through the large [trade] surpluses.  We can see this through the large budget deficit.

[...]

After 20, 30, 40, 50 years of bad behavior, you can't just wipe the slate clean.

~ Scott Bessent, Treasury Secretary, "Treasury Sec. Bessent says ‘there doesn’t have to be a recession’: Full interview," NBC News "Meet the Press," 2:50 mark and 9:30 mark, April 6, 2025

Leigh Goehring and Adam Rozencwajg on the new global monetary order

We have long maintained that the current period of commodity undervaluation would ultimately conclude with a fundamental shift in the global monetary order. Until recently, we expected this shift to originate from the BRIC nations. China, in particular, has spearheaded efforts to move away from the dollar in bilateral trade settlement, gradually reducing its reliance on the U.S. currency. By last year, nearly 10% of all international trade had already moved outside the dollar-based system—a quiet but unmistakable sign of change. 

More recently, however, our thinking has evolved. Rather than de-dollarization being driven externally, we now believe the catalyst may emerge from within the United States itself. Instead of retreating from the dollar’s role as the global reserve currency, policymakers appear poised to double down on it, introducing a series of sweeping reforms that the media has begun referring to as the “Mar-a-Lago Accords.” Though details remain scarce, both Treasury Secretary Bessent and proposed Council of Economic Advisors Chairman Miran have offered hints as to their likely structure. In short, the reforms are expected to include revaluing the Federal Reserve’s gold holdings, restructuring portions of the national debt, and implementing a tariff regime designed to define what Miran describes as a “global commonwealth” of allied nations. Whether these measures will succeed remains an open question, but there is no doubt they represent a fundamental break from the existing global monetary framework.

~ Leigh Goehring and Adam Rozencwajg, "On Commodities, Carry Regimes & Changes in Global Monetary Regimes," Goehring & Rozencwajg, March 7, 2025

Scott Bessent: "If anything, defense spending needs to rise"

In the history of the world, there have been six reserve currencies.  Tell me what all the former reserve currencies have in common: Portugal, Spain, Holland, France, UK.  They were also security zones.  How did they lose currency reserve status?  Especially Spain, they got highly leveraged and could no longer support their military...  If anything, defense spending [in the U.S.] needs to rise.  You can't keep your reserve currency status if you lose the defense umbrella.

~ Scott Bessent, "The Fallacy of Bidenomics: A Return to Central Planning," Manhattan Institute, 30:30 mark, June 13, 2024

Scott Bessent compares Donald Trump to Ronald Reagan

Both immediately went for tax cuts.  They both focused on the biggest external threat.  Reagan spent the Soviet Union into oblivion.  I think Trump had a different idea for how to deal with China and make up for a lot of bad historical trade agreements...  Even "Make America Great Again" was a Reaganesque saying.  It's an optimistic vision of America instead of managed decline which I think Biden 2.0 would be.

~ Scott Bessent, "The Fallacy of Bidenomics: A Return to Central Planning," Manhattan Institute, 22:10 mark, June 13, 2024