How Trump’s Treasury Pick Could Usher in a Golden Age for the United States Investing.com
Investing.com — Treasury Secretary nominee Scott Bessent is expected to win congressional confirmation, but how will ‘Bessenomics’ be applied to boost growth and reduce debt without the inflationary impact needed to usher in a Golden Age for the United States?
“We believe the new finance minister, Scott Bessent, plans to implement a mix of policies – which we call Bessenomics – that boosts economic growth and stabilizes the public debt-to-GDP ratio,” BCA Research said in a special report that sought to explore potential policies Bessent may decide on. spend.
The policy mix, dubbed ‘Bessenomics’, is expected to be based on three key pillars: currency depreciation instead of high import tariffs, fiscal policy calibration and increased US oil supply to lower crude prices.
Bessent could push for a dollar depreciation instead of tariffs to boost the competitiveness of American manufacturing and create industrial jobs. With this approach, according to the BCA, the potential destabilizing effects of tariffs on markets and the economy could be avoided.
Bessent could also reach an agreement with the Federal Reserve on a significant reduction in interest rates, provided the government and Congress reduce fiscal spending. This combination of tighter fiscal and easier monetary policy has historically led to a weakening of the currency.
To prevent a rise in inflationary expectations and a sharp rise in bond yields, Bessent’s strategy, the BCA hypothesis, could involve cutting fiscal spending and lowering oil prices. These measures, along with “appropriate macro communication and our credibility, will be enough to lower bond yields despite dollar weakness,” the report speculated.
Implementing ‘Bessenomics’ may not be easy, says the BCA, as a series of economic and political obstacles will cloud the way for Bessent to fully implement its plan.
“Economic, financial market, political and geopolitical constraints may not allow the Trump administration to fully achieve its policy agenda, and outcomes may differ from what the Trump administration desires,” it added.
