Scott Bessent to head the US Treasury

Amid all the discussions of Trump's cabinet pick, that circling around his choice of a Treasury Secretary has fascinated me the most.

This is, after all, Hamilton's heir. What other cabinet post can you think of that is at the center of a Broadway show?

George Washington had only four members in the first cabinet: an Attorney General (Randolph), a Secretary of War (Knox), a Secretary of State (Jefferson) and of the Treasury (Hamilton). Those remain the four most critical of cabinet offices. Okay, Jefferson was also at the center of a Broadway show, 1776 -- but as the title suggests it wasn't about his work as a cabinet secretary. Hamilton, very largely, is.

It delights me that Trump has chosen Scott Bessent. I suppose that if the Trumpets meant the crap they've been saying for so long about George Soros, about how evil he is, how he reaches his monstrous tentacles into everything ... if they meant it they would now be venting their fury at Bessent, the one-time Soros protege designated to run the US Treasury!

What is more ... Bessent is gay. Fine with me but not, I think, so fine with all of Trump's base. Bessent is very out-of-the-closet gay. Married to a man. Indeed, Bessent's husband is a former New York prosecutor, also a class of folks with which Trump and his allies are not thrilled.

Through the 1990s, Bessent worked for Soros Fund Management, the grand-daddy of global macro hedge funds. He may have been THE brains behind that fund’s most memorable play. In the early 1990s, Europe did not yet have a unitary currency. It had several national currencies and a European Exchange Mechanism. The EEM provided that each of the participating nations' currencies were supposed to stay within a predictable range of one another, providing for some oscillation within a trading band. This was supposed to (and did) prepare the groundwork for the consolidation of several currencies into one.

Also in the early 1990s, Germany had to crack down on inflation. The inflationary threat arose out of the reunification of the two halves of their country. The problem though was that as Germany cracked down on inflation, increasing the value of the mark, the Bank of England had to keep up, essentially buying pounds against marks to support the value of the former and stay within the trading band. Soros put his team on the opposite side of THAT trade. They put themselves in the business of selling pounds to the Bank of England.

Soros’ team was selling pounds AGAINST marks, i.e. betting that the latter would rise in value compared to the former. It was largely on the basis of Bessent’s research that Soros had the confidence to do this.

On September 16, 1992, the Chancellor of the Exchequer announced that the government was withdrawing the pound from the EEM. It was abandoning its effort to stay within the trading band. Bessent and Soros had won their high-stakes bet. This day known in some quarters as Black Wednesday. Soros made a lot of money, and Bessent made a reputation. I would argue that, despite the initial shock of it, Black Wednesday was good for Britain -- the pound remained a separate national currency, with the policy independence that implies.

Bessent left Soros in 2000. He did other things we will skip by, then came back to Soros’ fund in 2011. This time he was no mere researcher/analyst. He was made the Chief Investment Officer. He left Soros a second time in 2015 to create the Key Square Group.

Soros is the embodiment of evil for QAnon and for much of the Trumpet base, and for the sort of anti-Semites who always want to lecture you about the Rothschilds. I do not believe that Bessent is Jewish but it does look as if the “Christian nationalists” are calling on an openly gay associate of the ultimate in, well, Rothschildishness in order to allow them to negotiate the pressures of the bond markets. The selection of a Treasury Secretary from Team Soros will be bound to create a feeling among some of the faithful that “our guy has sold out … as they all do. Sigh.”

A Story About Coleridge

This is a quote from a memoir by Dorothy Wordsworth, reflecting on a trip she took with two famous poets, her brother, William Wordsworth, and their similarly gifted companion, Samuel Taylor Coleridge. We sat upon a bench, placed for the sake of one of these views, whence we looked down upon the waterfall, and over the open country ... A lady and gentleman, more expeditious tourists than ourselves, came to the spot; they left us at the seat, and we found them again at another station above the Falls. Coleridge, who is always good-natured enough to enter into conversation with anybody whom he meets in his way, began to talk with the gentleman, who observed that it was a majestic waterfall. Coleridge was delighted with the accuracy of the epithet, particularly as he had been settling in his own mind the precise meaning of the words grand, majestic, sublime, etc., and had discussed the subject with William at some length the day before. “Yes, sir,” says Coleridge, “it is a maj...

Searle: The Chinese Room

John Searle has become the object of accusations of improper conduct. These accusations even have some people in the world of academic philosophy saying that instructors in that world should try to avoid teaching Searle's views. That is an odd contention, and has given rise to heated exchanges in certain corners of the blogosphere. At Leiter Reports, I encountered a comment from someone describing himself as "grad student drop out." GSDO said: " This is a side question (and not at all an attempt to answer the question BL posed): How important is John Searle's work? Are people still working on speech act theory or is that just another dead end in the history of 20th century philosophy? My impression is that his reputation is somewhat inflated from all of his speaking engagements and NYRoB reviews. The Chinese room argument is a classic, but is there much more to his work than that?" I took it upon myself to answer that on LR. But here I'll tak...

Recent Controversies Involving Nassim Taleb, Part I

I've written about Nassim Taleb on earlier occasions in this blog. I'll let you do the search yourself, dear reader, for the full background. The short answer to the question "who is Taleb?" is this: he is a 57 year old man born in Lebanon, educated in France, who has been both a hedge fund manager and a derivatives trader. He retired from active participation from the financial world sometime between 2004 and 2006, and has been a full-time writer and provocateur ever since. Taleb's writings for the general public began where one might expect -- in the field where he had made his money -- and he explained certain financial issues to a broad audiences in a very dramatic non-technical way. Since then, he has widened has fields of study, writing about just about everything, applying the intellectual tools he honed in that earlier work. As you might have gather from the above, I respect Taleb, though I have sometimes been critical of him when my own writing ab...

Jamesian Philosophy Refreshed

Search This Blog