Scott Bessent: We Need to ‘Examine the Entire Federal Reserve’
“So, you know, I think this idea of them not being able to break out of a certain mindset, you know, all these PhDs over there, I don’t know what they do. I don’t know what they do. This is like universal basic income for academic economists.”
I could listen to and watch Treasury Secretary Scott Bessent all day long. He’s brilliant with communications and easy on the eyes. (He sounds like he’s not feeling well in this video, though.)
He makes my heart flutter when he says things like, “What we need to do is examine the entire Federal Reserve institution and whether they have been successful.”
Oh my gosh, yes please! Then END THE FED.
Bessent made the comments on CNBC’s Squawk Box:
I think that what we need to do is examine the entire Federal Reserve institution and whether they have been successful. I’m speaking, actually, I’m going to be in the building this evening. There is a regulatory conference that begins tomorrow. I’m the keynote speaker tonight, talking about regulation the Fed as well monitor deals with monetary policy, regulations, financial stability.
And again, I think that we should think has the organization succeeded in its mission? You know, if this were the FAA and we were having this many mistakes, we would go back and look at why. Why has this happened?
I mean, look at the, as you said, at the top of the at the top of this broadcast, there were, there was fear mongering over tariffs. And thus far, we have seen very little, if any, inflation. We’ve had great inflation numbers.
So, you know, I think this idea of them not being able to break out of a certain mindset, you know, all these PhDs over there, I don’t know what they do. I don’t know what they do. This is like universal basic income for academic economists.
.@SecScottBessent: "What we need to do is examine the entire Federal Reserve institution and whether they have been successful… All of these Ph.D.s over there, I don't know what they do… This is like Universal Basic Income for academic economists." pic.twitter.com/ITzSwQKpjS
— Rapid Response 47 (@RapidResponse47) July 21, 2025
The Federal Reserve has been at the forefront due to its inaction on interest rates. Rumors have floated that President Donald Trump would fire Jerome Powell.
Trump denied the rumor, but mentioned that he could do it for fraud. He mentioned the $2.7 billion renovation of the Federal Reserve building, claiming Chairman Jerome Powell “didn’t have proper clearance” to start the project.
It’s all political, playing games with our money. Suspicions over Powell skyrocketed when the Fed cut rates by 50 basis points (0.50%) in September 2024. People accused him of trying to help Kamala Harris in November.
The Fed made this decision despite high inflation numbers and no signs of the inflation rate decreasing.
Our inflation has gone down, except last month, since Trump took office, and now Powell takes a cautious stand. Weird.
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Comments
Powell is a political animal. He was recommended by insiders during his first administration. Just like Bill Barr he was a plant by the deep state. We need a Fed Chairman that will be the next Paul Volker. Volker focused on the M2 supply. You could then look at the velocity of money through banks to consumer products, bill payments and loans. That’s the key. M2 supply and velocity of money moving through the system.
Is this woman capable of writing an article and not sounding like cringy high school girl? Can someone please edit Mary? I can’t even read this. I get into the first paragraph and I have to stop. It’s so cringe, she’s a terrible writer, utterly unprofessional.
She a fan-girl and is open about it. What’s the big deal w that? Big SB is a sort of dreamy, super intellect, and id like to see him in charge of more stuff too!!
As a devout Catholic, Mary has a big thing for homosexual men in positions of authority.
trying to get the to change teams??
🙂
Unless someone forced you to read articles by Mary you are quite free to ignore all her writings in the future sweetie.
Inflation didn’t go down, instead some measures of particular prices of goods/services did. Prices are a lagging indicator. Inflation is a monetary phenomenon based on the size of the money supply. The more $ the Fed Reserve prints into existence the less the value of the $ in existence. What would be nice is an independent audit of the Federal Reserve but first let’s get the independent audit and video of the gold vaults (as promised) to see if we really still have 8,134 Tons of physical gold on hand.
We don’t have 8,134 Tons of “physical gold” in the vaults. We *ie. the U.S. government) sold that off a long time ago. Any gold remaining in the vaults belongs to foreign governments. That’s the dirty little secret the U.S. government has been keeping for decades.
And like the Epstein Client list, promise made, promises broken. So don’t expect any official audits any time soon, if ever.
The US gov’t claims they still own that gold and it hasn’t been sold off let’s see if they are telling the truth or blowing smoke. Step one is determine the extent of the gold held. Step two is to determine ownership. Step three is determine whether the US Gov’t or Fed Reserve has used gold held to ‘loan’ to other parties or otherwise intervened to artificially impact the price of gold over the years. Now that physical delivery is a better/easier option for settlement on the exchanges the spot price has exploded which suggests there may have been price manipulation in prior years to suppress the price. Discovering proof of manipulation or worse that the US govt has in fact sold the gold would definitely cause a rethinking about the implied value of the Dollar.
The part that can’t be ignored is the rate change in Sept.
I don’t know if that was a Hate Trump vs love of Dems. More specifically love of Dem’s inflationary policy. Per my diatribe below, has the US banking system bet too heavily on inflation and now they can’t pull those bets off the table?
well, I appreciate the tease
but anything they could do wont stop the control the fed exerts over middle america
BUT for a pro capitalist wh to even show interest in correcting the fed
its a welcome moment
“I think that what we need to do is examine the entire Federal Reserve institution and whether they have been successful”
You mean, like a (gasp)… AUDIT?? 💓
The Fed matches the number of dollars circulating to what the economy can do at once, so that the dollars don’t bid up the price of stuff that’s more than the economy can do at once, or have parts of it fall idle for lack of bidding dollars.
It does this by creating or destroying dollars.
It creates or destroys dollars by selling stuff it has (e.g. bonds) at a greater rate, or buying back stuff with newly created dollars (buying back debt, e.g.).
What regulates this selling or buying back is the target interest rate. They change this target rate in monthly meetings according to leading indicators of inflation. If inflation looks rising, it sells more debt and burns the dollars it gets. You can’t spend debt so that restricts bidding for goods and services. If inflation looks falling, it buys back more debt with newly printed dollars so there can be more bidding on goods and services. In between setting new targets, whether the market short term interest rate is above or below the target tells the fed to buy or sell more to hold the interest rate at the target.
Something gold can’t do for you.
What most people don’t understand, I think, is that money is not wealth. It is to an individual, but not to a country. Money is a ticket in line to say what the economy does next, presumably something for you. The Fed creates and destroys tickets to match what the economy can do at once.
There’s no increase or decrease in wealth, anybody’s wealth.
Maybe that takes some of the sinister magic out of it.
What? Of course there is a change. If I have $100 and the Fed.Reserve increases the money supply overnight by 10% then the purchasing power of my $100 decreased by 10% the next morning. All things equal every seller will immediately increase prices by 10% from the day prior.
Then there’s the question of access to capital (aka borrowing). The old saw that Banks loan to those who ‘don’t need the money’ has a good deal of truth. Those with the ability to borrow in a low or zero rate environment will then be able to acquire assets using borrowed capital at low rates unavailable to the general population. See the housing market as one example.
There was an enormous shift in the % of assets/wealth held by middle and lower class to the top quintile since we went off the last vestiges of the gold standard in the early ’70s. It accelerated during the decade and a half of low to zero rates following the housing crash. If nothing else a return to a gold linkage would very quickly reveal the actual market perception about the value of the US Dollar and US Bonds if they could be redeemed for gold. That would be one heck of an example of price discovery.
If productivity goes up 10% as well, then your $100 buys exactly what it did before. LIkewise is money velocity declines by 10%. Stuff changes and the Fed responds to keep the value of the dollar constant. Actually 2% inflation is the target because that adds stability to the economic system against sudden failures.
Assuming your argument that the means used by Fed has worked to achieve the end goal of Dollars with a constant value then the same basket of goods/services in ’73 would cost the same in inflation adjusted Dollars today. Are you arguing that is in fact the case? Lets keep it simple and use single family home prices and average wages as the metric. Let us know what you find.
huh???
the free market works to “tell” people what the banks can charge
“something gold cant do for you”??
not even sure what that means as gold is the pegged standard that unless toyed with ( fdr ) by the government backs up the usd
No, it isn’t. We went off the gold standard in the Nixon administration, and that was long after we should have done. It was one of the few things Nixon did that actually made sense. Dollars have not been “backed” by anything since then; the whole concept of “backing” dollars is obsolete. Dollars don’t “stand for” money, they are money, and money doesn’t need “backing”.
Dollars have value as medium of exchange so long as they continue to be accepted. I’d agree with you on the distinction between cash and money that you imply. I definitely agree about ‘wealth’ of an economy or Nation as a whole. Capital needs to be put to work/invested to create economic activity, employ people, innovate and expand.
In a perfect system I’d agree with you about gold. Unfortunately the system is far from perfect and the incredibly loose monetary policy by the Fed in creating more monetary supply on a unbroken trendline since severing the gold link has been disastrous for 70-80% of the US population.
If nothing else the ability to exchange notes and redeem bonds for gold acted as an outer limit to constrain the Fed from recklessly increasing the money supply. Without the immediate consequence of an outside constraint the Fed printed and the Treasury/Congress embarked on reckless spending. Our National debt wouldn’t be at $37 Trillion with a link to a gold exchange b/c the gold would have been drained long before now.
The good thing about a constraining gold exchange is that it is set by market forces and if allowed to operate works to prevent reckless fiscal and monetary policy. I’d also argue it works to increase the value of the available capital for average folks, allowing them to earn a net positive rate of return in lower risk bank accounts v having to move into more risky equity market investments to do so.
Chief, the problem with a gold standard is that the gold supply grows at random, at rates that have no connection with the need for an expanded money supply. The gold supply grows and shrinks as new mines are discovered and old ones play out. If you suddenly have a huge influx from newly opened mines, you get inflation; even hyperinflation, as Europe experienced when the gold from the New World started flowing in. And if production has a major spurt, and the gold supply doesn’t increase enough to match it, then you have deflation, which is even worse than inflation; no one wants to invest money in anything, because they’re better off just sticking it in a vault and letting it appreciate on its own.
The idea of the Fed is to control the money supply and make it grow at the same rate as production does, or as close to it as possible. Now at times the Fed has failed to do this, but at least when it’s doing its job properly we can expect good results, whereas with gold it’s always up to pure chance.
Milhouse,
If there were new mines going into operation on newly discovered gold deposits then sure your argument has merit. There haven’t been any new large deposits discovered in decades. Most mines have closed.
What makes the gold standard work is the direct market forces. If I run a central bank of X Nation and we have several $ Billion in US bonds with the ability to directly swap for gold that decision is a very clear signal to other market participants on my view of the value of the US Dollar. So is everyone else’s decision.
With a link to gold swap suddenly it doesn’t matter how intriguing a Fed Chairman’s remarks are or how compelling a case a Treasury Secretary lays out. Instead market forces easily and transparently communicate a very clear price signal about the value of the Dollar. Why wouldn’t we want that? Especially given that it inherently works to achieve greater fiscal discipline b/c when the Fed prints too many Dollars (reducing their value and creating inflation) folks can swap for gold which acts as a break. No wild money printing by Fed Reserve means the Treasury/Congress can’t be as reckless in spending/borrowing b/c the market for US debt will crater without a Fed Reserve backstop to buy excess bonds the market refuses to absorb.
That’s easy to say, until you realize that the same weight of gold that would buy you a house or a car back in 1933 is quite close to the weight that will buy you a house or a car today. Gold certainly doesn’t need to be “backed” by anything.
I didnt say anything about still being on the gold standard
and nixon had to take us off the gold standard as the rest of the world had revolted against the fiscal responsibility
you said: “money doesnt need backing”
I’ll give you another chance to re-think that!
Money doesn’t need to be “backed” by anything. It’s a medium of exchange in itself, and its value comes entirely from the fact that people are willing to accept it in exchange, confident that other people will be equally willing in turn. And they get that confidence from the fact that the IRS guarantees it will accept it, so if worse comes to worst you can use it to pay your taxes, and also from the fact that it’s legal tender, so you can discharge private debts with it whether your creditor likes it or not.
The idea that the government must be willing to sell you gold for dollars, at a fixed price, is obsolete and stupid. It reflects a mindset stuck in the olden days when gold was money and dollars weren’t themselves money but merely represented money. It’s the opposite now; dollars are money, and gold is merely a commodity, exactly like diamonds or wool.
As Smith taught us 250 years ago! The Wealth of Nations should be required reading before anyone comments on economics in any way.
Smith destroyed the “gold equals wealth” myth by pointing out that Spain was flush with gold, but was a very poor country. Beggars had gold plates but nothing to eat off them. Whereas Poland had very little gold, but was a very rich country. Therefore the quantity of gold in a country could not be a measure of its wealth.
millhouse re:post @ 2:57 am
going to have to respectfully disagree with you
again,,if I am reading you correctly you are for fiat and I am for backing the usd
fiat means the government dictates (fed) and gold backing means there is a tangible way to peg the usd which then limits governments in their free wheeling spending
yeah THAT IS OLD FASHIONED
but still an oldie but a goodie
You’ve described a world where someone doesn’t have their thumb on the scale.
We live in a world where, at present, thumbs are on the scale.
The question is why is an institution that is supposed to be beyond reproach doing this?
They say they are spending their own money.
And how do they make money?
By manipulating the interest rates we pay.
Huh? Who says they’re spending whose money?
The gold standard is not prefect, and the current system has much greater theoretical appeal. It sounds like capitalism vs socialism. Damn the relative stability of the former for the comforting, dreamy promise of the latter.
No system is perfect. I’d be in favor of a limited gold standard… or really an exchange. Allow every US Citizen to walk into any Bank and redeem dollars for gold limited to one OZ per month from any account they hold with that Bank. Then allow everyone to redeem bonds at maturity for gold instead of cash as an option. Don’t set an artificial price, let the market set the spot price. This allows the average person to influence monetary and fiscal policy over time with their collective decisions. It also acts a brake on size/scope of gov’t b/c the gov’t gotta make sure the gold is available, which means they gotta posses it or buy it instead of boondoggle spending. Creates a very visible picture of the value of US Dollar to gold for everyone to see and act upon. All that works to restrain money printing and overspending by Federal gov’t.
“let the market set the price”
thatttt is perfect
anything that deviates from that is no longer capitalism
( didnt we discuss this a week back or so?) ( crony capitalism)
Our current system is largely ‘crony capitalism’ where the govt directly/indirectly picks winners and losers via imposition of statutes, regulations, agency ‘Interpretations’ of the regs, policies and prosecutorial discretion.
The Covid mania era illustrates this. Gov’t imposes all sorts of things business must do to remain open…big box stores/corporate entities had the resources to comply but Mom Pop small business…not so much. Advantage to big business …..who just happened to be making campaign contributions directly and indirectly via industry lobbying efforts.
Illegal farm labor is another good example. The AG sector could hire US Citizens if they raised wages (see Green Valley plant in Omaha Men after the ICE raid) and US Citizens will do the jobs. They could use the special visa category that the Big AG lobby demanded Congress create for them to hire temporary workers… instead many choose to employ illegal aliens b/c it creates a competitive advantage; less wages, no SSA, no unemployment IN, no benefits just cash under the table ….and when Trump said go after them they panicked and tried to get enforcement stopped making the same ludicrous ‘who will pick the crops’ arguments the d/prog do.
“gov imposes all sorts of regs etc “
yup,, socialism
Hold on. Not EVERY reg or statute impacting commerce is ‘socialism’ or ‘crony capitalism’.
The threshold distinction I make is where the gov’t directly or indirectly works to assist its friends and harm its enemies…that’s the imposition of ‘crony capitalism’. There’s still a marketplace and consumers have choices but when the Gov’t stacks the deck against one or some competitors v others it moves into ‘crony capitalism’ as opposed to ‘socialism’.
I’m quite good at running into burning buildings and panic’d stock markets and buying the contents for dirt cheap. More than a few of my options from the darkest days of the trade war are approaching 400% returns at the moment. I did it in 2020 and I cut my teeth on it when the banks failed in 2008. I’m serious- It’s not rocket science, but I’m good at this and do it with real amounts of life changing amounts of money. While I’m not an expert on banking and money supply, I do understand forces that keep water from finding it’s own level for LONGER than it should be (aka Bubbles). That is what is happening but in reverse. Oddly things like DEI and Transgenderism follow the same dangerous trends. The economic adage of “That which cannot continue forever must end” but not specifying the “when” rings true.
There are two explanations of the forces:
1- Deep state political forces. They don’t want Trump nor America to win.
2- Financial institutions are looking to position themselves for the upside of the favorable rate change.
I think the latter is more probable.
What will happen when the rates drop? WHO stands to make the most if well positioned in terms of cash supply? or alternatively- who has their pants down and will be screwed when the rates drop? That is the force holding back the invisible hand.
I’ve only thought about this for about 5 minutes, so my theory is not well played out, but you are LITERALLY looking at the scene in “The Big Short” when the market players will not value the credit swaps correctly because they will be screwed if they do. If I’m not 100% right, I’m not wrong by half.
The other thing I’m certain about is the answer is in plain view. It always is.
While we pundit types always see it through the lens of Political Jackassery, there are other forces in the world that cause this stuff to happen too. Some institutions are positioning themselves for the eventual rate drop… either to benefit or put to their overextended d***k away before it gets cut off when the rates drop.
yeah but sooo what…even us not big time financial houses can and do position ourselves for gains and drops on monetary and/or fiscal issues
(didnt see the big short movie)
its the bailing out of those institutions and making them the only game in town,,,that both dupes and damages us….not to mention the fact that someone has to lose at some point and wont like that and then depending on their pull with the government gets favors…aka
socialism
#1 you MUST go watch that movie. It got it right. Aside from the final minute when they chose to go woke for 10 seconds, it is about as good of an explanation as could be laid out. It also hints at what’s going on here: The scene were the bond ratings are discovered to be completely fake… yep, the ratings institutions that were beyond reproach, it was all bogus.
#2
“even us not big time financial houses can and do position ourselves for gains and drops on monetary and/or fiscal issues”
Welllll. you can but it’s not that easy w/out huge sums. Besides that, you have no influence of the fed. Institutions with huge sums (do). I’m dubious it would be consumer level banks unless there is something sideways and evil going on with how much cash available to lend. What’s going on with Fannie/Freddie? What’s going on with the Fed banks? International? When the current starts flowing are they up or down based on their current position? Someone has their finger on the scale, but why? I’m dubious it’s all about hating Trump.
One question I’m thinking out loud about is: lower rates mean more lending. BUT WHAT IF THERE IS NO MONEY TO LEND????? Well that would be embarrassing for everyone involved. Do the lenders to the lenders have the correct cash held back? Would they be unable to service the borrowing? We know that commercial real estate has been in a doom loop for 5 years now. What have we not been told and who has been hiding it during the hair sniffing Dementia Dynasty?
if there was no money
they would just fix the printing press…..b/c we are fiat money supply
you dont need huge sums to make money off the feds direction..just not as much as others…so what…if you have the money and/or the courage go long or short the market
“even us not big time financial houses can and do position ourselves for gains and drops on monetary and/or fiscal issues”
After 2008, I spent an inordinate amount of time thinking about this. You have an idea of a bubble, but positioning for it in a way that does not leave you screwed is non trivial. For the average person you are limited to:
1 -Refi the house (if you carry a mortgage).
2- In times of inflation, avoid paying down debt.
3- Roll your retirement into ROTH (costs money cuz the tax hit).
Most people don’t even have the cash to do #3 and that’s the easiest risk free move that can be made. Capitalizing on the broader op is a super power few possess.
Even if you are someone with moderate cash, taking heavy positions on the big ups/downs is hard to do. You can’t time when the bubble will pop. This is something that movie got right, and timing is a suckers game. You are gambling with your future. Raising cash in the darkest hour AFTER it pops is difficult. It takes a stronger stomach and deeper reserve than most people have or have the mental fortitude to do. On the back side of the recovery you might have 20/20 hindsight, but on March 18, 2020 or this past spring I had no guarantee that the recovery was going to be fast over slow. I took very heavy positions in options and I’ll tell you it was pucker factor 9 with even 10% of portfolio. Intellectually you know it will come back, but in the hour it’s not easy to sell stocks and put that cash into options. In hindsight you see that if had doubled or tripled down you’d be rich beyond rich, but you also intellectually can see that if you are wrong, you’re going to be 80 and working as a greeter at Walmart. My grandfather died at 65 flat broke from bad business decisions and left my grandmother with a mess back in the 70s… so that math resonates.
My point is, it’s not easy to do with your own money. Even if you have it, it’s hard to do. I’m sure other people do it, but I’ve never met one… hence my love for the “The Big Short.”
I’m getting long winded but my theory on this stuff is.
#1 Recognize a bubble and position yourself to not get burned.
#2 Recognize a bubble and position yourself to see an upside in the pop or the recovery.
#3… Be really rich and single handedly cause both the bubble and the popping of the bubble and make the GDP of a small country when it happens.
“most people dont have the cash”
so what
THATS life
I have 1/1000000000000000000 of what some have
and
10x what others have
Its all earned and legal
so not sure what your point is there
you dont think everyone is michael jordan..right??
not everyone is going to earn or inherit $$$$$$$$$
again,,thats life
as long as the POSSIBILITY exists for anyone to make /do their best in life which capitalism allows for…socialism doesnt
So you’re saying you’ve done it?
In the past 6 years we’ve had two events where the market hit epic short lived lows that we haven’t seen since 2009 and 2001.
You capitalized on this with free cash flow and retirement savings – right?
Because you’d be the only person I’ve ever met that went in at pucker factor levels of their own money at those lows.
Answer seems easy. The people and institutions with the best access to capital will buy at the severely depressed prices post bubble pop using borrowed money at low to zero interest rate. If Mom and Pop little guy investors can manage not to panic sell they’ll come out ok. They’d do better if they could position themselves by selling on the up swing before the bubble pops and having cash on hand to invest at new far lower distress prices.
Most people don’t understand how markets function and how much of the ‘up’ is based on methodical, automatic investment from 401 K. Nor how narrow the ‘up’ is; often a dozen, maybe two dozen names proving up an index. Then there’s the illusion of strength created with buy backs. Lots of zombie companies out there and without steady access to capital from angel investors, continued VC or borrowing at near zero rates they will die.
I suspect next bubble pop is gonna be far worse than ’08. There’s too much systemic risk allowed to develop to truly enforce capitalism; banks going broke. The blip with SVB foreshadowed what’s gonna happen. Commercial real estate will eventually get marked to market and the drop will cause insolvency. The Treasury/Fed Reserve will prop up the system and force mergers and reward friends/punish enemies. If it gets too big/widespread then IMO they won’t backstop deposits over the FDIC limits and any backstop will be phased payments. If folks don’t have a second bank that’s solvent, a pile of cash at home or guaranteed access to short term loans they may be in for rough ride.
End result will be even higher concentration of assets and wealth in the top quintile when the smoke clears. This is fine if it is earned honestly on an even field of true competitive capitalism but when govt puts thumbs on the scale for decades we end up with some folks looking at nuts like Mamdani as viable options for imposing an alternative system.
“The people and institutions with the best access to capital will buy at the severely depressed prices post bubble pop using borrowed money at low to zero interest rate”
That’s my point. 99.99% don’t have the free cash flow to do it. Borrowing to do it is dumb speculation for the precise reason I pointed to in The Big Short. Someone has their fingers on the scale (the fed in the conversation). It can’t go on forever, but you are making a losing deal with the devil playing with borrowed money. Even options are not something you can ride for years of artificially depressed markets.
Back on topic of WHY they are not lowering the rate. Someone up stream is shoring up cash to handle the influx of borrowing that will occur with the rate hike OR covering a shortage to avoid getting burned. Sort of handy to control the spigot if you’ve been naughty with supply of money. Turning on the printing press is not as easy as everyone makes it out to be, especially if they’ve been practicing financial witchcraft they’d rather not be caught doing.
What we need to do is examine the entire Federal Reserve institution and whether they have been successful… All of these Ph.D.s over there, I don’t know what they do… This is like Universal Basic Income for academic economists.
Secretary Bessent, we’ve never met, but I want to have your baby! :<)
Having PhDs justify their existence? Classic. Please keep up the good work sir.
exactly
some on the left WANT POWELL to step down to
STOP ANY EXAMINATION of the fed and their misuse of not only money ( spending $$$$$$$$$ on a new building!!)
to their now stated agenda of EQUITY where they are following fjb agenda and hiring based on race