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Bessent and the Bonds
Paul Krugman | Substack • • business
Key Points:
- The author critiques Scott Bessent, the U.S. Treasury secretary, for overconfidence in managing interest rates, drawing parallels to past financial missteps like George Soros's 1992 pound speculation.
- Despite Bessent's claims of control, markets have challenged his efforts to suppress U.S. interest rates, which are rising globally, not just in the U.S.
- Rising long-term interest rates are attributed more to increased demand for funds driven by the AI investment boom rather than specific U.S. policy failures.
- Historical comparisons show that high interest rates occurred during previous technology booms, such as the late 1990s, even with low inflation and budget surpluses.
- The piece concludes that Bessent's boastful approach risks damaging his credibility, as market forces behind rising rates are beyond his control.
