“We believe the new Treasury Secretary, Scott Bessent, plans to pursue a policy mix – 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 that Bessent may opt to implement.
The policy mix, dubbed ‘Bessenomics,’ is expected to be built on three key pillars: currency depreciation instead of high import tariffs, fiscal policy calibration, and increased U.S. oil supply to deflate crude prices.
Bessent may push for dollar depreciation rather than tariffs to boost U.S. manufacturing competitiveness and create industrial jobs. This approach, according to BCA, could avoid the potential destabilizing effects of tariffs on markets and the economy.
Bessent may also strike a deal with the Federal Reserve to reduce interest rates substantially, provided the government and Congress cut fiscal spending. This combination of tighter fiscal and easier monetary policy has historically led to currency weakness.
To prevent inflation expectations from rising and bond yields from spiking, Bessent’s strategy, BCA hypothesizes, could include cutting fiscal spending and lowering oil prices. These measures, along with “proper macro communication and our credibility, will be sufficient to bring down bond yields despite dollar weakness,” the report speculates.
Source: Economy - investing.com
