It doesn’t reflect well on a Treasury secretary when the price of gold goes through the roof. As I explained in October (“Gold Is Booming And That’s Really Bad News”), it means people expect higher inflation and are losing faith in the stock market along with the overall health of the economy. In such moments, Wall Street longs for a steady hand at the helm. Instead, they get Treasury Secretary Scott Bessent hurtling insults in every direction and giving every impression that he’s about to have a nervous breakdown.
Bessent previously enjoyed a reputation as the sole grown-up in Trump’s Cabinet. But at Davos last week Bessent engaged in a frantic sort of MAGA minstrelsy, or possibly he converted under duress into a true-believing thug. I’m not sure it matters. But the more Bessent shoots his trash-talking mouth off, the more the dollar’s value falls and the higher the price of gold rises. Probably the best thing Bessent could do right now—for himself, for the dollar, and for your 401(k)—is to shut the fuck up.
I predicted in late October that a stock market crash was imminent. It didn’t happen, and as I write this the S&P 500 is rising. But a lot of experts still say some sort of correction is coming. Rising gold prices reflect that belief. Wall Street refers to the gold market as a “debasement trade”—the debased object being the dollar.
An ounce of gold rose in price Monday morning to $5,100 per ounce, up from $4000 per ounce three months earlier. For comparison’s sake, when gold was discovered at Sutter’s Mill in 1848, an ounce was priced at $20.67, or about $850 after inflation. That was enough to hurry California into statehood two years later and to triple its population by 1860. Today an ounce of gold sells for six times that amount, and amateur California prospectors are panning once again for gold. But a much easier path is to invest in gold while the Trump administration trashes the rules-based international order.
“Scott Bessent Is In Denial” was the headline last week on a Project Syndicate op-ed by Desmond Lachman, a former deputy director of the International Monetary Fund’s Policy Development and Review Department now at the conservative American Enterprise Institute. “As Treasury secretary,” Lachman wrote, “Bessent is supporting a grossly irresponsible budget and foreign policy, which is putting the United States on a path to economic ruin.”
The deficit, which was $1.8 trillion when Trump entered office, is projected, Lachman noted, to (nearly) double by the end of this decade to $3.4 trillion. The dollar has lost 10 percent of its value over the past year, and over the past 16 months the 10-year Treasury yield has risen 50 basis points. (That’s bad because it means investors aren’t buying Treasury bonds.) Instead of “continuing to back Trump’s reckless policies”—polymorphous tariffs, tax cuts we can’t afford, an insane threat to conquer Greenland, etc.—Bessent should “be highlighting the danger of undermining foreign investors’ confidence in the U.S.”
But Lachman understated the problem. At Davos, Bessent transitioned from merely backing Trump’s policies to egging them on—madly and belligerently.
After Trump threatened western Europe with tariffs to punish it for opposing his proposed conquest of Greenland, Bessent publicly insulted these countries at Davos by saying their angry reaction was “the same kind of hysteria that we heard on April 2,” when Trump announced a 10 percent tariff on all imports and higher ones on countries that didn’t import from the United States as much as they exported. “What I’m urging everyone there to do,” Bessent said condescendingly, “is sit back, take a deep breath, and let things play out…. The worst thing countries can do is escalate against the United States.”
As it happens, escalating turned out to be the very best option. Ignoring Bessent, the Europeans punched back hard with a threatened $93 billion in retaliatory measures. That spooked the stock market, which in turn persuaded Trump to back down.
At the same Davos appearance, Bessent was asked whether he was concerned that institutional investors such as pension funds in Denmark were pulling out of Treasuries. The correct answer would have been some unmemorable variation on “all will be well.” Instead, Bessent seized another opportunity to insult western Europe: “Denmark’s investment in the U.S. Treasury bonds, like Denmark itself, is irrelevant.”
California Gov. Gavin Newsom whacked Bessent on social media (“Could this smug man be more out of touch?”) for suggesting at Davos that Trump’s proposed ban on institutional investing in single family houses exempt “mom and pop” investors who buy “five, 10, 12 homes” to produce an income stream for their retirement. Bessent’s comment was indeed smug and out of touch. It was also a rare instance of the Treasury secretary doing the opposite of egging Trump on gratuitously. Instead, Bessent was trying to pull Trump back on a policy proposal that actually shows some potential.
Bessent hit Newsom back in a Politico interview. “Newsom was in over his hairdo,” he said, and has “a brain the size of a walnut,” and, most creatively, Newsom is “Patrick Bateman meets Sparkle Beach Ken.”
This last insult was so elaborately crafted that it sent me to Google. Patrick Bateman is the serial killer in American Psycho; Sparkle Beach Ken is a Ken doll manufactured in 1995 that wears sparkly swimming trunks to go with Sparkle Beach Barbie’s sparkly bikini. It’s doubtful Bessent constructs such put-downs himself; more likely, he has someone on the payroll who writes them. Newsom’s press office next hit back at Bessent with a homophobic tweet that I won’t repeat here, for which Newsom should apologize. But I hardly call that a victory for Bessent, and it doesn’t make me feel any better about the dollar.
Perhaps we need a new economic indicator: the Bessent. It would track daily the number of gratuitously hostile things Bessent says. The more he shoots his mouth off, the more likely a recession or perhaps even global depression is imminent. I’m tempted to exclude Bessent’s threats to beat up people who deserve it, such as Elon Musk, Federal Housing Finance Agency Director Bill Pulte, or Commerce Secretary Howard Lutnick. But on reflection I won’t, because these weren’t a sign of terrific mental health either. The more Bessent makes himself sound like Kristi Noem or Kash Patel, the less confident I will feel about my stock holdings and my job security. Mr. Treasury Secretary, I beg you: Put a sock in it.
