Scott Bessent
Appearances
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
I think the American dream is what it's always been. But after World War II, I think 90% of American families The children made more than the parents. Now I think it's 50-50. But it's to own a home. It's financial security. It's to some level of comfort. It's purpose in your work. It's to be able to support your family, to be able to have choices, to not have to work two jobs.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
I made a remark at the Economic Club of New York. last week, two weeks ago, and Mike Pence decided he was going to troll me, because I said the American dream is not built on cheap goods. And he said, well, yes, it is. And I just say, with Vice President Pence, this let them eat flat screens economic policy that doesn't isn't what people want. They don't want the baubles from China.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
It's like the old... They want progression.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Well, I think a lot of it's scarcity. Because what you're talking about is like out in San Francisco, super tight zoning laws. So there's scarcity for homes. If you think like Ivy League education, all of a sudden you gave all these people access to Ivy League education. You
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
brought in international students, but the number of degrees awarded at Harvard, Yale, Princeton probably hasn't changed very much since the 1950s. So you created just this demand for scarce things, which leads to this anxiety. But you also created, I think, a sense of hopelessness.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
No, look, they're subject to big revisions over time. And I thought one of the big mistakes the Biden administration made, and thank goodness they made it, was they refused to vote. They went with the numbers, not what the American people were feeling. They said, No, it's a vibe session and you really don't understand how good you have it. This has happened, this has happened. When in reality,
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
I was on Meet the Press yesterday, and there was something that said, well, the American people don't believe Donald Trump's doing enough on the economy. And I told the host, I said, you know, the one thing I'm not going to answer is that they don't know what they're talking about. I have to have respect for how they feel, and then we need to go back and look at what is causing this anxiety.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
So that's what we're going to do.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Well, look, I think we're trying to do three things. And I think you may have talked about it last week, week before.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
The three legs on the stool. And from the outside, you intuited that very well. I would do just a little refinement on that.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
But you were adjacent to everything. So on one, We are trying to bring down this massive federal debt, cut the spending, but in a controlled way. You can't do it all at once. I don't like to repeat private conversations with the president, but I'll repeat this one because I think it's very important. it really illustrates where his head was at.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
First time I went in to see him, saw him at Mar-a-Lago, and walk in the door, he said, Scott, how are we gonna get these debt and deficits down without causing a recession? And that's exactly where we are now. How are we gonna get the debt and deficits down, not cause a recession? And I said, sir, when you win, you didn't get us here,
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
going to set a goal by 2028 we want to get back to the long-term average we're going to deflate it slowly and long-term average being about three percent deficit to g3 three and a half percent deficit to gdp and you know like i keep saying the us we don't have a revenue problem we have a spending problem because we are averaging right about 18 revenue and i'm talking about federal government federal government only
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
We're at about 18%. And Biden administration blew it out, blew the spending out to 25. Normally, it's about 21, 21 and a half. We have the 2% inflation, nominal GDP, real GDP is 1.8. So we get nominal GDP 3.8%. it all works out. I had one of the heads of one of the Singapore sovereign wealth funds here last week. Guess what Singapore spends in terms of spending the GDP?
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
18%. And he said, you know, He said, we have a lot in common with the Trump administration. We like small government. We don't like illegal immigration. And we like personal safety, which I thought was very interesting.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
With this Republican Congress, I'm not sure what a deficit hawk is, but I think I would qualify as one. A lot of the Republicans, I actually have to coax them. You can't do this all at once. I was with one of the Congressional Budget Committees two weeks ago, and they really want to cut this fast. And I said, you do realize every $300 billion we cut is about a percent of GDP.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
So we are trying to land the plane well, and The plan, because that's really what I'd like to talk about today. I think there's three plans here. But plan one, we're going to de-lever the government via the spending. We are also going to shed excess labor from the government. So on that side. And then on the other side, we're going to deregulate the financial system.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
The regulated financial system's really been what I call a regulatory corset. for a long time, and as we deregulate that, then the private sector can re-leverage, so government de-leveraging, private sector re-leveraging, and the employment, or the folks who lost their government jobs will be picked up by the private sector.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Good, gentlemen, thanks for having me.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Yeah, and the... So part of fixing the affordability crisis is, we can come back and talk about it if you want, but where can we get prices down? Eggs are easier, but the other side of getting prices down is getting real wages up. So on getting real wages for working people up, it goes back to the Main Street versus Wall Street.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
And the second plan is to reorder the international trading system and bring manufacturing jobs back to the US and reinvigorate the middle class. Because again- Through tariffs. Well, to use tariffs where needed to bring other countries into line.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Well, so... There's tariffs. Then I think there's three other things we can do, which are the centerpiece of the administration. We can have the low and predictable taxes. We can substantially slash regulations, because regulations are the equivalent of- That'll drive investment dollars, private investment dollars. And predictability in regulations. And then cheap energy.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Yes. But You've got to have, I've been in this building, I think this is my seventh week, President Trump, been back at the White House for eight weeks, so you actually do need time. So a lot of people who weren't happy about the CR, but shutting down the government wouldn't have been productive, either politically or economically.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Well, I don't know where finance in particular came from. As you mentioned, my dad was a real estate developer and he was kind of boom, bust kind of guy. So I think that's where my passion for risk management came from. But I was very fortunate. Went to Yale, wasn't sure what I wanted to do.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Well, tax cuts will, so tax cuts and deregulation will change the growth trajectory.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Will grow GDP. If trend line has been 1.8, if you can move the growth to three or above, then you really change their trajectory. And if you can keep expenses flat or do the unthinkable and cut expenses, then you can really. So this is important.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
That's kind of the theory. And I'll tell you, shame on me. I was in the investment business 35 years. I talked very confidently that CBO scoring says this. And it turns out I didn't know you know what about CBO scoring. When you're on this side of the wall, you realize how crazy it is.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
It's very gameable. And one of the most gameable parts of it is in normal CBO scoring, that, so we're calling, we're saying that we want to renew the tax cuts.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
We're actually just renewing the current tax regime.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
That somehow after they expire, then they go back to the old rate. Spending never changes. Spending never has to get renewed. And I think when I look and think about a mental model and how do systems work, how do they break down, one of the things that has caused this spending bulge is this idea that you never had to rescore spending.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Yeah. I mean, it's OPM. It's other people's money. But Danny DeVito had that movie. But you would regard that as being a good politician. Right. Like you brought home the bacon for for your district.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
That because. The CR, a lot of people didn't like it, but one of the things that a lot of people didn't like, there were no earmarks in it. How dare they? Totally.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
So we are re-examining all the bank regulations. And why are they there? Why do banks have to, I can't remember, it's five or seven percent to hold treasury bills. What are the regulations? Why do, I had a whole group of community bankers or small banks here last week, and why do they have to hold the same amount of capital
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
1980, when I got there, probably you all can't imagine this, but there used to be these things called punch cards. And the Yale computer system had just gone from punch cards to screens. I was thinking of being a computer science major, maybe a journalist, because people actually used to read newspapers. So punch cards and newspapers from the Wayback Machine. And I got an internship
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
that JP Morgan and Wells Fargo and Citi hold when they don't have the complexity, they don't have, why do the regulators, one of these small bankers said, well, Bank of America does it this way. Bank of America has a trillion dollars in deposits. This was $183 million bank.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
But I know you all talk about incentives a lot. Back to incentives. What's a regulator's incentive just to keep tightening the corset? They don't care about growth. They don't care about the common sense.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Well, it doesn't have to be rates, but if we do all the things I was just talking about, if we deregulate, if we have cheap energy, if we shed excess labor from the government, if we get government spending down, then rates, inflation should come down, rates should come down. But on the question of how are we going to measure it, I don't have any problem with private credit.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
I actually think it's exciting. It's dynamic.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
And the strength of the US financial system is the depth and now the breadth. But you could see that what's happened that so much lending is being pushed outside the regulated banking system, that tells you it's over-regulated. Right, yeah. So now, once we, so one test will be, how has bank lending, especially small regional, small banks, community banks, that come and go, and these small banks,
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
that small banks and community banks, they're 70% of ag loans, they're 40% of small business loans. And that's one of the reasons Main Street's been stifled.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Well, the Fed, I 100% support the Fed's autonomy in monetary policy. I don't agree with it all the time. Right. it is it's how it is it's how it is and um so and and i said i won't comment on perspective policy i can talk about their mistakes in the past which have been numerous but i i think like like with like with it with any system as it expands beyond sort of the core uh i i actually think
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
that some of the things they've done in regulation, some of the things they've done in climate and DEI, some of the things, maybe even non-standard monetary policy, threatens their independence. And I want them to stay strong, robust, and independent on monetary policy. On regulation, I think that they have They have been much too harsh on especially the smaller banks, medium banks.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
So there's three main bank regulators. There's the Fed, Office of Control of the Currency, OCC, and the FDIC. And then they're... other regulators, the SEC, CFTC, but the banking regulators at the federal level are those three. Here at Treasury, we have something called FSOC, Financial Stability Oversight Council, and I chair that. And via that, the President's Working Group
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
which is another convening mechanism that I plan to just keep pushing for safe, sound, and smart deregulation. Why are we doing this? Why are we doing that? Again, that there's a capital charge to banks for buying treasury bills. So I actually think there's a chance that if we take, it's called the supplementary leverage ratio. If we take that away, it becomes a binding constraint on banks.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
just for an individual and he taught me the investment business really well and I And who is that? His name is Jim Rogers. He's famous. He was George Soros' first partner. He had just completed an around-the-world motorcycle trip and written a book called Investment Biker and a fascinating guy and I
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
We might actually pull treasury bill yields down by 30 to 70 basis points. Every basis point is a billion dollars a year.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Yeah, look, I thought that when rates were low, you're supposed to turn out rates.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
And instead, the Treasury for the past few years has pulled rates in. And I think part of that was to keep rates lower, that they changed the issuance schedule when rates moved back up towards 5%. have maintained that policy, but I'm maintaining it because, back to David's question, when are we gonna see the results from getting the government spending under control?
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
And I don't think the markets recognize it yet.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Yeah. The central value tendency, you're right. The central value tendency, what's the center of it? Because the range of outcomes is so broad. And we know there's a problem there. We know there's waste, fraud, and abuse. quantify it. So I think as we are more able to quantify it, we will get credit for it.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Yeah, I think there are a lot of headlines, especially after the CR, about the Democrats being in disarray. And media likes to write about disarray. I think the untold story here is Republicans have, for a change, actually been very disciplined. And I think a lot of that...
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
president trump is kind of shepherding the party shepherding the movement because imagine he said oh that mike johnson will never get reconciliation instructions out of he's got such a slim majority well he did it he did it yeah that he'll never be able to pass a clean CR. He did it. He did it. So let's see what happens with the budget. So we need Congress to be our partners on the budget.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
They're very engaged, the House and the Senate, that everybody recognizes that if we don't get this done, it's going to be the biggest, it's pass-fail. It's the biggest tax hike in history.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Well, Doge... That's the cost cutting. And it's the first time we've really ever had business people looking at it. This Clinton-Gore commission that we hear a lot about, I think it was a bunch of business school professors. But here you've got real CEOs.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
did the investment business and i thought this is really what i like because it's quantitative so i have to use my quantitative skills but you're also constructing a narrative and it's also like human emotions and you were trading equities bonds everything currencies uh well i started out with equities yeah and i i did that for several years and then i actually ended up
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Well, it's that. And we had this crypto council meeting the other day, and I was sitting and looking. It was myself, Secretary Letnick, and Kelly Loeffler. Everybody was a market person. Like, forget business. But with Doge, that I am completely... aligned with what Elon's doing. And everyone says, well, do you have to do it so fast? Do you have to do it?
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Like I said, I've only been in this business for seven weeks. I've only been in D.C. for eight weeks. The thing I can tell you is if you don't move fast, the vested interest will weigh you down. the quicksand will come up or... The claws get set. Everybody's got lobbyists, everybody's got... I mean, think about it. Within a 10-mile radius of here, 25% of the GDP of the U.S.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
pulsates through here every day. And everybody wants to just skim a little. I said to Elon, we were in a meeting, and I said, you know, people are mad at you because you're moving their cheese. And he goes, it's not their cheese. It's the American people's cheese. 100%.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Yeah, and I'd say there are a couple of things, too. One, everyone's hearing cuts, and they think their government services are going to get cut. That's right.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
And they're not. I keep saying it's the Department of Government Efficiency, not government extinction, not government elimination.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Can we make it run much better with fewer people with fewer costs? And I don't want to demonize any of these federal employees. They tell you in this building, I've been so impressed with the quality of the people. I would have hired them in my private firm. They are great public servants. I need you to stay for the weekend. I need a 25 page memo in 72 hours that super high quality.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
I actually think what When all this is done, there will have been two big savings. One will have been on these contractors.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
It was in the newspaper, so we can say it. It's Booz Allen. Exactly.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
It's shocking. What kind of risk management is that, by the way? Yeah. But it tells you that... That they didn't manage the risk. That's right. Tells you how entrenched they believe they were.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
And how good it is. You're absolutely right. And the way the grift works, you can only have six-month contracts, but there are people who have had 40 six-month contracts. Incredible. They've been in situ for 20 years. Incredible. And it's this whole...
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
at Soros Fund Management, worked for a fellow who's my mentor, Stan Druckenmiller, who's incredible. I think he's on, he's more than 40 years now, never a down year. When you're sitting next to him, what am I doing all day?
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
And the American people can see if they want it.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Well, I... I think that now that the cat's out of the bag, that the American people are not gonna stay with this, is that maybe, again, here, maybe in the Northeast Corridor, there's some pushback. But when I've seen the polling data, and the rest of the country does not want this to stop, and this administration is not going to stop.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
The courts, they're trying to throw sand in the gears with the courts, and how some judge can say, oh, all these workers have to come back in. But I also think We've moved really quickly.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Now, I think when we start putting out some of the anecdotes and the messages and talk about what's happening, I'll talk about it, I'll be talking about it soon, but there's one very large department that everybody deals with on April 15th that Their help desk is fully staffed 24-7, 365 days a year. They have the same number of people on Christmas Eve as they have on April 14th.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Look, I'd be the ultimate chump if I said, oh, we're going to cut spending, but I also cut revenues. With the IRS, which Treasury controls, my three goals are very simple. Revenue enhancement, privacy, and customer service. Totally.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
People that- Not almost. We had a big announcement on Tuesday, and we brought in the two Hunter Biden whistleblowers who have a lot to say about who gets audited, who doesn't. They're going to be sitting in this building, working on IRS matters, and understanding exactly how these audits get triggered, how these political witch hunts happen, and trying to... change the ethos of the building.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
And again, 99% of the people at the IRS are good people. It's just like all these other agencies where they're bad folks.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Yes, well, but he is the best at changing his mind of anyone I've ever seen.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
1971, and with 15, 16 trillion that we'd have. I don't know what the numbers are since W. tried it. They'd be substantial. We wouldn't be...
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Thinking about a problem in a few years, but I think now you got to play the hand you're dealt I think we are dealt with Social Security Hand and I think maybe we could re-engineer it if we could create the sovereign wealth fund and have that on the other side There are a lot of philanthropists who are looking at baby bonds. So if you can create a some kind of a
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
an investment account for newborns, then that would run on a parallel track to Social Security. So that would be compounding. The other thing would be a safety net.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Well, he has several. And I'm trying to get him to write a book because he has so many of these great things. Maybe you all could press him. But invest, investigate. It takes courage to be a pig. Right. And then I was hooked on markets because, again, it was quantitative. It was qualitative. And it's real time. You get real time feedback all the time. And you're
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
I am, and I'm excited by the idea. This is President Trump. Everything he does isn't in a straight line, but I guarantee you, he has a destination in mind. And the idea that he's going to be the first president in generations...
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
who is going to he wants to create assets for the american people not just debt yeah so he wants to take the debt down and then this idea of assets there's a lot of talk about this economic deal we're going to do with ukraine that would have gone in the sovereign wealth fund right yeah government has big stake in fannie mae and freddie mac yeah
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Where does that go? As you mentioned, Doug Burgum did great work when he was governor of North Dakota. North Dakota has the equivalent of two state sovereign wealth right and for Are they seven eight nine hundred thousand people, right? I think they had twenty five billion dollars, right and Alaska Alaska permanent they'll ask a permanent but all that's from the natural resource money going in.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Yeah, so to the extent we start The other day when the sovereign wealth fund was announced, President Trump surprised me in the Oval and said, could you make a few remarks? And I said, well, we're going to mobilize the asset side of the balance sheet. And all the gold books said he's going to revalue the gold. I can say today we're not revaluing the gold.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
But what we are going to do is Doug Burgum at Interior, every other department head is looking for the assets that we can mobilize. So if we have energy leases, federal government owned, back to the housing shortage, federal government owns a lot of land in downtown urban areas. Can we, or in suburban adjacent things in Nevada and Utah, Can we use that land?
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Oh, because you think you'd get a higher return. Right.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Yeah, I mean, not that I'm keeping score, not that I watch it closely, but the 10-year treasury today is 428. 428, yeah. So can we— It's responding well. Can we do better than 428? And I think with this group and this cabinet, and if we can put in— Right now, we're working on the study group for the sovereign wealth fund, and we want to do best practices. We're talking to people around the world.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
We're talking to investment people. We're talking to a lot of the other big sovereign funds, and we're going to do best practices. We want this to be a legacy of that.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
It's incredible. And I was with one of the Middle Eastern funds, and I said something about oil revenue. We haven't had an injection into the fund in 20 years.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Yeah, I think it was just this idea of it was supposed to be a safety net, not some kind of prosperity ramp.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Well, I think the biggest challenge we're having right now is trying to get private sector to lock in for some things that might not have a payoff for five, 10 years. And how do we avoid student body left, student body right with administrations coming and going? So we're working on that.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
You could have a long-term view, but then you're trying to gauge the short-term against that. And I loved it. And for 35 years, I did what was called macro investing. So eventually, I was trading currencies, bonds, commodities. the equities, some credit, and I got to travel around the world meeting leaders and trying to figure out what the next move was in policy.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
So to your point, we have this very delicate balancing act of making sure we... There's the tax side, but then the regulatory side. With fossil, it's tougher because it crosses a lot of state lines. There's a lot more permitting, a lot less permitting for solar farms, for wind, for geothermal.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Nuclear is going to be a big part of it, but it's not going to happen tomorrow.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Well, we got to fix the supply chain. We got to fix the regulatory. we've got to decide which model are we going to go with. I'm told that you two probably know more about nuclear than I do.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
But to the point that it's not investable, that's where the government needs to step in.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
And also I'm told, especially with the smaller plants, that you need to cluster them. And you've got to find somebody who wants to cluster on it and all that.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
The national security aspect. But I would say 40... 50% of my day, Treasury does a lot of national security work, whether it's CFIUS in terms of foreigners who want to buy US assets, whether it's sanctions, whether it's OFAC, anti-money laundering. We've just designated the Mexican cartels as foreign terrorist organizations.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
We, President Trump, over the weekend launched a very aggressive strike on, missile strike on the Houthi assets. Well, underneath that, we'd already been working for several weeks on their bank accounts.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Or anyone who is adjacent to them. The Iranians supply the Houthis with their ecosystem... Previous to my getting here, Treasury had disrupted the ecosystem so much that the Iranians used to hand them cash. Now they're just handing them here, take this oil tanker and try to sell it. So there is the ability to break that down.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Well, there have been several, but a good example, my family was actually there. Because after the inauguration, I asked President Trump, may I bring my family in, say hello, get a photo. And we're sitting in the Oval, so it's myself, my 11-year-old daughter, my spouse. 15-year-old son, and President Trump's having a great conversation with him.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
And then he said, oh, Scott, while you're here, let me call in these other two people, and we need to discuss this. So they actually got to see government being done live. So there's that. I have to say, I think the moment with... President Trump, Vice President Vance, President Zelensky was kind of a once-in-a-lifetime thing in the Oval Office. I hope it's once-in-a-lifetime.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
But I was sitting there, kind of in the front row of history, Vice President, Secretary Rubio, myself on the sofa, and watching President Zelensky do what I thought was the biggest diplomatic own goal in history.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
High decibel, yes. Yeah. But kind of my job for 35 years was to be outside the room trying to put my ear to the door, maybe lift myself over the transom, figure out what the leaders needed to do, were going to do, and then how it would affect the markets. And now it's,
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
fantastic and amazing and stimulating and a little scary being the person in the room yeah who has to what should we do what can we do how's it going to affect the markets how's it going to affect the real economy that what what's it going to do to working people in america so how do we fix affordability uh we're just going to have to go through and where where's the problem what's the solution
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
in terms of like, are the insurance markets broken? What can we do? There's been no, and I've been involved in the house building business. There's been no technological change in house building in 50 years, maybe 60. Some of the building codes go all the way back to the Chicago fire. So what can we do that, the way we categorize housing, it's stick built or modular.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
there something in the middle prefab because the more that comes out of a factory the more that it's standardized that neighborhoods from dc from dc to bethesda to potomac to like you could be in contiguous neighborhoods and if they're different municipalities they'd all have different building codes not zoning building And why is that? They're adjacent. Why do the houses have to be?
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
So is there some kind of window guidance that the federal government can give in terms of the more that comes out of the factory, the cheaper it will be, the faster we can make it, things like that?
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
I think there are a lot of things where you can look around and find what's something that's interesting that's being done somewhere. So I lived in Greenwich, Connecticut for a while, maybe the richest suburb in America. There's a ton of multifamily there, very expensive, very nice multifamily. There's some affordable housing, but Greenwich is not all 10 acres and a horse farm.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
The state of Connecticut has put in a, I guess it's a law, that every municipality has to allocate 10% of vacant land to multifamily. And if the zoning board won't give you a hearing, you as a developer, you as a nonprofit for housing, can go over the top and go to Hartford. And then Hartford will give you the authority.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
No town wants the state doing it on their behalf, so now the towns negotiate. So I think that there are a lot of things that can be done. Again, on insurance, is there something that I've been thinking about, is there something the federal government could do for California, where we come in, Everyone's paying homeowners insurance. Then there's reinsurance on top of that.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Then I think the California reinsurance company is called FAIR on top of that.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Yeah, but you're stacking it. So is there something we could do where you put another layer of private money in there and then the federal government is the fifth risk
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
You know, it's a lot of that. There's another great macro investor called Bruce Kovner. And he had this saying that he said, you know, I succeeded because I could imagine a different future and believe it could happen. So the keys to believe it could happen and then manage the risks. So could you imagine what would happen if the Iron Curtain came down? What would happen?
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
tranche right but if the federal government comes in can we mandate down here proper hygiene changes in the building code well changes in the building code changes and brush cutting right and material choices yeah right right yeah makes sense So I think there's a lot.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
But I mean, energy costs are energy costs. But then there's also, for food, the transportation cost of getting it to the grocery store, everything that's made out of petroleum products. I think we can do that. And I think there's a lot to do. And it shouldn't be too hard. So we're actually, we should probably be announcing it in about 10 days. We're going to have an affordability czar.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
But it's going to be someone with a lot of experience in supply chains figuring out what are a lot of the quick fixes we can do. Because back to the question, What really has people anxious, inflation for now is actually pretty close in, but the affordability has gotten so away from everyone that how can we bring that down?
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Well, it transitions. And I think it's also not being dogmatic. Totally. I saw what the Biden administration did with EVs. I have an EV. I can't wait for it to come off lease. But I also have a hybrid. And I think I fill it up maybe three times a year. But this administration had a jihad on hybrids because they didn't pass the purity test.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Because that's why Europe's kind of over a barrel, literally. And it's why the Russian war machine hasn't, again, literally run out of gas.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Yeah. I mean, we're not going to crush labor anymore.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Well, how about this? I we had a lot of foreign leaders come in and I knew someone in the in one of their entourages, I won't tell you which one, but afterwards he comes up to me and goes, holy crap, because he's really smart.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
President Trump has perfect recollection, because he was talking about something that had happened in that country 30 years ago, and he said, and he really, so President Trump listens, he is judicious, he is just taking it all in, he likes to see how people react, It's just incredible executive skills. Yeah. And the other thing too, that he's tough.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
I mean, you all do as venture capitalists, but how could the world live in a different state?
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
But I went in and I showed him, we were talking about something the other day, and I said, well, this is going to cause some layoffs. Well, let's try to fix it.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Let's try to fix it. So I always say, he really regards himself as the mayor of America. There are 330 million people.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
And he cares deeply about all of them. And he doesn't care whether you're Elon Musk or the guy cutting the rose garden. You're his constituent.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
So it's a great historical example. And it also kind of brings in three dimensions. So I was the analyst. Stan was the portfolio manager. And then in a way, George was the risk manager. So I was running the UK office. I was on the ground in the UK. And I had this light bulb go off. And I thought, the fulcrum thought, or my differentiated view was that the UK had just had a big housing boom.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
And UK mortgages at that time, they didn't have long-term mortgages. They were all floating rates. So if the Bank of England raised rates on a Wednesday, your mortgage went up on a Friday. The UK had hooked into something called the exchange rate mechanism. They had to balance versus the Deutsche Mark. They had to stay within a band.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
I noticed that if they raised or I thought if they raised rates to try to stay in the band and protect the currency, it would be unsustainable because British homeowners would get bankrupted. Stan's great feat of analysis was figuring out that these bands set up this incredible asymmetric bet because
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
I can push them up against one side of the band, and their mandate is just to push me back to the other side. So we just lose 2.5%. And Stan tells this great story of, like, telling George Soros, oh, well, here's what I want to do. And he says he told him, and George says, well, how much do you want to do? And he said, probably 100% of the fund. And he said, Soros gave me this really sour look.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
And he thought that he had said something wrong. He goes, well, why wouldn't you do three times that deal? So anyway, it was, we pushed him against,
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
the bank of England, the British government had to buy this unlimited amount of pounds and they started raising interest rates and this was September of 1992 and eventually they just weren't able to sustain the pressure from the high rates and came out and then the asymmetric risk reward was we made about 20 something percent in a day.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
And back to what was really Stan's genius, I don't know if either of you played backgammon, but in backgammon, there's the move after the move. And so Stan, we'd made all that money, and we were kind of euphoric. Okay, now what? Because there's going to be the trade after the trade. So we made that much in a day, but then it was actually the trade after the trade. This isn't well publicized.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
I think we made another 20%. during the rest of the year.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Well, look, I think it goes back to something that's unsustainable is unsustainable. And one of the reasons I'm sitting here now is about 18 months ago, I went to see President Trump. I'd known the Trump family for 30 years.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
I'd never known the president that well, but to tell him that I wanted to get involved in the campaign because I was so alarmed with what the Biden administration was doing with the debt and deficit.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Endless spending, but endless spending when we were in solid economic territory, or not in a war, first time ever, and I thought it was very cynical, because I actually thought, well, we're gonna spend, spend, spend, and then there'll be no choice but to raise taxes.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
So you'd go into this equilibrium that you could just never get out of, and you become kind of a European-style social democracy, the malaise. And I also think they were very cynical on immigration, because if you take the stated number, 12 million, the president's number, 22 million, I don't know what the truth is, kind of lean toward the president.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
But it was, oh, we're going to let all these people cross the border. You can't ever make them. Problem's too big to make them go home. But I like to stay in my finance lane. So the finance lane was, we're going to just go to the point of no return and kind of inflict these... progressive financial values on the country, there'll be no way out.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Well, it was always there, and you had these distributional aspects, because back to your question of Wall Street versus Main Street, that it was driving me crazy when Vice President Harris said, I'm going to fight for the middle class, and she'd eviscerated the middle class. Or these policies, inadvertent, intentional, had eviscerated the middle classes and really the bottom 50%.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
if you didn't have assets.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Not only did... inflation go up but if you look uh jason trinnert has this thing i think he calls it the everyman index and um so cpi went up about 22 during the period but the everyman index was up over 30 35 because the the bottom 25%, the bottom 50% of wage earners have a different basket than we do. And it inflated much faster. Use car prices were up. Car insurance.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Car insurance, rent, groceries. And not only is it unfair, but it's just unstable.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
Well, I think what happened, the Democrats will tell you that the big spending bills were needed for rescue. And I would say in March 2020, of 21, the economy didn't need rescue. It was already in recovery. So these were rescue-sized packages. And even Larry Summers, I remember there was a great debate between Larry Summers and Paul Krugman.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
And Summers, I think, said, look, this is at least $900 billion, a trillion too much. And the Federal Reserve was, to the summer of 23, 22, Federal Reserve was very slow off the mark. And we ended up, and again, imagine top 10% has assets, stock market is flying, you're in the bottom 50%, you have no assets, but you have debt.
All-In with Chamath, Jason, Sacks & Friedberg
Scott Bessent | All-In in DC!
So credit cards are up, mortgages, impossible to buy a house, house prices had gone through the roof due to COVID. So it really did end the American dream. But we've been suffering these distributional effects.
The Bulwark Podcast
S2 Ep1001: Bill Kristol: Give Back the Statue of Liberty
Not at all. I've been in the investment business for 35 years, and I can tell you that corrections are healthy. They're normal. What's not healthy is straight up that you get these euphoric markets, that's how you get a financial crisis. It would have been much healthier if someone had put their brakes on in 06, 07. We wouldn't have had the problems in 08. So I'm not worried about the markets.
The Bulwark Podcast
S2 Ep1001: Bill Kristol: Give Back the Statue of Liberty
Not at all, Chris. What I'm saying is the American dream is not let them eat flat screens. That if American families aren't able to afford a home, don't believe that their children will do better than they are. The American dream is not contingent on cheap baubles they have from China, that it is more than that.
The Bulwark Podcast
S2 Ep1001: Bill Kristol: Give Back the Statue of Liberty
And we are focused on affordability, but it's mortgages, it's cars, it's real wage gains.