US Treasury Secretary Bessent on Debt, DOGE, Dollar, and Musk

0:00 JOINING US FOR A CONVERSATION LIVE ON BLOOMBERG TV, THE 79TH SECRETARY OF THE TREASURY, SCOTT BESSENT. IT IS GOOD TO SEE YOU, SIR. SEC. BESSENT: IT IS GOOD TO SEE YOU. JONATHAN: A WARM CONGRATULATIONS FROM ALL OF US DO YOU. QUITE A WAYS FROM, WHAT WAS IT, LITTLE RIVER, SOUTH CAROLINA? SEC. BESSENT: IT IS AN AMERICAN SUCCESS STORY. JONATHAN: HOW IS THAT GOING TO HELP YOU APPROACH SOME OF THE CHALLENGES IN THIS ECONOMY? SEC. BESSENT: THE WAY I LOOK AT IT, FOR MY CAREER, FOR 35 YEARS I HAVE BEEN SITTING OUTSIDE THE ROOM WITH MY EAR UP AGAINST THE DOOR, TRYING TO LOOK OVER THE TRANSOM, TRYING TO FIGURE OUT WHAT POLICYMAKERS SHOULD DO OR GOING TO DO AND HOW THAT WOULD AFFECT MARKETS. NOW I'M INSIDE THE ROOM TRYING TO FIGURE OUT WHAT EVERYBODY OUTSIDE THE ROOM EXPECTS US TO

0:46 DO, HOW THE MARKET IS GOING TO REACT. AND WHAT THE ECONOMIC AND MARKET IMPLICATIONS ARE SHORT-TERM, BUT MORE IMPORTANTLY MEDIUM TERM AND HOW THAT IS GOING TO AFFECT THE UNDERLYING ECONOMY. JONATHAN: WE HAVE A LOT TO DISCUSS. LET'S START WITH THE DEBT MARKET. WHAT PEOPLE EXPECTED YOU TO DO WAS CHANGE SOME OF THE ISSUANCE FOR TREASURY. SOMETHING YOU SAID LAST SUMMER ABOUT THEN-SECRETARY YELLEN IS THAT YELLEN HAD TAKEN CONTROL OF MONETARY POLICY THROUGH TREASURY ISSUANCE. THEN YOU ARE BASICALLY MAINTAINING HER PLANS. CAN YOU HELP US UNDERSTAND WHERE YOU'RE COMING FROM? SEC. BESSENT: SURE. THE PREVIOUS ADMINISTRATION SHORTENED SOME OF THE DURATION, AND WE HAVE NOT SHORTENED IT FURTHER, WE HAVE JUST KEPT THE POLICY IN PLACE.

1:36 AND I BELIEVE OVER THE MEDIUM-TERM IT IS GOING TO PLAY OUT AS IT BECOMES CLEAR THAT EVERYTHING THAT PRESIDENT TRUMP'S ADMINISTRATION IS DOING WILL BE THIS INFLATIONARY. WE ARE GOING TO BRING DOWN ENERGY COSTS. WE ARE GOING TO BRING DOWN REGULATION. WHAT DOGE IS DOING IN TERMS OF COST-CUTTING. AND I THINK ONCE THE TAX CUTS AND JOBS ACT IS MADE PERMANENT, THEN WE CAN HAVE A REVENUE INCREASE, COST DECREASE, AND AS YOU SAID, AS THE NATION'S TOP BOND SALESMAN I'VE GOT A PRETTY GOOD STORY. JONATHAN: WHAT IS THE MEDIUM-TERM? AND LET'S SAY THOSE AMBITIONS BECOME REALITY, AND YOU START TO THINK ABOUT TERMING OUT THE DEBT? SEC. BESSENT: SURE, BUT THAT IS A LONG WAY

2:22 OFF. AND WE ARE GOING TO SEE WHAT THE MARKET WANTS. AS LISA NOTED THIS MORNING, AND IT IS FUN TO SEE SOMEONE WHO BELIEVES THAT FED MINUTES ARE EXCITING. [LAUGHTER] THE FED SAID THAT THEY MAY STOP THEIR BALANCE SHEET RUNOFFS. SO, EASIER FOR ME TO EXTEND DURATION WHEN I'M NOT COMPETING WITH ANOTHER BIG SELLER. ANNMARIE: WHEN DO YOU THINK THAT TIME WOULD BE? END OF THE YEAR OR FURTHER DOWN INTO THE ADMINISTRATION'S TERM? SEC. BESSENT: IT'S GOING TO BE PATH-DEPENDENT. WE ARE STILL SEEING THE RESIDUAL BIDEN-FLATION COMING THROUGH.

3:07 AS THE MARKET STARTS TO REALIZE WHAT WE ARE DOING AND INFLATION STARTS TO DROP THEN WE WILL SEE. IT'S GOING TO BE PATH-DEPENDENT. THAT IS THE EVENTUAL GOAL, BUT NOT GOING TO SEE IT GOING DOWN. ANNMARIE: WHEN YOU MENTIONED THE FED MINUTES, PARTICIPANTS INDICATED YESTERDAY THAT ONE OF THE PROBLEMS THEY HAD WAS, THEY WERE WAITING FOR TRUMP POLICIES TO COME INTO PLACE. DO YOU THINK THOSE POLICIES, WHEN YOU THINK OF TARIFFS, INTENTIONALLY DEPORTATIONS, IMMIGRATION, IS HE GOING TO HOLD BACK THE FED FROM CUTTING RATES? SEC. BESSENT: AND THAT TEAM TRANSITORY AT THE FED IS -- STILL HAS ANY CREDIBILITY, I WOULD SAY THAT TARIFFS, IF THEY HAVE ANY PRICE

3:54 ADJUSTMENTS, ARE THE MOST TRANSITORY THING THERE ARE. SO I DON'T THINK THAT SHOULD HOLD THEM BACK VERY LONG, AND I WOULD POINT OUT THAT DEPENDING ON WHAT NUMBER YOU WANT TO USE, 10 MILLION, 20 MILLION PEOPLE WHO CAME ACROSS THE BORDER, WE HAD THE WORST INFLATION IN FOUR YEARS AND WE ADDED 20 MILLION PEOPLE. I'M NOT SURE WHY PEOPLE ARE SAYING IT IS INFLATIONARY IF YOU TELL THEM TO GO HOME. ANNMARIE: WHEN YOU LOOK AT TEAM TRANSITORY DO YOU THINK THE NEXT MOVE FOR THEM WOULD BE A CUT? SEC. BESSENT: ANNMARIE, I HAVE SAID PUBLICLY THAT I WILL TALK ABOUT WHAT THE FED HAS DONE. WHEN I WAS A MARKET COMMENTATOR AND INVESTOR I WOULD TALK ABOUT WHAT THEY SHOULD DO. NOW I WILL LEAVE IT TO THEM AND CHAIR POWELL AND I HAVE A WEEKLY BREAKFAST. SORRY CHARLIE YESTERDAY, AND I WILL CONVEY MY

4:41 THOUGHTS THERE. JONATHAN: LET'S TALK ABOUT WHAT THEY HAVE DONE. THEY CUT RATES 100 BASIS POINTS GOING INTO THE END OF LAST YEAR. YIELDS AT THE LONG END ROSE. DO YOU THINK FEDERAL RESERVE EASING CONTRIBUTED TO HIGHER LONG END YIELDS? SEC. BESSENT: THE POINT OF CUTTING RATES IS TO CUT RATES. IF THEY CUT RATES AND RATES WENT UP, THEN THERE PROBABLY WAS SOMETHING THERE. I THOUGHT THAT THE RATE CUT IN SEPTEMBER, I SAID IT MAY BE EVEN ON YOUR SHOW HERE, THAT IT WAS OVER-SIZED. THE MARKET RESPONDED, BUT NOW WE ARE SEEING TERM PREMIUM COME BACK DOWN. WE WILL SEE WHAT HAPPENS FROM HERE. LISA: DO YOU THINK THE CURRENT RATE

5:26 RIGHT NOW IS ENOUGH TO BRING DOWN 10-YEAR YIELDS OVER TIME JUST BY VIRTUE OF BEING RESTRICTIVE? SEC. BESSENT: AGAIN, I'M NOT GOING TO COMMENT ON CURRENT POLICY. HE TALKED ABOUT HOW YOU DO LOOK AT THE 10 YEAR YIELD EVERY SINGLE DAY. I LOVE THAT. I LOVE THAT YOU ARE THE TOP ON SALESMAN IN THE UNITED STATES. ARE YOU EXPECTING OR HOPING FOR TO GO DOWN FROM HERE? IS THAT NECESSARY TO ACHIEVE YOUR 3% GROWTH TARGET? SEC. BESSENT: WHAT IS NECESSARY ARE THE UNDERLYING CONDITIONS. THE UNDERLYING CONDITIONS THAT WE NEED FOR YIELDS TO COME DOWN, FOR GROWTH TO GO BACK UP. HAVE THIS AFFORDABILITY CRISIS IN HOUSING. WE HAVE AN AFFORDABILITY CRISIS IN THE AUTO PAYMENTS. SO, ONE THING THAT WOULD BE VERY STIMULATIVE, AND AS

6:11 JONATHAN MENTIONED EARLIER, THE 10 YEAR HAS COME DOWN, OR RATES HAVE COME DOWN EVERY WEEK SINCE DONALD TRUMP HAS BEEN PRESIDENT IF WE CONTINUE THAT FOR 52 WEEKS THAT WOULD BE GREAT AND IT WOULD BE VERY -- IT WOULD BE A WIN FOR THE AMERICAN PEOPLE, WHICH AT THE END OF THE DAY THAT IS OUR GOAL. SO, IF WE DO WHAT WE SAY WE ARE GOING TO DO, IF WE CAN REIN IN THE BUDGET DEFICIT, IF WE HAVE NON-INFLATIONARY GROWTH, IF WE BRING DOWN ENERGY PRICES AND, YOU KNOW, I THINK NOW THAT I HAVE THE NUMBERS ON THE INSIDE THERE WAS A BIG CONTRIBUTOR TO THIS MASSIVE INFLATION WAS REGULATION. I THINK YOU SAID EARLIER THIS MORNING THAT THE -- WHAT IF THESE THINGS CAUSE INFLATION? AS ANNMARIE JUST SAID, SOME OF

6:59 THE POLICIES. WHAT REALLY HAPPENED UNDER THE PREVIOUS ADMINISTRATION WAS YOU CREATED A DEMAND SHOCK WITH GOVERNMENT SPENDING BUT IT WAS MET BY SUPPLY CONSTRAINTS AS THERE WAS MORE REGULATION. AND TRUMP 1.0, WE CREATED DEMAND SHOCK WITH TAX CUTS, AND IT WAS MET BY SUPPLY-SIDE RESPONSE OF LESS REGULATION. THE BIDEN ADMINISTRATION CREATED THIS INFLATION THAT CAMINO YOU KNOW, A DEMAND SHOCK AND CONSTRAINING SUPPLY IS THE ULTIMATE RECIPE FOR INFLATION. JONATHAN: I KNOW YOU WANT TO CUT SPENDING. THE DOGE PROGRAM. YOU WILL REMEMBER THAT CLINTON TRIED SOMETHING SIMILAR. THE NATIONAL PARTNERSHIP FOR REINVENTING GOVERNMENT. HOW DIFFERENT -- HOW DIFFERENT

7:46 WILL THIS BE AND WHAT COST SAVINGS ARE YOU THINKING? SEC. BESSENT: I COULD GO ALL THE WAY BACK TO THE 1980'S, TO THE GRACE COMMISSION. THEY HAD SOME GREAT IDEAS. MOST OF THEM NOT IMPLEMENTED. I THINK THAT THE CLINTON-GORE INITIATIVE, A LOT OF THAT WAS ACADEMICS. SO, THIS IS PEOPLE ON THE GROUND , ALL AREAS OF GOVERNMENT, AND IT IS MOVING QUICKLY. I REALLY DO THINK IT IS UNFORTUNATE THAT IT HAS BEEN LAMPOONED AND ATTACKED THE WAY IT HAS COME ABOUT WHEN IT IS BEING ATTACKED LIKE THIS IT TELLS ME THAT THERE ARE A LOT OF ENTRENCHED INTERESTS. YOU ARE MOVING PEOPLE'S CHEESE THEY DON'T LIKE IT.

8:32 AND IT IS NOT THERE CHEESE, IT IS THE AMERICAN PEOPLE'S CHEESE. ANNMARIE: HOW ABOUT PUTTING CHEESE BACK IN THE AMERICAN PEOPLE'S POCKETS? HOW BIG WOULD THOSE DOGE CHECKS BE THAT THE PRESIDENT SPOKE ABOUT YESTERDAY? SEC. BESSENT: IF WE ARE BRINGING DOWN ENERGY PRICES, IF WE ARE CUTTING THE REGULATION -- SO, YOU KNOW, I THINK IT'S -- TO QUOTE THE VICE PRESIDENT DURING THE CAMPAIGN, I THINK IT IS HOLISTIC, AND I THINK THAT IT IS ALL KIND OF ONE MOSAIC. IF YOU WERE TO INJECT A LOT OF MONEY INTO THE ECONOMY -- ANNMARIE, THINK ABOUT THIS. WE ARE AT, YOU KNOW, THIS MASSIVE DEFICIT TO GDP.

9:18 ALMOST 7%. WHAT WE HAVE HAPPENING ON ONE SIDE, YOU WILL BE BRINGING DOWN THAT SPENDING IN THE ECONOMY. SO, VERY EASY MENTAL MODEL IS EVERY $300 BILLION IS ABOUT 1% OF GDP. SO, EVERY $300 BILLION THAT DOGE IS ABLE TO SAVE, COULD YOU PUT THAT BACK IN THE ECONOMY INTO PEOPLE'S POCKETS? ANNMARIE: ONE THING THAT COULD HAPPEN IS MAY BE REMARKING GOLD. ELON MUSK WAS TALKING ABOUT MAYBE GOING TO FORT KNOX TO MAKE SURE THOSE GOLD RESERVES ARE THERE. DO YOU HAVE ANY PLANS TO VISIT KENTUCKY? SEC. BESSENT: I DON'T HAVE ANY PLANS. I CAN TELL YOU THAT WE DO AN AUDIT EVERY YEAR. I CAN TELL THE AMERICAN PEOPLE

10:08 ON CAMERA RIGHT NOW THAT THERE WAS A REPORT SEPTEMBER 30, 2020 FOUR, ALL THE GOLD IS THERE. IN THE U.S. SENATOR WHO WANTS TO COME VISIT IT CAN ARRANGE A VISIT THROUGH OUR OFFICE. SEC. BESSENT: GOLD WAS YOUR BIGGEST HOLDING WHEN YOU WERE A HEDGE FUND MANAGER BEFORE YOU DIVESTED TO BECOME THE TREASURY SECRETARY. YOU KNOW THE VALUE OF GOLD RIGHT NOW VERSUS WHERE IT IS MARKED ON ITS BALANCE SHEET. IT IS CLOSE TO $3000. IS IT GOOD FOR THIS ADMINISTRATION TO REVALUE GOAL? SEC. BESSENT: WHEN I WAS TALKING ABOUT THE SOVEREIGN WEALTH FUND, I CAN PROMISE YOU THAT IS NOT WHAT I HAD IN MIND. ANNMARIE: SO IT IS NOT ON THE TABLE? SEC. BESSENT: THAT IS NOT WHAT I HAD IN MIND. LISA: WHEN YOU LOOK AT THE DOGE SAVINGS SO FAR, HOW MUCH IS THAT GOING TO OFFSET SOME OF

10:53 THE TAX EXTENSIONS WE HAVE SEEN? WHAT ARE THE SAVINGS ARE YOU LOOKING AT THAT POTENTIALLY ARE CRUCIAL? SEC. BESSENT: AGAIN, THEY ARE JUST GETTING STARTED, AND ONE OF THE SHOCKING THINGS TO ME HAS BEEN, YOU KNOW, WHEN WE TALK ABOUT WASTE, FRAUD, AND ABUSE WE ALL THINK OF, YOU KNOW, WHAT COMES OUT OF D.C.. THINK OF WASTE AND FRAUD AND FRICTION COSTS. ONE WAY TO THINK ABOUT THIS IS, 25% OF THE U.S. ECONOMY FLOWS THROUGH WASHINGTON, D.C.. SO, IF WE CAN CUT THE FRICTION ON THAT, YOU KNOW, THAT IS A LOT OF SAVINGS. WHAT WE ARE DISCOVERING NOW, IN WASTE, FRAUD, AND ABUSE, THERE MAY BE MORE FRAUD GOING ON THAN WE THOUGHT.

11:40 YOU MAY BE HEARING MORE ABOUT THAT IN THE COMING WEEKS. JONATHAN: CAN WE HEAR ABOUT IT NOW? SEC. BESSENT: YOU WILL HEAR ABOUT IT IN THE COMING WEEKS. JONATHAN: WHAT KIND OF FRAUD HAVE YOU IDENTIFIED? YOU WERE HERE NOW. SEC. BESSENT: I WOULD REFER YOU TO SOME OF THE STATEMENTS BY LEE ZELDIN AT THE EPA. JONATHAN: WE CAN BUILD ON THAT IN THE WEEKS TO COME. I WOULD REFER SOME COMMENTS FROM THE WASHINGTON POST ON DEFENSE CUTS. THEY ARE REPORTING THAT PETE HEGSETH ORDERED SENIOR LEADERS OF THE PENTAGON AND THROUGHOUT THE U.S. MILITARY TO DEVELOP PLANS FOR CUTTING A PERCENT FROM THE DEFENSE BUDGET EACH OF THE NEXT FIVE YEARS. ARE YOU AWARE OF THAT PLAN? SEC. BESSENT: I'M IN CONTACT WITH SECRETARY HEGSETH AND WE ARE WORKING VERY CLOSELY, AND, YOU KNOW, AGAIN, I'M NOT GOING TO JUMP THE GUN

12:27 HERE ON TV, BUT I THINK EVERYTHING IS ON THE TABLE, AND, CAN THINGS WORK MORE EFFICIENTLY? ANNMARIE: WHEN IT COMES TO THE DEFENSE BUDGET WE SPENT MORE LAST YEAR ON OUR INTEREST PAYMENTS THAN DEFENSE. ARE YOU HOPING FOR 2025 TO SPEND MORE ON DEFENSE THAN THE INTEREST PAYMENTS? SEC. BESSENT: IT WOULD DEPEND HOW WE GOT THERE TOO. DOES DEFENSE SPENDING GO DOWN? DOES THE INTEREST WILL GO DOWN? WE WILL SEE WHAT THAT CALCULUS IS. JONATHAN: GOT TO FOCUS ON TARIFFS TOO. REVENUE RAISING AS PART OF THAT STORY. RECIPROCITY. THE PRESIDENT HAS DISCUSSED RECIPROCAL TERRACE. HE HAS MENTIONED THE EUROPEANS ALSO OFFERED TO DROP AUTO TARIFFS. HAVE THE EUROPEANS ACTUALLY MET THAT OFFER? SEC. BESSENT: I HAVE NOT SEEN THAT, BUT IT IS

13:14 POSSIBLE. THE GOOD THING ABOUT PRESIDENT TRUMP'S NEGOTIATING STYLE IS, PEOPLE WITH THINGS THAT WERE NOT ON THE TABLE BEFORE ON THE TABLE VERY QUICKLY. ANNMARIE: THAT WOULD BE RECIPROCITY AND MAYBE NEGOTIATING. BUT TO OFFSET THE TAX CUTS, WHERE IS THE REVENUE-RAISING? SEC. BESSENT: THEY COULD BE -- YOU KNOW, NOT EVERYONE IS GOING TO GIVE ON EVERY POINT, RIGHT? SO, THE EUROPEANS SEEMINGLY PUT FORWARD VERY QUICKLY AUTO TARIFFS. BUT NOT EVERY COUNTRY IS GOING TO DO THAT. MY VIEW, AS I HAVE SAID BEFORE, CHINA IS THE MOST IMBALANCED

14:00 ECONOMY IN THE HISTORY OF THE WORLD, AND THEY ARE TRYING TO EXPORT THEIR WAY OUT OF WHAT IS A VERY SERIOUS RECESSION. AND THE REST OF THE WORLD CAN'T DO THAT. THEY CANNOT DUMP CHINESE GOODS. THEY'RE GOING TO HAVE TO REBALANCE THEIR ECONOMIES. SO, TARIFFS ON CHINESE GOODS AND UP 10%. AND A LOT OF THAT, AGAIN, MEXICO, CANADA, CHINA, THAT WAS IN RESPONSE TO THE FENTANYL CRISIS. ANNMARIE: CHINA IS THE ONLY ONE THOSE TARIFFS HAVE STAYED IN PLACE. IS THAT THE OPENING SALVO? HOW HIGH DO YOU THINK TRUMP WANTS TO GO WHEN IT COMES TO CHINESE TARIFFS? SEC. BESSENT: I'M NOT GOING TO GIVE AWAY HIS NEGOTIATING HAND ON TV. I DO HAVE MY FIRST CALL WITH MY CHINESE COUNTERPART TOMORROW, SO I LOOK FORWARD TO A PRODUCTIVE DISCUSSION. ANNMARIE:

14:45 WHAT IS THE FIRST POINT YOU WANT TO BRING UP? SEC. BESSENT: THAT WE WANT TO WORK TOGETHER. AS WE HAVE SAID, A LOT OF THE PRECURSOR INGREDIENTS FROM FENTANYL ORIGINATE IN CHINA, SO WE REALLY WANT TO PUT A STOP TO THAT QUICKLY. JONATHAN: HISTORICALLY THERE HAS BEEN CURRENCY CONCERNS WITH REGARDS TO CHINA AS WELL. IN THE CONVERSATIONS BEFORE TAKING UP THIS POST WITH YOU YOU MENTIONED THAT SOME CURRENCIES ARE UNDERVALUED. HIS CHINA ONE OF THEM? IS THAT SOMETHING YOU WOULD LIKE TO REMEDY? SEC. BESSENT: WHAT I SAID IS, MAKE A MISTAKE, THE U.S. STILL HAS A STRONG DOLLAR POLICY. BUT THAT DOES NOT MEAN THAT I LATERALLY OTHER COUNTRIES CAN WEAKEN THEIR CURRENCIES VERSUS THE DOLLAR WILL MANIPULATE THEIR CURRENCIES. SPECIFICALLY ON CHINA, CHINA IS

15:33 A VERY DIFFICULT CURRENCY TO VALUE BECAUSE I REALLY THINK THAT WHEN WE THINK ABOUT THE VALUE OF THE RMB IT IS IN DIFFERENT EQUILIBRIUM. ANY ACADEMIC MODEL IT IS CHEAP. ON THE OTHER SIDE YOU HAVE 1.4 BILLION PEOPLE WHO ARE SUBJECT TO CAPITAL CONTROLS AND THEY WANT TO GET SOME OF THEIR MONEY OUT OF THE COUNTRY. AND THEN YOU HAVE WHAT I WOULD CALL THE X FACTOR. IF YOU PUT MONEY INTO CHINA TODAY, WHAT IS YOUR BELIEF THAT YOU WILL GET IT OUT IN 2, 3, 4 YEARS? IT IS VERY DIFFICULT TO COME UP WITH A POINT VALUE. LISA: YOU HAVE TALKED ABOUT THE DESIRE TO HAVE A STRONG DOLLAR POLICY FOR THE UNITED STATES. BUT IS A STRONG DOLLAR AT ODDS

16:19 WITH THE IDEA OF BRINGING INDUSTRIAL BACK TO THE UNITED STATES? IT SPEAKS TO SOME OF THE CONCERNS ABOUT OTHER COUNTRIES TRYING TO DEVALUE THEIR CURRENCIES. SEC. BESSENT: I THINK WE WILL NECESSARILY HAVE A STRONG DOLLAR IF WE ON GOOD POLICIES, AND I THINK WE ARE GOING TO RUN GOOD POLICIES. IF WE CUT THE TRADE DEFICITS. IF YOU THINK ABOUT, THE TRADE DEFICIT IS A COMBINATION OF TERMS OF TRADE, VALUE OF THE DOLLAR, AND OUR OWN BUDGET DEFICIT. IF WE BRING DOWN THE BUDGET, THEN I THINK EVERYONE, IF WE ARE DEREGULATING, IF WE MAKE THE TAX CUTS PERMANENT, IF WE MAKE THE U.S. MORE BUSINESS-FRIENDLY, THEN

17:08 EVERYONE, YOU KNOW, ALL OF THE RESERVE MANAGERS IN THE WORLD, ALL OF THE PRIVATE INVESTORS ARE GOING TO WANT A PIECE OF THAT. THE DOLLAR WILL BE STRONG, BUT WE WILL BE ABLE TO PUSH BACK ON THAT. THROUGH GOOD POLICIES, THROUGH PRODUCTIVITY. THE U.S. PRODUCTIVITY, I THINK, I HAVE BEEN MEETING WITH A LOT OF THE TECH LEADERS LATELY, AND I THINK WE ARE VERY CLOSE TO THE CUSP OF THIS AI FINALLY COMING INTO THE PRODUCTIVITY NUMBERS. LISA: DO YOU THINK A STRONG DOLLAR IS NECESSARY TO OFFSET SOME OF THE COSTS THAT COULD BE ASSOCIATED WITH THE TARIFFS? SEC. BESSENT: TRADITIONAL ECONOMIC THEORY WOULD TELL YOU THAT THE DOLLAR STRENGTHENS ON THE TARIFFS, BUT WHO KNOWS WHAT WE HAVE ALREADY SEEN SINCE THE DOLLAR

17:55 APPRECIATION SINCE NOVEMBER 5? YOU KNOW, OUR KIDS LIVE IN THE FUTURE, SO HAVE WE ALREADY PRICED IN SOME OF THAT? ON THE OTHER SIDE, WHAT WE ARE TRYING TO DO IS TO GET OTHER ECONOMIES TO SUCCESSFULLY REBALANCE. MY CONVERSATION TOMORROW -- AND THIS IS REALLY JUST AN INTRODUCTORY CONVERSATION. BUT AS WE GO DOWN THE ROAD THE CHINESE NEED TO REBALANCE THEIR ECONOMY IN FAVOR OF CONSUMPTION. THAT THEY ARE SUPPRESSING THE CONSUMER IN FAVOR OF THE BUSINESS COMMUNITY. SO, YOU KNOW, AS THAT HAPPENS THEN THEY WILL INCREASE THEIR DEMAND. SOMETHING IN EUROPE. MARIO DRAGHI, FOR ANY OF YOUR VIEWERS WHO DIDN'T SEE IT,

18:43 MARIO DRAGHI HAD A FANTASTIC EDITORIAL THIS WEEKEND IN THEIR FINANCIAL TIMES WERE HE SAID, LOOK, WE HAVE PUT THE EQUIVALENT OF MORE TARIFFS ON OURSELVES. MORE TARIFFS ON OURSELVES THAN THE U.S. COULD EVER CONTEMPLATE. SO, COULD YOU GET A VERY STRONG EURO? SOMEHOW THEY HAD AN IMMACULATE DEREGULATION. ANNMARIE: YOU ARE HAVING THIS CALL WITH YOUR CHINESE COUNTERPART. WILL YOU SEE HIM NEXT WEEK AT THE G20 FINANCE MINISTERS MEETING? SEC. BESSENT: I'M NOT GOING TO, DUE TO SOME DOMESTIC CONSIDERATIONS. I DO THINK HE IS NOT ATTENDING EITHER. JONATHAN: IS THAT WHAT HE HAS TOLD YOU? SEC. BESSENT: THIS IS THE READOUT WE HAVE GOTTEN.

19:29 SO, AGAIN, I ALSO BELIEVE SEVERAL OF MY OTHER COUNTERPARTS WILL NOT BE THERE. I HAVE BEEN SPEAKING AND AM IN CONTACT WITH THEM REGULARLY. AND THEN I WILL BE SEEING THEM AT THE SPRING IMF WORLD BANK MEETINGS. JONATHAN: WANTED TO TALK TO YOU NATIONAL SECURITY AS WELL. THE DOLLAR HAS A ROLE TO PLAY ON THAT FRONT. THE SANCTIONS POLICY OF THE UNITED STATES. DO YOU THINK THAT HAS BEEN MISUSED, ABUSED? SEC. BESSENT: EXCELLENT QUESTION. WHEN I COME INTO TREASURY, IF YOU THINK ABOUT, SORT OF, TREASURY IS FIVE PIECES. THERE IS IRS ON ONE SIDE, THE MINT ON THE OTHER, BUT THE MAIN FOCUS IN THE BUILDING AT TREASURY, DOMESTIC FINANCE, INTERNATIONAL FINANCE.

20:14 THAT IS WHAT I HAVE BEEN DOING FOR 35 YEARS. I WAS ABLE TO HIT THE GROUND RUNNING ON THAT. THE TERMS OF FINANCE IS WHERE MY BIGGEST LEARNING CURVE IS, SO I'M SPENDING A LOT OF TIME ON THAT, AND I AM REVIEWING THE SANCTIONS POLICIES. WHY DO WE DO WHAT WE DO? HAVE THEY BEEN EFFECTIVE? ARE WE RUNNING A 21ST CENTURY PROGRAM AS OPPOSED TO SOME OUTDATED MODALITIES? ANNMARIE: THE CURRENT SANCTIONS ON PLACES LIKE RUSSIA TO TRY TO GET PUT INTO THE NEGOTIATING TABLE, YOU ARE INTRICATELY INVOLVED IN THIS DEAL. WERE JUST IN KYIV. TRUMP YESTERDAY CALLED ZELENSKYY A DICTATOR. AND SAID HE BETTER MOVE FASTER OR HE IS NOT GOING TO HAVE A COUNTRY DOES THIS LANGUAGE MAKE

21:00 IT HARDER FOR YOU TO GET THAT MINERALS DEAL OVER THE FINISH LINE? SEC. BESSENT: I THINK PRESIDENT ZELENSKYY, UNFORTUNATELY, ESCALATED AND HAS PUT SOME DAYLIGHT BETWEEN US. ANNMARIE: HOW DID HE ESCALATE? SEC. BESSENT: A LOT OF HIS REMARKS IN MUNICH, I THOUGHT, WERE INAPPROPRIATE. PRESIDENT ZELENSKYY, WHEN I MET WITH HIM, ASSURED ME THAT HE WOULD BE SIGNING THE MINERALS DEAL IN MUNICH. HE HAS NOT. AND, LOOK, THE REAL PURPOSE HERE -- AND I THINK IT IS -- IT HAS TURNED INTO THIS MEDIA CIRCUS. PRESIDENT TRUMP HAD A VERY ELEGANT PLAN, AND IT WAS, BRING THE UKRAINIANS CLOSER TO THE U.S. LET'S DO THIS ECONOMIC DEAL AND EVEN KARL ROVE IN THE WALL

21:49 STREET JOURNAL THIS MORNING APPROVES OF IT DOING THE U.S., WITH GREATER ECONOMIC INTEREST IN UKRAINE, PROVIDES A SECURITY SHIELD. SO, THE SEQUENCING OF WHAT IS GOING TO HAPPEN WAS, BRING THE UKRAINIANS CLOSER TO THE U.S. THROUGH ECONOMIC TIES, CONVINCE THE AMERICAN PEOPLE, THE AMERICAN PUBLIC, THEM ONSIDE, AND THEN TELL THE RUSSIANS, GO TO THE NEGOTIATING TABLE WITH A VERY FULSOME MESSAGE THAT IF WE NEED TO WE WILL TAKE SANCTIONS OUT. ANNMARIE: WHAT ABOUT TAPPING THE RUSSIAN FROZEN ASSETS? SOME $300 BILLION. WOULD YOU FORCE YOUR EUROPEAN COUNTERPARTS DID NOT JUST HAVE THEM FROZEN, BUT TAPPED THEM? TRUMP TALKS ABOUT REPAYING THE AMERICAN TAXPAYER.

22:35 SHOULDN'T RUSSIA BE A PART OF THAT? SEC. BESSENT: THEY ARE BEING TAPPED. ANNMARIE: THE INTEREST. SEC. BESSENT: THE RETURNS FROM THE FREEZE ASSETS FILE IS GOING TO PAY THE EUROPEANS. IT IS VERY IMPORTANT TO UNDERSTAND HERE IS EVERYTHING THE U.S. HAS DONE TO DATE, THE AMERICAN PEOPLE, THE AMERICAN TAXPAYER, IS GRANTS. EUROPEANS, ROUGHLY HALF OF WHAT THEY HAVE DONE OUR LOANS, AND THE RUNOFF FROM THE FROZEN ASSETS IS BEING USED THE REPAY EUROPEAN LOANS. JONATHAN: HAVE YOU COMMUNICATED THAT TO THE EUROPEANS? THAT YOU ARE UPSET WITH THEM? SEC. BESSENT: WHAT IS THAT? JONATHAN: HAVE YOU COMMUNICATED TO THE EUROPEANS THAT YOU ARE UPSET WITH HIM? SEC. BESSENT: I THINK VICE PRESIDENT PENCE DID A PRETTY GOOD JOB IN MUNICH.

23:22 JONATHAN: DO YOU THINK THAT THE U.S. RUNNING A DEFICIT NORTH OF 7%, DO YOU THINK THEY UNDERSTAND THE GRAVITY OF THE MOMENT IN THE UNITED STATES, THE U.S. PERSPECTIVE? SEC. BESSENT: I THINK THEY UNDERSTAND THAT PRESIDENT TRUMP DURING HIS FIRST TERM, THIS TERM, VICE PRESIDENT PENCE AND THE ENTIRE SECURITY APPARATUS HAVE TOLD THEM THAT MANY OF THE COUNTRIES ARE DEFICIENT IN THEIR NATO SPENDING, AND THEY NEED TO COME UP. WHEN I WENT TO UKRAINE, YOU FLY INTO POLAND. POLAND IS SPENDING ALMOST 5% OF GDP ON DEFENSE. LOOK AT POLAND SITTING NEXT TO UKRAINE.

24:07 POLAND IS ONE OF THE GREAT ECONOMIC SUCCESS STORIES OF THE PAST 30 YEARS. AFTER CHINA THEY HAVE HAD THE FASTEST GROWTH. SO, WHY COULDN'T UKRAINE, WITH SOME U.S. CAPITOL INGENUITY, KNOW-HOW, OUT SOME OF THE CORRUPTION, AS WELL AS THEIR NEIGHBOR HAS DONE? JONATHAN: IF EUROPE SPENT MORE WOODED ALLOW THE UNITED STATES TO CUT BACK ON DEFENSE SPENDING? IS THAT THE GOAL? SEC. BESSENT: THE ULTIMATE GOAL IS FOR THE EUROPEANS TO COME UP TO WHERE THEY HAVE SAID THEY ARE GOING TO. AND TO PROVIDE THEIR SHARE OF THE NATO SPENDING. ANNMARIE: YOU MENTIONED SANCTIONS. DO YOU HAVE BOTH ON THE TABLE READY TO GO? AS SANCTIONS RAMP-UP OR WIND DOWN ON RUSSIA, DEPENDING ON

24:52 HOW THESE TALKS GO? SEC. BESSENT: I THINK THAT WOULD BE A GOOD CHARACTERIZATION. ANNMARIE: TRUMP STILL THINKS HE'S GOING TO MEET WITH PUTIN BY THE END OF THE MONTH. ARE YOU PREPARED FOR THAT? SEC. BESSENT: I'M NOT GOING TO GIVE AWAY THE TIMETABLE, BUT THE PRESIDENT IS COMMITTED TO ENDING THIS CONFLICT VERY QUICKLY. I WILL TELL YOU, IN KYIV I WENT TO A CHILDREN'S HOSPITAL THAT HAD BEEN BOMBED. THIS WAS NOT A CHILDREN'S HOSPITAL WHERE YOU TAKE YOUR CHILD IF HE OR SHE SCRAPES THEIR KNEE. ANNMARIE: SO YOU CAN IMAGINE -- I DID THAT TRIP YOU ARE TALKING ABOUT. YOU CAN IMAGINE WHY THEY HAVEN'T HAD ELECTIONS THEN, RIGHT? THEY ARE LIVING IN THIS MARTIAL LAW? SEC. BESSENT:

25:42 THEY ARE, AND, YOU KNOW, IT IS PROBABLY UNNECESSARY, PROBABLY NECESSARY TO MOVE FORWARD WITH A DEMOCRATIC PROCESS. JONATHAN: WE'VE COVERED A LOT OF TOPICS. ONE NAME THAT HAS NOT COME UP MUCH IS ELON MUSK. YOU HAVE HAD SOME TREMENDOUS COLLEAGUES OVER YOUR CAREER, INCLUDING STANLEY DRUCKENMILLER. YOU HAVE WORKED ALONGSIDE DONALD TRUMP THE CAMPAIGN. CAN YOU DESCRIBE WHAT IT IS LIKE TO WORK WITH SOMEONE LIKE ELON MUSK? WHAT IS THAT LIKE, THEY TODAY? SEC. BESSENT: ELON MUSK, LIKE STAN DRUCKENMILLER, I ALWAYS COMPARE THE GREAT BUSINESS PEOPLE TO GREAT ATHLETES. KEEP THEIR EYE ON THE PRIZE.

26:33 WHETHER HE IS THE MESSI OR MICHAEL JORDAN, HE IS FOCUSED AND HIS ENERGY LEVEL IS UNBELIEVABLE. HE HAS GOTTEN TO WHERE HE HAS BECAUSE EVERYTHING IS ON THE TABLE. THERE IS ALWAYS THIS EXAMINATION OF, WHY ARE WE DOING IT THIS WAY? MOST OF ALL, IF SOMETHING IS NOT WORKING, LET'S FIX IT, YOU KNOW? ANNMARIE: SAM ALTMAN WAS ON BLOOMBERG TV TWO WEEKS AGO AND CALLED ELON MUSK INSECURE. DO YOU VIEW HIM AS SUCH? SEC. BESSENT: I'M NOT GOING TO GET INTO THE TECH MAGNATE -- [LAUGHTER] YOU KNOW, THE SLAP FAST. JONATHAN: THAT IS WISE. HE IS DRAWING CRITICISM, THOUGH. WHEN YOU AND THE ADMINISTRATION PICK OUT THINGS MONEY IS BEING WASTED ON, I THINK WE CAN ALL AGREE THAT IS A WASTE OF MONEY. WHERE THERE MIGHT BE SOME CONCERN IS THE WAY THAT SOME

27:20 PEOPLE HAVE BEEN LAID OFF IN WASHINGTON THAT LACKS DIGNITY. CAN YOU COMMENT ON THAT TODAY? SEC. BESSENT: I THINK THERE ARE MANY FINE PUBLIC SERVANTS, BUT I THINK -- YOU KNOW, I HAVE BEEN IN WASHINGTON THREE OR FOUR WEEKS NOW, AND THERE IS A REAL BIAS TOWARD THE STATUS QUO. AND IF YOU DON'T MOVE QUICKLY THAN THE LOBBYISTS GET INVOLVED, ENTRENCHED INTERESTS, AND IT IS IMPOSSIBLE TO GET ANYTHING DONE. SO, YOU KNOW, ANYONE WHO IS EXPERIENCED IN FINANCIAL HARDSHIP, ANY KIND OF THE MENTAL DURESS, I'M SORRY FOR THEM, BUT THAT IS ALSO WHAT THE AVERAGE AMERICAN EXPERIENCES

28:05 EVERYDAY. MOST OF US -- YOU ALL COME TO WORK. YOU WANT GOOD RATINGS. YOU GET A PERFORMANCE READOUT. YOU REALLY PUSH FORWARD. AND I CAN TELL YOU THAT IN TREASURY I HAVE BEEN SO IMPRESSED WITH THE QUALITY OF THE PERMANENT STAFF. AND, YOU KNOW, I WANT TO GET EVERYBODY BACK TO THE OFFICE AND A LOT OF PEOPLE ARE ON BOARD WITH THAT. ANNMARIE: WHEN IT COMES TO YOUR PRIOR LIFE, YOU DID NOT HAVE A BOSS. YOU SAID IT WOULD BE LIKE ATROPHY IF YOU ARE NOT TRADING FINANCIAL MARKETS EVERYDAY. WHAT IS IT LIKE NOW TO BE IN THIS POSITION WHERE YOU MAKE DECISIONS THAT PEOPLE CAN TRADE AGAINST WHAT YOU ARE DOING AND YOU ALSO HAVE A HAVE A BOSS

28:53 THAT'S IT'S FREE CLOSE TO YOU IN TERMS OF THE TREASURY DEPARTMENT AND THE WEST WING? SEC. BESSENT: I ONLY HAD MY OWN FIRM FOR EIGHT YEARS. I WORKED WITH MR. SOROS, WITH STAN DRUCKENMILLER. IT IS A GREAT FEEDBACK MECHANISM. I THINK I HAD THE BEST POSITION. I AM ON THE WHITE HOUSE CAMPUS. I CAN BE IN THE OVAL OFFICE IN FOUR MINUTES. THERE IS PROXIMITY. NOT LIKE ELON MUSK, PRESIDENT TRUMP IS COMMITTED TO SHAKING UP THE STATUS QUO.

29:38 HE CAME IN WITH A MANDATE AND HE IS MOVING ON IT QUICKLY. JONATHAN: YOU'RE A TOTAL GENTLEMAN AND YOU'VE BEEN GENEROUS WITH YOUR TIME. THANK YOU FOR BEING A FRIEND TO THIS PROGRAM.