Scott Bessent Urges Trump to Reevaluate Fed Amid Economic Turning Point
So, something big is stirring in Washington, and it's coming straight from Treasury Secretary Scott Bessent. In a recent interview, Bessent made headlines by calling out the Federal Reserve for what he described as a series of “many mistakes” that could be holding back the U.S. economy. He’s urging the Trump administration to take a hard look at the Fed’s performance—and maybe even make some changes at the top.
Bessent drew an intriguing comparison between today’s economic potential and the explosive growth of the 1990s, during the height of the dot-com boom. He believes we’re on the edge of another massive surge—this time driven by artificial intelligence. Speaking from CNBC’s “Squawk Box,” Bessent shared insights from a tech conference in Sun Valley, Idaho, where he met with leaders who think the AI revolution is coming faster than expected, possibly hitting its stride as early as 2026. What’s even more fascinating is his belief that this growth could unfold without triggering inflation, largely because AI could reduce the demand for human labor.
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Now, here’s where it gets political. Bessent made it clear: if inflation stays low, interest rates should come down. But the Federal Reserve hasn’t cut rates since December, and that’s got President Trump fired up. Trump has been openly frustrated with Fed Chair Jerome Powell, and while he hasn’t officially moved to remove him, he’s not exactly hiding his intentions either. Bessent, when asked whether Powell should be fired, didn’t give a yes or no. Instead, he raised a provocative question: if the Fed were the FAA and made this many mistakes, wouldn’t we demand an investigation?
He’s not pulling any punches either. He even joked that the Fed has become “universal basic income for academic economists,” criticizing the institution for being out of touch. Bessent says it’s time to ask whether the Fed is truly succeeding in its mission. Meanwhile, inflation is creeping back up, and tariffs are starting to bite, but Bessent insists fears around trade policies are overblown.
In a potentially telling move, the Trump administration has already started the process of identifying Powell’s successor—months ahead of schedule. They’re also scrutinizing the $2.5 billion renovation of the Fed’s headquarters in D.C., alleging wasteful spending. Think Italian beehives, luxury elevators, and posh dining rooms—claims Powell has pushed back on, saying the building simply needs major structural repairs and asbestos removal.
At the end of the day, Bessent’s message is crystal clear: the Fed can’t operate in a vacuum anymore. With the AI era at our doorstep and inflation potentially under control, he believes this is the moment to reassess how America steers its monetary policy. Whether that means a leadership change or a complete structural rethink of the Federal Reserve, one thing’s certain—this isn’t just financial housekeeping. It’s a political power play that could reshape the country’s economic future.
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