The dust has settled! What did the new U.S. Treasury Secretary say? The "3-3-3" strategy and long-term criticism of the Federal Reserve

On Friday, Trump announced the nomination of hedge fund manager Scott Bessent as Treasury Secretary, immediately drawing widespread attention from the market regarding the seasoned Wall Street investor's policy positions on tariffs, inflation, deficits, and the Federal Reserve.

The 62-year-old Bessent is the founder of Key Square Capital Management and served as Chief Investment Officer at Soros Fund Management from 2011 to 2015, being referred to by Trump as "one of the smartest people on Wall Street."

As the nominee for the new Treasury Secretary, Bessent recently proposed a notable "333 plan": reducing the budget deficit to 3% of GDP by 2028, achieving 3% GDP growth through deregulation, and increasing oil production by 3 million barrels per day or an equivalent amount of energy. He believes that implementing this plan will create conditions for the Federal Reserve to initiate an "appropriate easing cycle."

It is worth noting that Bessent has consistently held a strong critical stance towards the Federal Reserve. Last month, he previously proposed a controversial suggestion to appoint a "shadow Federal Reserve Chair" to succeed Powell after his term ends in 2026, making the current Chair Powell a "lame duck." After this unconventional suggestion sparked controversy in the financial markets, Bessent changed his position, stating that the new government should "early nominate the next Federal Reserve Chair."

"3-3-3" Strategy, Attempting to Downplay Trump's Trade Threats

At a meeting held by the conservative think tank Manhattan Institute on Thursday evening, Bessent presented an economic policy proposal known as the "333 plan."

As mentioned earlier, the plan includes three core objectives: reducing the budget deficit to 3% of GDP by 2028, achieving 3% GDP growth through deregulation, and increasing oil production by 3 million barrels per day or an equivalent amount of energy.

Regarding economic growth, Bessent advocates achieving the 3% real economic growth target through deregulation, expanding U.S. energy production, and controlling inflation.

Bessent emphasized, "The goal is to let the private sector take over, replacing the currently inflated government spending." He believes that the Biden administration's policy direction has suppressed private investment willingness.

In terms of deficit control, Bessent stated that he would urge Trump to "publicly express the desire to reduce the deficit to 3% of GDP before the end of his term." Bessent added:

"Trump did not let the deficit reach 6% or 7% of GDP; his first term saw an average federal budget deficit of 4% of GDP, so (in this term) it should be reduced to 3%."

On energy policy, he views increasing crude oil production as a key means to curb inflation expectations, advocating for an additional 3 million barrels of oil or equivalent energy production per day.

Regarding tariff policy, Bessent attempts to downplay Trump's trade threats. In response to concerns from Wall Street that comprehensive tariffs could trigger a trade war and ultimately lead to higher prices for American consumers, Bessent replied that Trump's tariff threats are a negotiation strategy aimed at obtaining concessions from other countries:

"Tariffs are the starting point for negotiations with trading partners... fundamentally, he is a free trader."

Long-term Criticism of the Federal Reserve

In terms of monetary policy stance, Bessent has long held a strong critical attitude towards the Federal Reserve. He previously proposed a controversial suggestion to appoint a "shadow Federal Reserve Chair" to take over immediately after the current Chair Jerome Powell's term ends, making Powell a "lame duck."

This proposal sparked controversy and was criticized for potentially disrupting financial markets. This month, Bessent changed his mind on this idea but still suggested that the new government should "nominate the next Federal Reserve Chair early."

In response, current Federal Reserve Chair Powell (whose term lasts until 2026) has clearly stated that he will not resign, and Trump has no authority to demote Federal Reserve officials.

Bessent's predictions in the financial markets have also drawn attention. He publicly predicted that if Vice President Harris wins the election, the stock market would crash. This statement reportedly impressed Trump.

Recently, he published an opinion piece in The Wall Street Journal, refuting a group of Nobel laureates' warnings that Trump's economic agenda would harm the U.S. economy. "Recent market trends clearly show recognition of Trump's 2.0 economic vision," Bessent wrote, "The market is releasing expectations for higher growth, lower volatility and inflation, and revitalizing the economy for all Americans."

However, Bessent's nomination also faces some questioning voices. Last Saturday, billionaire Elon Musk publicly supported Bessent's main competitor, Howard Lutnick, CEO of financial services firm Cantor Fitzgerald, on his social media platform X. Musk stated that Lutnick would "bring change," while Bessent was merely a "conventional choice."