Bescent and Trump "express loyalty": Clarifying strong dollar policy, reiterating that suing Walsh is a joke, hinting at Powell's dereliction of duty

During an interview on Friday, the 6th, Eastern Time, U.S. Treasury Secretary Becerra's series of remarks seemed to express loyalty to President Trump.

Becerra refuted claims of a divergence between him and Trump on dollar policy, reiterating that the core of the "strong dollar policy" is to create a strong economic foundation for the dollar. He clarified for the second consecutive day recent comments by Trump threatening to sue Federal Reserve Chair nominee Kevin Warsh, repeatedly stating that it was a "joke."

On the issue of the Federal Reserve, Becerra echoed Trump's critical stance, suggesting that current Fed Chair Jerome Powell is derelict in his duties.

Becerra emphasized that Trump has great respect for the independence of the Federal Reserve, and that Warsh would bring exceptional credibility and expertise to the Fed. This statement aims to alleviate market concerns about the Fed's independence. Powell's term is set to expire in May 2026 and he is currently under investigation by the Department of Justice.

In the interview, Becerra also highlighted the "Trump Account" plan, stating that it "could become Trump's greatest political legacy." This plan, aimed at increasing the proportion of stock ownership among the American public, will provide $1,000 in seed funding for eligible newborns to invest in funds tracking indices like the S&P 500.

Becerra's remarks have drawn market attention following recent fluctuations in the dollar exchange rate. On January 27, Trump stated he was not worried about the depreciation of the dollar, believing the dollar was "performing great," after which the dollar index fell to its lowest level since 2022. Becerra is attempting to clarify the government's stance on dollar policy.

Strong Dollar Policy Requires a Strong Background

On Friday, when asked which of his and Trump's recent remarks were correct, Becerra called it a "false dichotomy." He explained that the "strong dollar policy" does not refer to intervening in exchange rates, but rather to creating a strong background for the dollar through the right economic policies.

Becerra stated, "The core of the strong dollar policy is whether we are doing things that can create a strong foundation for the dollar." He pointed out that the tax, trade, deregulation, and energy policies of the Trump administration, as well as "reinforcing our sovereignty in critical mineral sectors," are all components of this policy.

Becerra remarked, "Are we making America the best place for global capital? I believe no one has done it better than President Trump."

This statement attempts to bridge the confusion in the market regarding the government's stance on the dollar.

On January 28, Becerra stated that the U.S. "has always adhered to a strong dollar policy," and asserted that the U.S. government "absolutely will not" intervene in the foreign exchange market to support the yen's exchange rate, leading to a rebound in the dollar that day.

However, just a day before Becerra made these statements, Trump, when asked if he was worried about the dollar's depreciation, responded, "No, I think it's great."

After Trump's remarks, the dollar accelerated its decline at the end of trading on the 27th, with the ICE dollar index dropping below 96.00 to 95.60, hitting its lowest level since February 2022.

At that time, Trump also suggested he could manipulate the dollar's exchange rate, stating, "I can make it fluctuate like a yo-yo." However, he believed that doing so was not a good thing, comparing it to hiring unnecessary employees to boost employment figures, while criticizing some Asian economies, including Japan, that he believed were trying to devalue their currencies

Senators Don't Understand the Joke About Walsh

Besant reiterated on Friday his statement from Thursday's Senate hearing that Trump's remarks about "removing Federal Reserve Chair nominee Walsh" were "a joke." He stated that Walsh would bring exceptional credibility and expertise to the Federal Reserve and emphasized that Trump has great respect for the independence of the Federal Reserve.

On Thursday, during a Senate Banking Committee hearing, Democratic Senator Elizabeth Warren asked Besant to commit that Walsh would not be prosecuted or investigated by the Department of Justice for not lowering interest rates as Trump requested. Besant responded at the time, "That depends on the President."

When Walsh pressed, saying this should be an easy question to answer, Besant stated that those were "joking" remarks and noted that Trump was joking about Warren at the time, "which made everyone laugh."

Besant told the media on Friday, "I tried to explain to Senator Warren—she seems to have no sense of humor—that it was a joke." He did not repeat the statement that whether Walsh would be prosecuted would "depend on the President."

This controversy stems from reports over the weekend. It was reported that Trump said at a dinner in Washington that he would sue Walsh if he could not lower interest rates. Trump explicitly stated on Wednesday that if Walsh expressed a willingness to raise rates, he would not receive the nomination for Federal Reserve Chair.

Walsh served as a Federal Reserve Governor from 2006 to 2011, during which he remained vigilant about inflation and often supported higher interest rates. However, in 2025, he changed his tune, echoing Trump's view that rates could be significantly lowered.

Powell May Be Incompetent

Besant mentioned Powell on Friday, stating that the Department of Justice investigation found no evidence of criminal behavior, but "it doesn't look good either, because they say the Chair is incompetent." He summarized, "No crime, but there may be incompetent negligence."

Besant stated that Acting Attorney General Pam Bondi would decide whether to continue the investigation into the Federal Reserve.

Nearly four weeks ago, the U.S. Department of Justice launched an investigation into Powell, focusing on the $2.5 billion cost overruns of the Federal Reserve headquarters renovation and whether Powell lied to Congress about project details. Powell subsequently issued a statement saying the investigation was due to the Federal Reserve's interest rate decisions not "following the President's preferences." Trump stated on Monday that there should be "a thorough investigation" into Powell.

These statements have heightened market concerns about the independence of the Federal Reserve. Several key senators, including Republican Senator Thom Tillis from the Senate Banking Committee, warned that Trump's nominees for the Federal Reserve would face stricter scrutiny. The Banking Committee, which handles Federal Reserve nominations, has a slight Republican majority with 13 seats compared to 11 for the Democrats.

"Trump Accounts" May Become Political Legacy

Besant stated on Friday that "Trump accounts" could become Trump's biggest political legacy. Besant said, "I believe that children born last year and in the coming years will start to mature in 18 years when these accounts begin to mature. Perhaps individuals and families who receive these accounts can create one for themselves." The "Trump Account" is a plan aimed at increasing the proportion of stock ownership among the American public, and is an important component of the "Big Beautiful Plan." According to details disclosed by the U.S. Department of the Treasury, the plan will establish investment accounts for children born between 2025 and 2028, with the government making a one-time deposit of $1,000 in seed funding for eligible newborns. The funds will primarily flow into index funds that track the performance of the U.S. stock market.

According to estimates from the White House Council of Economic Advisers, if the seed funding of $1,000 grows at an average annual rate of 10.5% based on the S&P 500 index, it is expected to increase to about $600,000 by the time the beneficiary reaches retirement age. In a high-yield scenario, if families can contribute the maximum amount through private funds each year, the account could be worth over $300,000 when the child turns 18, and could even exceed $1 million by the age of 28.

On December 17, 2025, Bessent pointed out that 38% of Americans still do not own any stocks, and the goal of this plan is to reduce that percentage to zero. The U.S. Department of the Treasury stated that this initiative is not intended to replace the Social Security system, but rather to supplement it, allowing more Americans to directly participate in the distribution of corporate value creation.

The plan employs a flexible funding structure, which, in addition to federal appropriations, also includes contributions from business owners, philanthropists, and state governments. The annual contribution limit for individuals is set at $5,000, while employers can contribute up to $2,500 for their employees' children's accounts. The plan is expected to officially open for the first round of funding after July 4, 2026