The Beclowning of Scott Bessent

Paul Krugman argues that Scott Bessent, once seen as a credible Treasury secretary, has wrecked his reputation by aligning with Donald Trump and making grandiose market claims he cannot back up. After intervening to support the yen and openly daring investors - declaring “I am the house now” - Bessent sought to push long-term U.S. interest rates down by buying 30‑year Treasuries. That move, Krugman says, was tone-deaf and ineffective, likened to paying down a mortgage by running up a credit card. A profile quote from Jason Furman establishing Bessent’s prior credibility underscores the contrast between his earlier standing and his present “Baghdad Bob” posture in bond markets.

Krugman explains why Bessent’s campaign failed: macro forces are driving rates up - an AI-fueled investment boom and, more immediately, Trump’s rejection of an Iranian proposal that sent oil and refined-product prices higher. Shipping frictions around the Strait of Hormuz, including nighttime shuttle transfers and an estimated 15 percent of large crude carriers idled off Oman, keep fuel prices elevated and inflation sticky, which in turn forces the Fed to maintain high short-term rates that feed into long-term yields. Bessent’s prediction of a near-term Iranian economic collapse and a quick diplomatic win is presented as implausible; Krugman’s larger point is blunt - working for Trump can destroy an otherwise solid professional reputation.