Scott Bessent: Trump’s man who broke the Bank of England

To hear him tell it, Scott Bessent was built just for this moment. “In the next few years, we are going to have to have some kind of a grand, global economic reordering,” the billionaire hedge fund investor predicted at an event last summer. “I’d like to be a part of it.”By tapping Bessent, 62, for Treasury secretary, president-elect Donald Trump has granted that wish. He will be arriving to lead one of the most powerful offices in the world with the global economy at a crossroads. Western governments have emerged from the pandemic with crippling debts just as increasingly bellicose rivals such as China and Russia assert themselves. Without dramatic economic surgery, Bessent reckons, America will tip into a “permanent, European-style malaise” and cede supremacy to China. “I think we are at a very unique moment here. We are the last-chance bar and grill for growing our way out of this.”
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Bessent has not only studied such grand shifts, he has participated in them. As a young trader in London in 1992, it was he and Stanley Druckenmiller, both working for legendary investor George Soros at the time, who came up with the idea to bet against the pound. Soros will forever be known as “the man who broke the Bank of England” — and took the resulting $1 billion profit that bet yielded when Britain pulled out of the European exchange rate mechanism (ERM). But it was Bessent who set the wheels in motion behind the scenes.
Bessent became wildly wealthy through years working for Soros and running his own funds back in New York, but he largely stayed out of the spotlight. That was until last year, when he decided to “come out from behind my desk” and go all-in on Trump. He donated millions of dollars to Trump’s election campaign, suddenly began popping up at events, and publicly stroked the incoming president’s famously outsized ego.
Elon Musk had publicly championed Bessent’s rival for the job, Howard Lutnick, chief executive of the financial giant Cantor Fitzgerald. He also labelled Bessent a “business-as-usual” candidate. Despite that, Trump appointed Bessent last week, lauding him as “one of the most brilliant men on Wall Street”.
Bessent, who has two grown-up children with his husband, a former New York prosecutor, could prove to be the most consequential pick of Trump’s new cabinet if confirmed, which appears very likely.
It would put the self-proclaimed “economic historian” in charge of stewarding the largest economy on the planet. His remit would include issuing debt to fund the government, collecting taxes, overseeing a workforce of more than 100,000 people and, critically, being the tip of the spear for Trump’s trade war.
Last week, the president-elect promised to slap 25 per cent tariffs on all goods coming from Canada and Mexico — two of America’s top three trading partners — until they stem the flow of drugs and illegal immigration. He has said he will impose an additional 10 per cent tariff on all goods from China, America’s single biggest trading partner.
Jeffrey Sonnenfeld, a professor at Yale School of Management in Connecticut, said higher tariffs would be “catastrophic for Main Street” because companies would pass on cost increases to customers. Analysts at Barclays predicted that the tariffs could wipe out “effectively all profits” from America’s big three automakers — Ford, General Motors and Stellantis — because many of their cars are made in Mexico.
It is up to Bessent, whose appointment has pleased both his Wall Street cronies and Trump’s “Make America Great Again” base, to steer the ship through the choppy waters to come. Steve Bannon, the Trump loyalist recently released after a four-month prison sentence for defying a congressional subpoena, said: “I’m the hardest-core guy on tariffs — to bring back manufacturing jobs and to use as negotiating leverage — and Scott Bessent is my guy.”
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Before he was a billionaire, before the $22 million mansion in his native South Carolina, before the estate in Long Island’s exclusive The Hamptons, Bessent was a young political science student at a loose end.
He had just lost out on a bid to edit the student newspaper at Yale, so figured he would give investing a try. Jim Rogers, a notorious investor and early partner to Soros, had put up a posting at the university, looking for bright young interns. Bessent applied, not least because Rogers said he could sleep on an office sofa bed when he was in New York. “He was a blank slate. He didn’t know what a stock was. He didn’t know what a bond was,” recalled Rogers, now 82. “But he was eager to learn, he was enthusiastic, he never said no to anything.”
After learning at Rogers’ elbow, Bessent went into investment banking and then managed money for a Saudi family. He landed at Soros’s London office in 1991 and swiftly dived into data on Britain’s housing market. This led him to his first big investment call.
He rang Druckenmiller, Soros’s head of investment in New York. “He tells me the British housing market is in big trouble, and the British economy is in big trouble,” Druckenmiller recalled on a recent podcast.
What did Bessent see? Britain was in recession and most people had floating-rate mortgages. If someone made a big enough bet against the pound, they could force the Bank of England into a corner. It could either protect the currency’s value by raising interest rates, or sever the long-held agreement that pegged the pound to the German deutschmark, which required the Bank to buy pounds in the market to maintain an agreed ratio with the German currency.
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An interest rate increase would hurt millions of homeowners already suffering in the recession; Soros bet, rightly, that he could force the Bank to pull out of the ERM instead and give up the fight to defend the pound’s value. Buttressed by Bessent’s research, he made a $10 billion bet against sterling and that led to Black Wednesday — September 16, 1992 — when the Bank did indeed pull out of the ERM. The collapse in the pound’s value earned Soros more than $1 billion in a matter of weeks and ultimately led to the downfall of prime minister John Major. Bessent was an invisible hand behind the chaos.
He went on to launch his own fund in 2000, with mixed results, before returning to Soros’s firm in 2011. Bessent left again in 2015 to start his own firm, Key Square Capital, with the $4.5 billion that it raised, including $2 billion from Soros, making it one of the largest hedge fund launches ever.
Bessent earned a reputation for strategic thinking. Bob Diamond, the former Barclays boss who founded Atlas Merchant Capital in New York, said: “When our paths have crossed, I’ve always been struck by how thoughtful and strategic Scott is. He’s obviously highly capable and a great choice for Treasury secretary.”
Yet Bessent might have been seen as a surprise choice until recently — not least because of his long-standing partnership with Soros, a Democrat mega-donor who has become a bogeyman of the right, and the subject of wild conspiracy theories related to his support for progressive causes. Bessent himself hosted a fundraiser in 2000 for Democrat presidential nominee Al Gore at his Hamptons mansion, and has benefited from the success of Democrat causes such as gay rights. “If you had told me in 1984 — when we graduated [from Yale] and people were dying of Aids — that 30 years later I’d be legally married and we would have two children via surrogacy, I wouldn’t have believed you,” he once told a Yale student alumni magazine.
Yet his growing alarm at the level of government debt, exaltation of Ronald Reagan’s policies and his very apparent disgust with Joe Biden’s economic policies appear to have been enough to convince Trump that he was the right man for the job. For his part, Soros, who called Trump a “confidence trickster whose narcissism grew into a disease”, took his money back from Key Square in 2018. The men have reportedly not spoken for several years.
After a disappointing run between 2018 and 2021, when Key Square either broke even or lost money amid a booming market, its assets dwindled as investors pulled out their cash. However, Bessent’s reputation as an astute analyst of global forces, and how they translate to the financial markets, survived and he soon turned his attention to the next chapter of his career.
So what are likely to be Bessent’s priorities at the Treasury? At the event he spoke at last summer, he laid out a “three arrows” approach modelled on the radical overhaul of the Japanese economy carried out by then-prime minister Shinzo Abe between 2012 and 2020: slashing interest rates, cutting regulations and passing shareholder-friendly rules. In 2013, Bessent bet on the collapse of the yen — consequence of Abe’s strategy — while working for Soros. The trade generated a $1 billion profit. Twenty years after helping to break the Bank of England, Bessent broke the Bank of Japan.
With those lessons in mind, he has suggested a “3-3-3” approach for the Trump economic overhaul: target a 3 per cent economic growth rate (it is currently running at 2.8 per cent) through aggressive deregulation; increase America’s crude oil production by three million barrels a day to cut energy costs, and thus inflation; and slash the budget deficit to 3 per cent, or less than half its current rate of 7 per cent.
In practice, that would mean cutting more than $1 trillion (£800 billion), or 15 per cent, of the government’s annual budget. America’s national debt this year has topped $35 trillion, meaning that its $1.1 trillion interest bill is more than the budget of the Pentagon.
The stakes for not reducing this are, in Bessent’s mind, existential. “We were able to save the economic wellbeing of the country during the Great Depression by spending, and then we were able to save the world during World War Two,” he explained. “So we have to get this [debt] down, or we have no room for manoeuvre.”
So why might America need to manoeuvre? One needn’t guess. In a 2022 article, Bessent wrote of Trump’s first term as president: “[His] most enduring achievement may have been to wake the United States and the world to the growing dangers of an ever-more-antagonistic China.”
Like Trump, Bessent reckons that a great game is about to unfold, and he appears eager to move the pieces on behalf of his new boss.