BS BULLETIN:
- Treasury Secretary Scott Bessent torched Sen. Elizabeth Warren after she questioned whether taxpayers could be stuck with the bill if Japan failed to “repay” the U.S.
- Bessent delivered one rather important detail: There was no loan. Japan owes the Treasury nothing.
- He then recommended Warren take an entry-level international finance course — or offered to personally give her a “Foreign Exchange for Dummies” tutorial.
Treasury Secretary Scott Bessent apparently decided a routine response to Sen. Elizabeth Warren wasn’t going to cut it.
Warren had pressed Bessent over the Trump administration’s intervention to support the Japanese yen, warning in an Aug. 13 letter that “American taxpayers would ultimately bear the cost if Japan were unable to repay the Department of the Treasury.”
There was just one rather large problem with Warren’s premise.
Japan doesn’t owe us any money.
“No new congressional appropriation was involved, and no credit was extended to Japan. Japan owes Treasury nothing,” Bessent wrote in his response. “There is therefore no risk that Japan will fail to repay a debt that does not exist.”
Ouch.
Treasury had exchanged foreign-currency assets already held by its Exchange Stabilization Fund for yen. Bessent also pointed Warren toward Section 5302 — the very statute cited in her own letter — which authorizes the Treasury secretary, with presidential approval, to conduct foreign-exchange transactions in support of orderly exchange arrangements.
Then Bessent stopped sounding like a Treasury secretary and started sounding like a professor who had finally lost patience with a student.
“In her latest sciolistic letter to me, @SenWarren made it clear that she knows even less about foreign exchange markets than she does about banking,” Bessent wrote Friday on X.
Bessent accused the “media mob” of lacking enough financial literacy to spot Warren’s “remedial error,” before delivering the line that turned the exchange into a social-media feast.
“For a fuller explanation, I recommend Senator Warren take any entry level course in international finance for her and her staff, or I can personally give her a tutorial on Foreign Exchange for Dummies.”
He added that he hoped Warren’s next letter would show she had “learned the difference between a currency purchase and a swap or a loan.”
Warren fired back on X rather than accepting the free tutoring.
“Tough couple weeks for Sec. Bessent,” she wrote, arguing that his effort to support the yen hadn’t worked and declaring, “Trump’s economy is crushing families. Maybe he should focus on that.”
The underlying financial debate isn’t entirely academic. The U.S. intervention was the first effort to buy yen since 1998, and Treasury still hasn’t disclosed the size of its purchase. Japan, meanwhile, spent roughly $96.4 billion supporting its currency during its recent intervention campaign. Bessent argues that instability in the yen could spill into U.S. markets and ultimately push borrowing costs higher for American families and businesses.
But Warren’s original “repay” argument?
It’s difficult to default on a loan that never existed.
DBS WIRE SOURCES
- Twitchy — Bessent offers Warren a “Foreign Exchange for Dummies” tutorial
- U.S. Senate Banking Committee — Warren’s original letter and questions to Bessent
- Daily Caller — Bessent responds to Warren over the yen intervention
- Japan Times — Bessent explains why yen instability could affect U.S. interest rates
