Mises Institute Scott Bessent: New Prince of the Yen?
11 snips
Aug 17, 2026 Jonathan Newman, Henry Hazlitt Research Fellow and economics instructor, walks through yen intervention, U.S. treasury market risks, and central bank coordination. He discusses why weaker currencies are politically popular, how Japan’s holdings shape U.S. actions, and tensions between Fed normalization and emergency tools. The conversation also touches on rising yields, deficits, jobs data, and public perceptions of inflation.
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Treasury Pressured Fed To Protect Debt Markets
- Treasury pressured the Fed to backstop yen moves and raise the foreign repo cap to discourage Japan from selling Treasuries.
- Newman argues Fed independence is largely myth; the Fed exists to support Treasury financing needs.
Weaker Currency Helps Exporters But Harms Economy
- Currency devaluation arguments for boosting exports are mercantilist and misleading; devaluing benefits exporters but hurts import-dependent firms and consumers.
- Newman invokes Bastiat: seen gains for exporters offset by unseen higher import costs and distorted production.
Carry Trade Is Central To Yen Weakness
- The yen's weakness is driven by the carry trade: borrowing at low Japanese rates to invest abroad, amplifying yen selling.
- Japan may sell Treasuries to defend the yen, risking higher U.S. yields and prompting U.S. intervention.
