Warsh and Bessent urged to anchor U.S. policy on a stable dollar

The commentary criticizes past attempts by Treasury Secretary Scott Bessent to cut long-term rates through bond purchases and proposes a different strategy. It calls on Bessent and incoming Federal Reserve Chair Kevin Warsh to declare that the chief aim of both the Treasury and the Fed is to keep the dollar’s value steady. The author argues that a stable currency would naturally reduce interest rates, citing the low yields on Swiss government bonds versus U.S. Treasuries.

Over time, a trustworthy dollar could attract other countries to align their currencies with it, fostering broader economic growth. The piece also rebuts the IMF’s long-standing belief that currency devaluations enhance competitiveness, labeling such moves counterproductive. Finally, it suggests the Fed could use gold prices and the performance of currencies like the Swiss franc as benchmarks for maintaining dollar stability.