US Treasury: "America, the Top Destination for Global Capital"

Besant, US Treasury Secretary, Speaks at Milken Conference on the 5th (local time)

"Trump's Policies Encourage Long-term Investment in the US"

"Both Main Street and Wall Street Can Prosper"

"The United States is the top destination for global capital."

Scott Besant, the US Treasury Secretary, has recently stepped in to address the 'Sell America' movement. Speaking as a keynote speaker at the Milken Conference held in Los Angeles on the 5th (local time), Besant stated this. He explained that President Donald Trump's economic policies ultimately aim to make the US the center of global capital. His remarks were made in light of the significant volatility in the New York Stock Exchange and the US bond market since Trump's inauguration, as well as the selling trend among investors at one point.

"Both Wall Street and Main Street Can Prosper"

On this day, Secretary Besant showed a markedly different policy stance from a few months ago. He argued at the event that "Trump's policies are 'interlocking parts of a single engine' driving long-term investment in the US." Trade, tax cuts, and deregulation are not independent policies but are organically connected to encourage long-term investment in the US economy. He also stated that under the Trump administration's policies, "both Main Street and Wall Street can prosper."

This is a departure from Besant's previous stance, where he had distinguished between 'Wall Street,' representing the capital markets in the US economy, and 'Main Street,' representing the real economy, and expressed a focus on 'Main Street.' In March, at the New York Economic Club, he said, "Wall Street has done well and will continue to do well, but this administration is about Main Street."

However, this stance of the Trump administration has been criticized. The implementation of tariff policies to bring manufacturing back to the US led to a significant drop in stock and bond prices compared to immediately after Trump's inauguration. President Trump mentioned the volatility in the bond market and delayed the implementation of reciprocal tariffs by 90 days.

Secretary Besant asserted that the US is "the top destination for global capital" and that "the Trump administration's policies will further solidify this position."

China Needs to Consume More

Regarding the balance between the revival of US manufacturing through tariffs and the resulting isolation of the US, Secretary Besant replied, "The two are not mutually exclusive." He stated, "In the trade (policy) puzzle, China is clearly the largest piece and can undergo a beautiful readjustment." The US wants manufacturing, and China needs more consumption, i.e., boosting domestic demand.

Secretary Besant emphasized that the US must maintain an edge over China in the fields of artificial intelligence (AI) and quantum computing. He said, "At my confirmation hearing, I stated that if the US does not win in quantum and AI, nothing else matters, and if we lose the era there, it is natural for China to catch up."

Implicit Security Assurance to Ukraine

Secretary Besant also explained the significance of the mineral agreement between the US and Ukraine at this event. He said, "This agreement will symbolize to the Ukrainian people that the US still exists and to skeptical Americans about more financial commitments that joint prosperity with Ukraine is possible." He added, "The economic partnership (between the two countries) will be an implicit security assurance."

Secretary Besant emphasized that this agreement is "not one of China's greedy deals." He pointed out that "China's deal is to lend money and own the country's minerals," whereas the US is not lending money to Ukraine but is engaging in an economic partnership through equity investment.

Pushing for Financial Regulation Easing

Secretary Besant also revealed that he is pushing for easing financial regulations. He interpreted the growth of private credit, known as private credit, as a sign that regulations on banks are strong. Private credit refers to the market where investment firms (private equity, asset management companies, etc.) lend money instead of banks. These entities have filled the lending gap created by the strengthened regulations on banks following the 2008 global financial crisis.

Regarding the recent surge in US Treasury yields, he predicted, "If the US government's credit risk disappears, rates will naturally fall."

Secretary Besant reiterated that he has been monitoring the US 10-year Treasury yield, and regarding last month's surge, he diagnosed, "Many leveraged players built very large positions, and uncertainty and shocks caused them to exit the market."

He continued, "What we are trying to do is return to growth without inflation," and "The reason I am here is to eliminate the US government's credit risk, and if we do that, rates will naturally fall."

He also stated, "The other goal is to slowly reduce government borrowing, reducing the deficit by 1% each year, so that by the time President Trump leaves office, it returns to the long-term average of about 3.5% of GDP."

He explained, "We are adjusting government spending and employment to appropriate levels, and on the other hand, through easing financial regulations, we are readjusting leverage in the private sector and ensuring that excessive employment reduced from the government flows into the private sector."

New York = Park Shin-young, Correspondent nyusos@hankyung.com