From Rod Martin, June 2:
He helped break the Bank of England. Now Trump’s Treasury Secretary is using that experience for the United States — and China should be terrified.
More than a year ago, both before and after Donald Trump announced his “Liberation Day” tariffs, I told you that China could not win a trade war with the United States. My reasoning was straightforward: China’s economy is far weaker than its official numbers pretend, its demographic collapse is leading it off a cliff, and its only way out — even in the short term — is exports, particularly to the U.S. market.
Not long after I started sounding that alarm, Treasury Secretary Scott Bessent gave a long-form interview explaining Trump’s tariff strategy. Buried inside it was something far more important.
China, he said, has the most imbalanced economy in modern history. It is trapped in a deflationary recession — perhaps depression — and trying to export its way out. Its own people do not trust the yuan. They want to get their money out. The Chinese Communist Party will not let them.
That sounds like normal economic commentary. It isn’t. Bessent was describing the anatomy of a currency regime under pressure.
If you understand who Scott Bessent is and what he once did, that should run shivers up your spine.
In 1992, Bessent was a leading member of the team at Soros Fund Management that “broke the Bank of England.” Britain was trying to defend the pound inside Europe’s Exchange Rate Mechanism. The official line was confidence, stability, managed order, and responsible policy. The SFM team saw something else: a government defending a position reality no longer supported.
Soros got the legend. Bessent helped him execute. Trump watched, and learned the lesson.
Speculators do not destroy sound currencies by magic. They attack when governments defend lies. They see the contradiction before politicians admit it, before central bankers explain it away, before the press corps discovers it three years too late and pretends it was obvious all along. Britain broke. The pound fell. The Bank of England lost.
Now Bessent is Trump’s Treasury Secretary, and the currency under pressure is not the pound. It is the yuan.
So here is the question the Enemedia will not ask, and probably won’t even think of: is Scott Bessent working to crash China’s currency?
Not by announcing it. Serious men don’t announce the trade before they make it. By doing something much larger: strengthening the dollar, hardening the American financial system, using tariffs to stop China from exporting its depression into our markets, and forcing Beijing’s unsustainable economic model into the open.
Presidents hire people for a reason. Trump did not put Scott Bessent at Treasury because he needed another Wall Street résumé. Trump hired a man who had helped break a major currency from the inside, who understood the role of confidence, leverage, capital flows, interest rates, debt, and political denial, and who knew that governments do not lose control of currencies because traders are clever. They lose control because reality finally catches up with the lie.
Bessent is not incidental to Trump’s China strategy. He is one of its central weapons.
China is not Britain in 1992. The analogy is not exact, nor does it need to be. Britain was defending a currency arrangement markets no longer believed. China is defending something far bigger: the fiction that an overbuilt, overleveraged, export-addicted dictatorship with too little domestic consumption and evaporating foreign direct investment can keep growing forever while its own people are trapped behind financial walls and its customers are shutting their doors.
That fiction is embodied, crystallized in the yuan.
The yuan is not a normal currency. It is not the dollar. It’s not even the euro. It is a managed instrument of Communist Party control. A real reserve currency requires trust. It requires convertibility. It requires deep and open capital markets. It requires the rule of law. It requires confidence that the government will not trap your savings the moment they become politically inconvenient.
China cannot offer any of those things without ceasing to be Communist China.
This is the place where all of China’s contradictions meet. Beijing needs a weak yuan because its economy is built around exports. If Chinese goods get too expensive abroad, factories slow, unemployment rises, debt problems worsen, and the Party’s claim to competent rule erodes. But Beijing also needs a strong yuan because the moment ordinary Chinese believe their currency will fall, they will try to get their savings out even faster than they already do. That means tighter capital controls, more fear, more distortions, and still less trust....
....MUCH MORE
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