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Treasury Secretary Bessent Reveals Fed Chair Search Focused on Shrinking the Central Bank

MarketDash Editorial Team
1 day ago
Treasury Secretary Scott Bessent is interviewing candidates for the next Federal Reserve Chair, prioritizing those who want to shrink the institution and abandon perpetual quantitative easing as standard policy.

Treasury Secretary Scott Bessent just made it official: the administration is interviewing candidates for the next Federal Reserve Chair, and they're looking for someone who wants to shrink the place. Not metaphorically shrink its influence or gently trim around the edges, but actually reduce the central bank's footprint and put an end to quantitative easing as a permanent fixture of American monetary policy.

Calling Out the "Engine of Inequality"

Bessent laid out his vision during an appearance on the All-In Podcast, delivering what amounts to a 15-year retrospective on Federal Reserve policy since the financial crisis. His verdict? Not great. He called the Fed's massive asset purchase programs—the quantitative easing that started in 2008 and never really stopped—"gain of function" experiments that need to be reversed.

The Treasury Secretary didn't mince words, labeling the Federal Reserve "the engine of inequality." His point wasn't that the Fed should be in the business of creating equality, but that it shouldn't actively make the wealth gap worse. And according to Bessent, that's exactly what happened.

"We ended up with this two-tier economy where either you were an asset holder, or you weren't," Bessent explained. By keeping interest rates artificially low and purchasing trillions in assets, the Fed inflated portfolios for people who already had money while Main Street watched from the sidelines. Asset holders got richer. Everyone else got left behind.

Bessent also took aim at what he described as "modern monetary practice"—basically the Fed monetizing government debt by buying up bonds. He made clear that the next Chair needs to treat quantitative easing as an emergency tool, not business as usual.

What Shrinking the Fed Actually Means

Beyond just changing monetary policy, Bessent wants to downsize the Federal Reserve as an institution. He criticized the central bank's lack of budgetary oversight, pointing out that it "prints its own money" and operates without the fiscal discipline imposed on other government agencies.

"Everyone wants to see a smaller footprint and more predictability," Bessent said about the candidates currently under consideration. The goal is to have a Fed that fades into the background rather than one where markets hang on every word from the Chair. Less drama, more predictability, and a return to focusing on price stability instead of trying to manage the entire economy.

The Short List

Bessent confirmed he's conducted extensive interviews with top contenders, including Kevin Warsh, Kevin Hassett, and Governor Chris Waller. All three apparently share the administration's vision for what Bessent calls a "traditional" Fed—one that sticks to its core mandate rather than expanding into experimental monetary policy territory.

"I understand probably better than just about anybody… what needs to be done," Bessent concluded, suggesting a nomination could come soon as the administration prepares for the 2026 leadership transition.

Markets Keep Climbing Despite the Uncertainty

While all this Fed drama plays out, the stock market has had a solid year. Despite various federal and economic headwinds throughout 2025, all three major U.S. benchmark indices advanced.

The S&P 500 climbed 17.74% on a year-to-date basis, while the Nasdaq Composite gained 22.20% and the Dow Jones rose 14.27%. The SPDR S&P 500 ETF Trust (SPY) and Invesco QQQ Trust ETF (QQQ), which track the S&P 500 and Nasdaq 100 respectively, both closed higher on Tuesday. SPY rose 0.46% to $687.96, while QQQ advanced 0.47% to $622.11.

Futures for the Dow Jones, S&P 500, and Nasdaq 100 indices were lower on Wednesday, as markets digested Bessent's comments and what they might mean for monetary policy going forward.

Back to Stock Market News

Treasury Secretary Bessent Reveals Fed Chair Search Focused on Shrinking the Central Bank

MarketDash Editorial Team
1 day ago
Treasury Secretary Scott Bessent is interviewing candidates for the next Federal Reserve Chair, prioritizing those who want to shrink the institution and abandon perpetual quantitative easing as standard policy.

Treasury Secretary Scott Bessent just made it official: the administration is interviewing candidates for the next Federal Reserve Chair, and they're looking for someone who wants to shrink the place. Not metaphorically shrink its influence or gently trim around the edges, but actually reduce the central bank's footprint and put an end to quantitative easing as a permanent fixture of American monetary policy.

Calling Out the "Engine of Inequality"

Bessent laid out his vision during an appearance on the All-In Podcast, delivering what amounts to a 15-year retrospective on Federal Reserve policy since the financial crisis. His verdict? Not great. He called the Fed's massive asset purchase programs—the quantitative easing that started in 2008 and never really stopped—"gain of function" experiments that need to be reversed.

The Treasury Secretary didn't mince words, labeling the Federal Reserve "the engine of inequality." His point wasn't that the Fed should be in the business of creating equality, but that it shouldn't actively make the wealth gap worse. And according to Bessent, that's exactly what happened.

"We ended up with this two-tier economy where either you were an asset holder, or you weren't," Bessent explained. By keeping interest rates artificially low and purchasing trillions in assets, the Fed inflated portfolios for people who already had money while Main Street watched from the sidelines. Asset holders got richer. Everyone else got left behind.

Bessent also took aim at what he described as "modern monetary practice"—basically the Fed monetizing government debt by buying up bonds. He made clear that the next Chair needs to treat quantitative easing as an emergency tool, not business as usual.

What Shrinking the Fed Actually Means

Beyond just changing monetary policy, Bessent wants to downsize the Federal Reserve as an institution. He criticized the central bank's lack of budgetary oversight, pointing out that it "prints its own money" and operates without the fiscal discipline imposed on other government agencies.

"Everyone wants to see a smaller footprint and more predictability," Bessent said about the candidates currently under consideration. The goal is to have a Fed that fades into the background rather than one where markets hang on every word from the Chair. Less drama, more predictability, and a return to focusing on price stability instead of trying to manage the entire economy.

The Short List

Bessent confirmed he's conducted extensive interviews with top contenders, including Kevin Warsh, Kevin Hassett, and Governor Chris Waller. All three apparently share the administration's vision for what Bessent calls a "traditional" Fed—one that sticks to its core mandate rather than expanding into experimental monetary policy territory.

"I understand probably better than just about anybody… what needs to be done," Bessent concluded, suggesting a nomination could come soon as the administration prepares for the 2026 leadership transition.

Markets Keep Climbing Despite the Uncertainty

While all this Fed drama plays out, the stock market has had a solid year. Despite various federal and economic headwinds throughout 2025, all three major U.S. benchmark indices advanced.

The S&P 500 climbed 17.74% on a year-to-date basis, while the Nasdaq Composite gained 22.20% and the Dow Jones rose 14.27%. The SPDR S&P 500 ETF Trust (SPY) and Invesco QQQ Trust ETF (QQQ), which track the S&P 500 and Nasdaq 100 respectively, both closed higher on Tuesday. SPY rose 0.46% to $687.96, while QQQ advanced 0.47% to $622.11.

Futures for the Dow Jones, S&P 500, and Nasdaq 100 indices were lower on Wednesday, as markets digested Bessent's comments and what they might mean for monetary policy going forward.