Steven Mnuchin, the one man who stood between Trump and a recession – Now he is gone

Steven Mnuchin, the former Treasury Secretary under Donald Trump in his first term, is no longer in Washington. Yet, as markets bid bye to trillions of dollars and investors blame Trump 2.0, many on Wall Street wish he was still in by the president’s side.

Mnuchin, was the eyes and ears of Wall Street in the White House, and he kept the markets calm even at times when uncertainty reigned. He was often seen as one of the more pragmatic figureheads in the Trump 1.0’s economic team.

The economy is now at the mercy of inflation and recession scares, and many in the business world are hoping Mnuchin’s voice will again calm fears about tariffs and trade wars. Listening to the former Treasury Secretary speak on CNBC’s Squawk Box, they might have gotten half of what they wanted, at least.

Mnuchin: People are overreacting to recession talks

The seasoned investment banker from New York City does not buy the idea that the US is heading for a recession. 

“I think that people are overreacting a bit,” he reckoned. “Let me just start off with this discussion around a recession. I don’t think we’re going to have a recession. I don’t think the outlook looks like we’re going to have a recession.”

Mnuchin also clapped back against former Treasury Secretary Larry Summers, who had recently predicted America has a 50% chance of an economic downturn. “I just don’t agree with that,” he said, coining the market corrections as a “natural occurrence” rather than signs of economic distress. 

“We’ve had a 5 percent correction in the S&P. We’ve had close to a 10 percent correction in the Nasdaq. Both of these indexes were at very high levels and had huge tech spending built into them. So, I don’t think anybody should look at what’s a natural, healthy correction of these indexes as indicating that the economy is in trouble.”

‘I don’t have any Bitcoin’

Mnuchin made it clear that he has never owned Bitcoin. “I missed the rally in Bitcoin,” he admitted, saying there were plenty of other investment opportunities that could have been just as profitable. “Not that much unless you leverage the hell out of Nvidia or something. Maybe Nvidia,” he reckoned.

He shared his concerns about transparency in crypto markets, particularly regarding illicit financing. “I continue to be concerned about the issues of transparency and all these cryptos and making sure that we’re fighting terrorist financing and making sure that we don’t treat them like Swiss numbered bank accounts,” he said.

When pressed on whether he saw Bitcoin as a legitimate store of value, similar to gold, Mnuchin said he was unconvinced about the coin’s prospects. 

“I don’t buy it as a longer-term asset, but then again, I don’t invest in gold either. I like owning stocks that generate earnings,” he explained.

The discussion briefly changed to the US government’s involvement in digital currencies, where he was asked if he sees federal authorities eventually buying Bitcoin with taxpayer money. 

“I don’t want to speculate what they’re going to do or what they’re not going to do. From my reading of the executive order, it actually was helpful to say they’re not going to go out and spend taxpayer money to do that,” he said.

Trump cares about the trade deficit

Wall Street has a hot and cold relationship with the POTUS; on one hand, his administration’s push for tax cuts and deregulation does seem best for business in the long-term. On the other, his “fight against China” with cut-throat trade policies for reasons well known to him, has certainly taken its toll on consumer confidence.

“I’ve been a believer in tariffs being important in getting people to the table. I support the president putting another 20 percent to get them back to the table. They haven’t lived up to the phase one trade agreement. And that should be the priority. And if they do, the tariffs can come off. And if they don’t, I’m sure the president will add more tariffs,” the 62-year old businessman remarked.

Still, Mnuchin sees Trump’s aggressive stance on trade as merely a focus on reshaping global economic relationships. 

“There is no question that President Trump is trying to change the dynamic of trading relationships,” he continued. “And there’s no question that he cares about the trade deficit and is focused on reducing it both across the board and with specific countries.”

The New York-born seasoned investment banker argued that investors should not be rattled by short-term fluctuations, saying Trump is pushing America towards long-term economic benefits. 

“There are going to be industries, let’s just say the auto industry, which is a big focus of his. He wants more auto manufacturing in the U.S., and there may be issues along the way that impact certain companies in the transition. But overall, I think if you step back and don’t look at a specific company and you look at the economy, I think these are all moves that are going to be very good for the economy over the next four years,” said Mnuchin.

The US needs a stronger dollar

When asked about the role of a strong US dollar in alleviating trade imbalances and debt repayment, Wall Street’s finest said he prefers stability over strength. 

“I actually believe the important policy is a stable dollar as opposed to a strong dollar,” he said. “And when I tried to indicate that as Treasury Secretary, the markets reacted.”

Mnuchin surmised that the dollar is still the world’s most trusted currency. “I think the US is going to outperform Europe and the rest of the world. I think the dollar is the only safe haven to store assets around the world. And I really don’t see any challenge to the dollar, at least in the next 10 or 20 years, as the reserve currency.”

He explained that interest rate differences can directly influence exchange rates because various currencies can be arbitraged based on those rate differentials.

“I don’t think a weak dollar is in our interest. I do think a stable dollar and not an overvalued dollar is in our interest,” Mnuchin added.

Cryptopolitan Academy: Coming Soon - A New Way to Earn Passive Income with DeFi in 2025. Learn More