By Andy Serwer

At a recent gala dinner in Manhattan, Treasury Secretary Scott Bessent was asked how independent-minded the new Federal Reserve chairman, Kevin Walsh, would be, given President Donald Trump's strong preference, shall we say, for lower interest rates.

"Look, the president understands, he and I have talked about it quite a bit," Bessent told the assembled throng at the Economic Club of New York's celebration dinner of the 250th anniversary of the U.S. at the Waldorf Astoria. "The bond market has taken out more governments than howitzers, so I believe that he has complete confidence in the Fed chair to do the right thing."

Bessent's take on the power of the bond reminded me of a favorite James Carville-ism: "I used to think that if there was reincarnation, I wanted to come back as the president or the pope or as a .400 baseball hitter. But now I would want to come back as the bond market. You can intimidate everybody." Bessent seems to suggest that might even include Trump.

The Treasury secretary's remark about Fed independence also speaks to a much broader point, and really the subtext of Bessent's prepared remarks, which is American exceptionalism. And as we take stock and celebrate the only semiquincentennial of our lifetimes, it's worth asking ourselves, Has our nation truly been exceptional? And if so, is it still? And further, and pertinent specifically to readers of this publication, how important is all this to our financial well-being?

Admittedly, I've set up some straw men here. Of course, yes, we have been exceptional, and that is important to money and markets. It is the middle matter — are we still exceptional now, and beyond that, will we continue to be? — which is trickier. Answers to those questions are subjective and sit uneasily at the juncture of politics and finance — which if you think about it, pretty much squares with the role of the Treasury secretary.

And as any political appointee might, Bessent toed the party line, essentially saying that to restore American exceptionalism, we have a lot of work to do. More overtly, he used the occasion to lay out his take on "economic statecraft," which includes terminating trade agreements that subsidize other countries and retaliating against countries that penalize American companies.

"The most fitting way to honor those who founded this nation is to meet the great challenges of our own time with the same resolve that they brought to theirs," Bessant said. "Under President Donald Trump's leadership, the U.S. Treasury is working to restore economic security as the foundation that allows a nation to fulfill its most basic obligations."

Bully for Bessent, I suppose. Though many CEOs and even some heads of state might agree with these premises, at the very least many of them have been accompanied by excessive inconsistency, capriciousness, and whipsawing.

For private-sector takes on exceptionalism, I turned first to Mr. Eye on the Market, Michael Cembalest, the J.P. Morgan strategist. To mark the semiquincentennial, Cembalest, known for his often unconventional takes, used artificial intelligence to cross a bald eagle with an octopus, creating an image of an Aquilaceph — Latin, he says, for a phantasmagorical beast which is a metaphor for the continued U.S. grip on financial markets.

Cembalest notes that U.S. equities, bonds, real estate, venture capital, and private equity have outperformed the world since 1990. The gist of his report is asking and answering how sustainable this is, especially since, as Cembalest puts it, some of the administration's policies have raised questions about that prospect. Some examples:

Question: Are we at risk of the dollar losing its reserve currency status?

Answer: No. "Reserve currencies are hard to dislodge, particularly without a clear replacement," he writes. "Other than an immediate selloff of 10% when Trump took office, the trade-weighted dollar has been resilient. China as the world reserve currency is a frankly preposterous idea right now."

Question: Is the U.S. still attracting foreign capital?

Answer: Yes. "Foreign holdings of Treasuries are still rising....The same rising trend is seen when looking at foreign holdings of U.S. corporate bonds and U.S. equities."

Question: How has the "Sell America" trade worked out?

Answer: Not so well. "In March 2025, a flurry of Trump administration executive orders were catalysts for the first 'Sell America' episode since 1982....Since then, the trade-weighted dollar is down just 1%; U.S. 10+ year Treasury yields are 10 basis points higher but 70 bps higher elsewhere in the developed world; and U.S. equities have outperformed."

All isn't completely strawberry shortcake in Cembalest's mind, though. Concerns for U.S. investors include "sustainability of the U.S. Federal debt, cyclical inflationary pressures, increased unpredictability in the rule of law, and government defunding of science."

Oh. Just that.

At least one of those issues is worrisome to financial elder Peter Cohen, who was once CEO of that singular, moment-in-time Wall Street beast Shearson Lehman American Express. It's a little strange referring to Cohen as a graybeard (though he does turn 80 this August), as I know him best as a brash young man on Wall Street. "I wasn't nearly as brash as the press made me out to be," Cohen says. "I was younger than everybody, and I was a little edgy."

Cohen, now a private investor, chairman of the Museum of American Finance, and a self-described American financial history freak, has his own take on American exceptionalism. "A great degree of American exceptionalism has been born from how the country was created, without a monarchy, with the Constitution, and with a structure that was unique in the world. That gave rise to the ability for entrepreneurs to build," he says.

"But when people talk about American exceptionalism, they're really thinking about the postwar period," he continues. "Back then, we had a monopoly in the world. Asia and Europe were destroyed. The Soviet Union and China were peasant economies. We had an immense industrial base unimpeded by any damage from the war. And we had great science. So, when you look at what we've accomplished postwar, there was a vacuum and we filled it. And we dominated the world economically for the next 50 years."

Going forward, the road won't be quite so easy, especially when we're tethered in a financial straitjacket. "We'll continue to innovate and build because it's the nature of our system and our people, but we've gotten ourselves in a very difficult position," Cohen says. "Wealth is created from making things, not from a service society. It's very hard for us to create the kind of growth we need to pay down this tremendous burden of $39 trillion of national debt. There's a limit to how much you can tax people."

As for the July Fourth holiday, Cohen will be celebrating by reopening the finance museum on Friday, July 3 at its new location on Commonwealth Pier in Boston. MoAF was founded in New York 37 years ago by John Herzog, chairman of market maker Herzog Heine Geduld. In 2018, a main water pipe burst in its building, causing significant damage and prompting the museum to vacate. After years of searching, it ended up in Boston.

MoAF's collection includes thousands of pieces of financial Americana, such as a bond owned and signed by George Washington from 1792, Paul Revere's bank book, and a Bank of the U.S. check from 1794 signed by Alexander Hamilton.

Ah yes, Alexander Hamilton, our first Treasury secretary, and more than that, a world-class innovator and really the father of America's financial system. Hamilton's fingerprints are all over the museum, says MoAF President David Cowen. "The themes that run throughout the museum — budgeting, credit, risk and risk management, and investing — are all things Hamilton had to worry about," he says.

Other museums are getting in on the semiquincentennial act, too. The New York Historical (it dropped the "Society" two years ago), the city's oldest museum, timed its opening of the Tang Wing for American Democracy, named for Oscar Tang (and his wife Agnes), philanthropist and co-founder of money management firm Reich & Tang, to the 250th. Its "Democracy Matters" exhibit includes fragments of a statue of King George III from Lower Manhattan, chopped up on the evening of July 9, 1776, after the first public reading of the new Declaration.

In Paris, the National Archives and Lafayette College are commemorating both the 250th and the 200th anniversary of that Pennsylvania college with an exhibit on Marquis de Lafayette, an invaluable ally to George Washington. "Lafayette met with Benjamin Franklin and the two of them persuaded Louis XVI to send troops, armament, and money to America," says Olga Anna Duhl, co-curator and professor of French at Lafayette College.

As noted, history was top of mind for Scott Bessent as well, with the 79th Treasury secretary calling himself "an economic historian" and citing Hamilton that night at the Waldorf. "We have rediscovered at great cost what Alexander Hamilton taught us...that every nation ought to endeavor to possess within itself all the essentials of national supply, that our strength, in other words, is derived from what we can build," he said. "For the nation that cannot produce what it needs isn't truly secure. The nation that depends on its adversaries for critical inputs isn't truly sovereign, and the nation that reduces its economics to consumptions isn't truly prosperous."

One wonders what Hamilton would have thought of Bessent's take, as well as our economy and markets. "Of all the Founding Fathers, if Hamilton came back, he would understand what had happened more than the others," says Richard Sylla, a retired economics professor and financial historian.

Of course, much of America is still exceptional, including our financial system and markets. Heck, we created 1,200 millionaires a day last year. But you know what else is exceptional, and not in a good way? That aforementioned national debt, which has spiraled from $1 trillion in 1981 to that $39 trillion today. What would Hamilton think about? "He'd be spinning in his grave," says Cowen.

Let's hope that 250 years from now, we're not known as the generation famous for throwin' away its shot.

Write to Andy Serwer at andy.serwer@barrons.com. Follow him on X and subscribe to his At Barron's podcast.

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