Ms Tett is at least mildly interesting to read
The Mar-a-Lago Accord is, like the Plaza accord it's named after, a policy way to intentionally devalue the U.S. currency and thus mechanically improve exports. Fits the Trump admin storyline.
"Viewed through the prism of recent mainstream economic thinking, there are huge headwinds."
- Joint currency interventions ≠ free markets, thus unfashionable
- FX interventions work with allies; China, U.S, and Europe are not on the same footing these days
- tariffs apparently strengthen currencies (I've never thought of that, but would assume that it reduces world money demand for a given currency given that it's now less useable in trade on the margin?)
- if there's a stock market crash as a consequence, there will be popular backlash (everyone's a stock market investor now, #904747)
I think it would be dangerous to assume that these headwinds will kill the Mar-a-Lago idea: Trump’s economic team have such a radically different philosophy from the mainstream policy world of recent years that they interpret those four issues differently. they do not consider financial policy interventions to be retro, but essential if they are to force a grand reordering of global finance and trade.
"“Trump’s team cares much more about the real economy in the medium-to-long term than the financial economy in the short term,” says Zoltan Pozsar,"
OK, that's interesting... more importantly: our boy Zoltan is back!! (he's a god, and he's been quiii-eeet-af for a while).
Here's another wrinkle:
one idea floating around is that other nations will be “encouraged” to swap holdings of dollars, short-term Treasuries or even gold for long-term or perpetual dollar bonds suitable for repurchase deals at the Federal Reserve. That would reduce fiscal pressure for the US, some think, while maintaining the dominance of the dollar financial system — and enabling Washington to weaken the currency. Or, as Bessent said last year, dollar devaluation and dominance are not “mutually exclusive” goals.
So Plaza accord is 40 years ago this year? uh-hu. ("The ongoing tariff shocks may presage a bigger drama. Watch out for that Plaza anniversary.")
But what investors must grasp right now is that Trump’s recent actions are not “just” capricious; his team’s vision has a potent internal logic. The current chaos is as much a feature as a bug.
Or, to put it another way, when Bessent declared last year that he wanted “to be part of . . . Bretton Woods realignments” for the global finance and trade system, he was not joking. Far from it. The ongoing tariff shocks may presage a bigger drama.
It's always interesting to be a (monetary?) economist.
non-paywalled
https://archive.md/Ejwf8