The Mar-a-Lago Accord

[bannork]

 On Wall Street, there is talk that Trump's tariff policy's aim is to make world leaders build factories in the US and strengthen their own currencies to help US manufacturing. In 1985, Washington persuaded Japan, Germany, Britain and France to coordinate on devaluing the dollar in the Plaza Accord.

The White House thinks it can leverage threats of tariffs and withdrawn US security guarantees to dictate terms.

But Europe is rearming by building up its own defence base rather than buying US-made weapons, and longstanding US allies are planning independent nuclear deterrents. Rather than bow to Trump, the global response “has been to look for alternatives”. China, which is already struggling with sluggish demand, also has no interest in doing a deal that harms its own exporters, says Neil Shearing of Capital Economics.

With foreigners buying large amounts of dollar-denominated assets, Americans can consume more than they produce. One way to fix this would be to limit those inflows by imposing capital controls, but that would lower US living standards and damage the dollar’s status as the global reserve currency.

George Saravelos of Deutsche Bank argues, “There is a fundamental inconsistency” between Trump’s desire “to maintain dollar reserve status” and many of the proposals currently floating around for engineering a weaker dollar.''

Talk of a Mar-a-Lago deal rests on a “misidentification” of the true sources of imbalanced global trade, namely very large fiscal deficits in the US and a very high savings rate in China.

What is the Mar-a-Lago Accord and why is it getting attention from Wall Street?

[blaze master]

Can we not just have one big thread now. Call it we hate Trump. Remember when the w word was popular ?

 

Weird that no one uses it anymore. 

 

 

[Harrisfan]

28 minutes ago, blaze master said:

Can we not just have one big thread now. Call it we hate Trump. Remember when the w word was popular ?

 

Weird that no one uses it anymore. 

 

 

Agree. One topic - I hate Trump. He lives in my head 24/7.

[hotsun]

DONALD TRUMP DONALD TRUMP 

[jvs]

1 hour ago, Harrisfan said:

Agree. One topic - I hate Trump. He lives in my head 24/7.

You flipped? lol.

[simple1]

4 hours ago, blaze master said:

Can we not just have one big thread now. Call it we hate Trump. Remember when the w word was popular ?

 

Weird that no one uses it anymore. 

 

 

 

No longer "The Land of the Free" with all the repressive actions by the trump Administration. trump loves posing in the same manner as Mussolini and admiring far right and other repressive groups. What about "Making AXIS Great Again"?

[blaze master]

4 minutes ago, simple1 said:

 

No longer "The Land of the Free" with all the repressive actions by the trump Administration. trump loves posing in the same manner as Mussolini and admiring far right and other repressive groups. What about "Making AXIS Great Again"?

 

I think you've replied to the wrong poster. But good luck with whatever it is you're getting at.

[placeholder]

7 hours ago, bannork said:

 On Wall Street, there is talk that Trump's tariff policy's aim is to make world leaders build factories in the US and strengthen their own currencies to help US manufacturing. In 1985, Washington persuaded Japan, Germany, Britain and France to coordinate on devaluing the dollar in the Plaza Accord.

The White House thinks it can leverage threats of tariffs and withdrawn US security guarantees to dictate terms.

But Europe is rearming by building up its own defence base rather than buying US-made weapons, and longstanding US allies are planning independent nuclear deterrents. Rather than bow to Trump, the global response “has been to look for alternatives”. China, which is already struggling with sluggish demand, also has no interest in doing a deal that harms its own exporters, says Neil Shearing of Capital Economics.

With foreigners buying large amounts of dollar-denominated assets, Americans can consume more than they produce. One way to fix this would be to limit those inflows by imposing capital controls, but that would lower US living standards and damage the dollar’s status as the global reserve currency.

George Saravelos of Deutsche Bank argues, “There is a fundamental inconsistency” between Trump’s desire “to maintain dollar reserve status” and many of the proposals currently floating around for engineering a weaker dollar.''

Talk of a Mar-a-Lago deal rests on a “misidentification” of the true sources of imbalanced global trade, namely very large fiscal deficits in the US and a very high savings rate in China.

What is the Mar-a-Lago Accord and why is it getting attention from Wall Street?

One of the most remarkable pieces of ignorance that characterized Trump supporters is the lack of understanding of the balance of trade. They seem to have a problem digesting this bit of info:

"With foreigners buying large amounts of dollar-denominated assets, Americans can consume more than they produce. One way to fix this would be to limit those inflows by imposing capital controls, but that would lower US living standards and damage the dollar’s status as the global reserve currency."

In fact, foreign investment in the US counts as a negative in the balance of trade because from a national accounting point of view, it's a loan. But, of course, foreigners want to invest in the US because of its dynamic economy. It seems unlikely that the economy will continue to be dynamic given the loony economic measures taken by Trump. And also the threats to some of their investments. One proposal, from Stephen Miran, appointed by Trump to be the Chair of the Council of Economic Advisers, is to forcibly convert foreigners investments in short term bonds  into long term bonds. Not exactly a way to encourage faith in the US government.