My Take | Unlike Plaza Accord, Mar-a-Lago deal would speed up US decline
Weakening the dollar to rebuild domestic manufacturing and exports is a pipe dream, but that will not stop ‘brains’ behind tariffs from trying
Stephen Miran, chairman of the White House’s Council of Economic Advisers, has made a whole career out of claiming the US dollar is overvalued. It doesn’t matter whether that’s really so, it’s enough that practically all the big economic honchos working for Donald Trump 2.0 believe it, or act like they do.
So they want to do a Plaza Accord 2.0, and many have taken to calling it the Mar-a-Lago Accord. But that’s just laughable.
Whether the 1985 Plaza Accord was intended to do tremendous harm to Japan – then America’s greatest economic rival but also a protectorate under the US nuclear umbrella – is something that people will argue till kingdom come.
Because the accord eventually led to the mother of all economic bubbles, whose bursting took Japan three decades to recover, the Land of the Rising Sun has long been the focus of discussion.
But it’s worth remembering that the accord actually involved the so-called G5 – the United States, Britain, France, West Germany and Japan – back then the world’s biggest economies.
The idea was for the other four allies to collectively engineer “some further orderly appreciation of the non-dollar currencies”. It was to weaken the dollar, reduce America’s trade deficits, encourage exports and reverse the rapid decline of domestic manufacturing.