4 ms·

Most of us don't really understand why, but that is apparently the goal of this administration. I'm honestly not sure there's any grand design or even inkling

Most of us don't really understand why, but that is apparently the goal of this administration. I'm honestly not sure there's any grand design or even inkling of a plan. It's happening and we have to deal with the consequences

alwillis 1y ago
It's called The Mar-a-Lago Accord. When you google it, this is the summary: The "Mar-a-Lago Accord" is a proposed economic strategy, often discussed in financial circles, suggesting a coordinated effort to devalue the US dollar and reduce the country's trade deficit. Essentially, it envisions a deal where the US would pressure its trading partners to weaken the dollar and lower US borrowing costs, potentially in exchange for continued US security guarantees. The idea is rooted in the 1985 Plaza Accord, where major economies agreed to jointly weaken the dollar, but with some key differences.
- wahern 1y ago
  > weaken the dollar and lower US borrowing costs I found this confusing as weakening the dollar and lowering borrowing costs would seem to be at odds. Apparently the "deal" involves central banks which hold US Treasuries swapping some large share of them for near-zero interest ultra-long Treasury bonds (50-100 years), to prevent yields on typical Treasury bonds spiking when rolling over debt. See https://www.cfr.org/article/mar-lago-accord-not-recipe-success https://www.cfr.org/article/mar-lago-accord-not-recipe-succe... I'm still not sure how that's supposed to work to actually lower borrowing costs rather than blunt the increase. Maybe it's like the Laffer Curve where they rely on some very specific hypothetical conditions to make the numbers work?
  - slt2021 1y ago
    China calls 100 year zero coupon bonds basically Technical Default on foreign debt, and rejected it. If you think about, it really is a default, because US borrowers are being forced to exchange their cash into trust-me-bro letters. Technically USD has been a trust me bro paper ever since Bretton Woods, but today the trust in the system is really at very low level, unlike before
    - mcv 1y ago
      That's the real damage Trump is causing. The US has traded on trust for the past 80 years, but they had that trust. Trump squanders that trust and then wants a new trust-based deal? That ship has sailed, and he's the one who sent it off.
      - slt2021 1y ago
        The trust was undermined long time ago by inlimited printing and decades of forever wars where $36 trln of debt has been borrowed on behalf of US, with absolutely nothing to show for it
      - alwillis 1y ago
        The reputational damage to the US is incalculable.

alwillis 1y ago

It's called The Mar-a-Lago Accord. When you google it, this is the summary: The "Mar-a-Lago Accord" is a proposed economic strategy, often discussed in financial circles, suggesting a coordinated effort to devalue the US dollar and reduce the country's trade deficit. Essentially, it envisions a deal where the US would pressure its trading partners to weaken the dollar and lower US borrowing costs, potentially in exchange for continued US security guarantees. The idea is rooted in the 1985 Plaza Accord, where major economies agreed to jointly weaken the dollar, but with some key differences.

wahern 1y ago
> weaken the dollar and lower US borrowing costs I found this confusing as weakening the dollar and lowering borrowing costs would seem to be at odds. Apparently the "deal" involves central banks which hold US Treasuries swapping some large share of them for near-zero interest ultra-long Treasury bonds (50-100 years), to prevent yields on typical Treasury bonds spiking when rolling over debt. See https://www.cfr.org/article/mar-lago-accord-not-recipe-success https://www.cfr.org/article/mar-lago-accord-not-recipe-succe... I'm still not sure how that's supposed to work to actually lower borrowing costs rather than blunt the increase. Maybe it's like the Laffer Curve where they rely on some very specific hypothetical conditions to make the numbers work?
- slt2021 1y ago
  China calls 100 year zero coupon bonds basically Technical Default on foreign debt, and rejected it. If you think about, it really is a default, because US borrowers are being forced to exchange their cash into trust-me-bro letters. Technically USD has been a trust me bro paper ever since Bretton Woods, but today the trust in the system is really at very low level, unlike before
  - mcv 1y ago
    That's the real damage Trump is causing. The US has traded on trust for the past 80 years, but they had that trust. Trump squanders that trust and then wants a new trust-based deal? That ship has sailed, and he's the one who sent it off.
    - slt2021 1y ago
      The trust was undermined long time ago by inlimited printing and decades of forever wars where $36 trln of debt has been borrowed on behalf of US, with absolutely nothing to show for it
    - alwillis 1y ago
      The reputational damage to the US is incalculable.