Don’t count the dollar yet

Even without Mr. Trump’s policy recently, it is even without the damage that was recently inflicted, it is possible that the dollar would decrease, if only because it had reached historically increased levels. Consider this version:

• In 2024 the dollar increased by more than 7 percent, measured by the Dollar Index and 9 percent, using the nominal wide US Dollar Index.

• Taking into account inflation by using the real broad trade weight index of the FED, the dollar increased almost 23 percent during the 20 years to March.

• At the end of last year, with the help of this broad, inflation-corrected index, the dollar was stronger than since 1985.

The high valuation of the dollar had become a burden for many American companies that earned profit abroad, and contributed to the American trade deficit, making the dollar a concern of the Trump administration.

The Accord of Mar-A-Lago

What happened in 1985 is resonating today.

In those days, Japan, not China, was generally seen in Washington as the most important culprit behind American trade shortages. The strong dollar helped to make our export expensive – and Japanese goods such as Toyotas, Hondas and the Sony Walkman extremely attractive. Laboration costs and production quality had something to do with the growing preference among our consumers for foreign goods, but it was easier for American politicians to deal with the dollar.

So the Reagan government used diplomacy – and the implicit threat of overwhelming military and political power – to convince his allies to participate in the devaluation of the dollar. This culminated on September 22, 1985 in an agreement that became known as the Plaza AccordBecause it was signed in the Grand New York City -Etablissement, the Plaza Hotel.

A Publicityssavvy Real Estate Developer named Donald J. Trump bought The square three years later. (Mr. Trump placed his first wife, Ivana, charged with renovating the old building, and in December 1993 he married his second wife, Marla Maples, in the hotel, before sold it in 1995.)

Echos from the Plaza Accord can be heard today. Well before the inaugural day, with the dollar on the way to the 1985 level, the economic advisers of the President-Elect discussed a hypothetical diplomatic agreement, which called this dream the ‘called’Mar-A-Lago Accord. “Taking out would have required subtlety and statesmanship.