Safe prediction: You’re going to be hearing the words “Plaza Accord” more and more over the coming weeks and months.We discussed this event last weekend, when in 1985 the world’s governments jointly intervened to strengthen the yen, and help foster a US export recovery.
Now it’s all about strengthening the yuan — something that the US, Japan, and Europe are all very much into.
And the CEO of Nucor, the US steel company, is calling for a brand new Plaza Accord
It takes time for the impact of a massive currency correction to show itself, but it does show itself. And it will never show up with token revaluations!
The overall U.S. trade deficit ballooned to $436 billion in 2000, $654 billion in 2004, and $808-$827 billion in 2006-8 — all this directly related to failed trade policies over the last 15 years. In particular, China began its currency manipulation in 1993, when its pegged its currency to the dollar after devaluing it by over 80 per cent.
It is way past time for the diplomacy we need to create the negotiating power to succeed with a new Plaza Accord with China.