Daily Wealth

Not long after the accord was signed, Donald Trump bought the hotel it was named for...

Forty years ago, politicians from around the world convened in New York's Plaza Hotel to try to solve a growing problem with the U.S. dollar.

At the time, the dollar was extremely expensive relative to other currencies.

That high valuation was hurting global trade. U.S. exports fell off, while imports soared... And America was threatened by a growing trade deficit.

So in September 1985, these politicians agreed to work together to gradually lower the value of the dollar. They dubbed their agreement the "Plaza Accord" – and it dropped the dollar's exchange rate by 25% in two years.

Three years after the deal, Trump – just a famous businessman back then – bought the Plaza for $407 million. He called it "the ultimate work of art."

The hotel has since passed out of Trump's hands. But a new version of the Plaza Accord appears to be taking shape in the White House...

If the new plan comes to fruition, it could turn the economic order on its head... and torpedo the portfolios of investors sitting in cash today.

Let me explain...

The Plaza Accord 2.0 may be coming – in the form of what some have called a "Mar-a-Lago Accord."

This isn't a formal document – at least, not yet. It refers to a series of rumblings from the Trump administration that suggest a new effort to sink the dollar is underway.

The chief architect of this policy is likely Stephen Miran. He's a senior strategist at Hudson Bay Capital. And importantly, he's also the new chair of the Council of Economic Advisers – a group that advises the president on the economy.

In a 2024 essay titled, "A User's Guide to Restructuring the Global Trading System," Miran revealed some ideas to solve a key economic challenge...

The root of the economic imbalances lies in persistent dollar overvaluation that prevents the balancing of international trade.

In other words, this is the exact problem the Plaza Accord set out to tackle 40 years ago.

Now, Trump hasn't endorsed Miran's vision officially. But Trump's Treasury secretary, Scott Bessent, has been a fan of more activist trade policies. And he clearly plans to make sweeping changes...

According to the Wall Street Journal, Bessent hinted at a June event, "We are going to have to have some kind of a grand global economic reordering."

If a Mar-a-Lago Accord becomes a reality, its supporters hope that it might help bring back American manufacturing jobs and ease the U.S. debt burden.

But there's a catch... It could also kick off a nasty new leg down in the dollar's current bear market.

That's right – the dollar is two and a half years into a bear market already. It's just not a very widely discussed story yet...

See, currencies go through extremely slow boom-and-bust cycles. And the last boom just peaked in September 2022.

We can see this using the U.S. Dollar Index, which measures the value of the dollar against a basket of other currencies. Take a look...

Since the dollar's recent peak in 2022, the currency has tried repeatedly to break into an uptrend. But each rally has failed.

In other words, the dollar just peaked... so we're still near the beginning of this downtrend. That means the dollar has a lot lower to go.

And with anti-dollar chatter from the White House growing louder, savers and investors need to get ready for volatility in the buck.

Whatever you do, I recommend diversifying your cash pile. Gold is a reliable safe haven when currencies start to fall. And developed international markets that don't rely on the dollar are also a good bet today.

Currencies are only as good as people's confidence in them... And right now, some of America's biggest policymakers have knives out for the dollar.

Good investing,

Sean Michael Cummings

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