Last November, Hudson Bay Capital released a 41-page document that outlined a plan to restructure the global trading system with a juicy premise for Wall Street.
Complicated and dense, “A User’s Guide to Restructuring the Global Trading System” touches on everything from US debt to interest rates to re-shoring of US manufacturing but with a central idea of a “Mar-a-Lago accord” built around tackling dollar “overvaluation” and what author Stephen Miran wrote could be “a 21st Century version of a multilateral currency agreement.”
“Many argue that tariffs are highly inflationary,” he wrote at another point, but “that not need be the case,” especially if currency issues are also addressed.
The idea quickly gained steam on Wall Street, with prominent backers on Wall Street like Jim Bianco of Bianco Research urging investors to read it. Bianco said in February it was a signal that the young administration is “thinking very big,” as he put it on a podcast called MacroVoices.
The thesis was also bolstered by Miran’s subsequent selection to head Trump’s Council of Economic Advisers, a sort of in-house think tank at the White House.
Stephen Miran, Trump’s pick to be chairman of the Council of Economic Advisors, is sworn in to his Senate confirmation hearing on February. (Tom Williams/CQ-Roll Call, Inc via Getty Images) ·Tom Williams via Getty Images
The issue, at least so far? That fuller plan outlined in the paper has been belied by the administration’s own actions since taking office.
President Trump is clearly aiming to upend the global trading system and is full speed ahead on one side of Miran’s thesis — the implementation of tariffs — but has put the corollary currency piece on ice and even offered some skeptical comments since taking office.
Miran himself acknowledged as much in a series of recent comments.
He told the Washington Post recently, “Anyone thinking what I wrote in November is the policy agenda we’re secretly implementing right now is just looking for something to write about.”
He added to Bloomberg of his ideas that “some of them are easy, some are tough,” and downplayed the importance of his paper, saying instead that Trump is “solely” focused on tariffs right now.
Yet the paper has remained a source of positivity, even as Bianco said from the get-go it could never happen. Miran even wrote about tariffs being a first priority before policy “becomes dollar negative.”
It was cited often by those needing a silver lining amid the current uncertainty of market volatility, sticky inflation, and nervousness about the possibility of a recession as Trump touts his coming April 2 “Liberation Day” plans.
Columbia University historian Adam Tooze went so far in a recent Substack post as to compare the continued market focus on Miran’s paper with Stockholm Syndrome, the psychological phenomenon where a hostage develops positive feelings toward their captor.
“Call it Mar-a-Lago (Accord) Syndrome,” Tooze wrote.
Miran in his paper argued that tackling the currency question could rebound in America’s favor on a variety of fronts — from the national debt to national security arrangements to providing a boost to US businesses.
The goal is to ensure the dollar remains supreme as a global reserve currency while at same time correcting what he viewed as an “overvalued dollar” that makes US manufacturing less competitive.
The US, he argued, could convince other countries to help with that devaluation in exchange for security guarantees or a pledge to drop punitive tariffs — what he called the “multilateral” approach to a new trading landscape but one that it’s very unclear other countries would go along with willingly.
He also wrote in detail about how the administration could, if needed, unilaterally act “if it is willing to be creative” to address the problem of undervalued foreign currencies — pointing to possible measures in the International Emergency Economic Powers Act of 1977 (IEEPA).
But it’s a detail that has perhaps unwittingly underlined Trump’s focus elsewhere so far in his second presidency.
The president has indeed relied on IEEPA law for dramatic actions in his early weeks in office — but almost solely the tariff provisions in the law, to impose tariffs on China, Canada, and Mexico, without significant action on currency.
And in another recent appearance, on CNBC, Miran didn’t weigh in on currency at all and even sounded firmly in line with Trump’s overall message of downplaying any economic effects from tariffs.
“My view is that the country on which we are imposing those tariffs ultimately pays those tariffs as opposed to having any negative economic consequence on the United States,” he offered.
Trump likes to promise to keep aloft “the mighty U.S. Dollar” and maintain its status as the global reserve currency.
But in other settings, Trump has suggested an openness to a devaluation case and acknowledged in a campaign interview that the gap between the US and other currencies has created a “tremendous burden” on companies.
President Donald Trump waves as he leaves the White House Friday afternoon to head to Palm Beach, Florida for the weekend. (Andrew Harnik/Getty Images) ·Andrew Harnik via Getty Images
In any case, a meaningful push for currency measures or devaluation hasn’t emerged from the White House so far even as Wall Street interest has remained high.
In his recent comments to Bloomberg, Miran seemed amused that he was still being asked about the paper as he downplayed its chances in the near term.
It’s “taken on a life of its own, against all my intents,” he quipped.
But hope perhaps springs eternal, with Miran adding of the currency side of the equation, “Could it be something that is entertained down the road? Sure.”
Ben Werschkul is a Washington correspondent for Yahoo Finance.
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