The so-called Mar a Lago agreement is nothing more than a
rehash of the 1985 agreement to devalue the dollar.
The goal of devaluing the dollar is to strengthen it. On the
one hand, to strengthen the competitiveness of the US economy, it would
apparently reduce the fiscal deficit and the trade deficit.
All of this is a lie, with the dollar or any other currency.
If devaluing the currency achieved all these wonders mentioned above, Venezuela
and Argentina would be the great powers, the latter nation with 21st-century
socialism and Venezuela with the regime it still suffers.
Since 2021, the dollar has performed relatively strongly,
but in reality, the relative strength of this currency comes not because its
purchasing power has increased, but because other currencies have lost more
purchasing power than the dollar. Inflation has caused the dollar to lose
purchasing power because inflation is the loss of a currency's purchasing power,
and other currencies have been even worse.
While it's true that the dollar has strengthened against the
euro and the yen since 2021, this is not due to the currency itself, but rather
to the weakness of other currencies.
So, devaluing the dollar would impoverish all citizens. Much
material has been published regarding the supposed Sea to Lake Agreement, but
the reality is that this agreement does not exist. Furthermore, the Trump
administration has not said it intends to devalue the dollar.
The idea is inspired by the 1985 Silver Agreement, which, as
noted earlier, sought to devalue the dollar to address the United States' trade
deficit at the time, and that plan failed.
This idea is definitely mistaken. It stems from the belief
that US exports are relatively low compared to other countries at 11 percent of
the Gross Domestic Product, while other countries account for between 24 and 29
percent. This is because the United States is not only the largest market, but
also the richest of the developed countries. That is, the consumer with the
greatest purchasing power, the richest, and the one with the greatest access to
credit. It's also worth mentioning that the United States is virtually
independent when it comes to raw materials, making it less necessary to export
to reduce its import bill. The value of U.S. raw materials exceeds $45
trillion, and it is the world's largest oil producer. It is the largest market
among developed countries and also the richest.
The wealthy, one-third of the population consumes 54 percent
of the country's wealth. That's why most foreign companies want to export to
the United States, and most US companies don't need to export to the rest of
the world and are spared the risks of other countries' currencies and fiscal
rules.
The US industrial sector can't afford to consider competing
and exporting more with a weak dollar and competing on cost. It doesn't make
sense.
We must also destroy the idea that the United States' fiscal
problems stem from a strong dollar. The country's debt problem doesn't stem
from a strong dollar. Exchanging short-term debt for a 100-year debt represents
an enormous danger: first, if you seek to artificially devalue the currency in
pursuit of this debt swap, the message sent to investors is that you can do
this trick as many times as you want in the future, so the demand for US debt
logically decreases, and the artificial search for short-term debt relief does
not solve the problem of high spending and constant deficits.
Debt restructuring also has another very dangerous factor:
demonstrating the insolvency of the State to the world, because you don't
restructure unless you have the need. Neither exports nor debt are solved by
devaluation.
In addition to the above, inflation would worsen. The
country already has a serious inflation problem, and this administration was
elected to reduce inflation. Therefore, a "strategy" that only
increases the prices of consumer goods and services makes no sense.
Therefore, devaluation not only fails to boost productivity
or industrial value-add, but actually worsens it. Therefore, any spending cuts
due to the so-called competitive devaluation would immediately be reflected in
a decline in productivity and an impoverishment of the nation's workers, in an
attempt to save uncompetitive sectors.