Special Report – Federal Debt Time Bomb and the Mar-a-Lago Accord

Special Edition: Thoughts on the Market

September 22, 2025

This Special Edition is a deep dive into the Mar-A-Lago Accord. If you haven’t heard of it, you owe it to yourself to get educated.

I have written for many months about the mounting crisis of our nation’s federal debt.  Thirty-seven Trillion Five Hundred Billion Dollars ($37,500,000,000,000.00) and climbing.  Even though I am a “numbers guy,” it is hard to really get my mind around them.  Let me put this huge figure in perspective.  The U.S. is currently carrying more than $109,000 of debt for every American, or more than $324,000 of debt for every taxpayer.  The annual cost of servicing this debt is now $1.05 Trillion – that’s right, One Trillion, Fifty Billion dollars are being spent on interest payments every year.  That is $125 Billion more than our defense budget.  This is unsustainable, and it is getting worse every year. 

Before we begin, let me make one thing clear: This is not about Republicans or Democrats, Conservatives or Liberals – this is about the survival of our nation and the utterly irresponsible budgetary actions undertaken by both political parties.  It has taken decades to get to this point, but we are perhaps three or four years away from a terrible reckoning, when the system will seize up, not unlike (to borrow an analogy from Ray Dalio) the heart attack of a man who has eaten too many fatty, processed foods and not exercised. 

I get it.  You might be tired of hearing me go on and on, week after week, about the impact of the debt. I do have some ideas for a solution, and I might write about them in a future Special Report.  Today, however, I want to present to you a proposed “solution” that is being floated in Washington and in the executive suites of a number of powerful banks and financial institutions. 

The scariest part of this so-called solution is that the first part has already been executed. Frankly, I find the proposal absolutely horrifying, but you need to make your own informed decision.

This plan is referred to as the Mar-a-Lago Accord. 

As you can see from the cartoon I have created, I am not a big fan.

The Mar-a-Lago Accord

During the past few days I have done a deep dive into the thinking and policies of Stephen Miran.  Dr. Miran was originally appointed by President Trump as the Chairman of the Council of Economic Advisors, a position from which he has taken a leave in order to serve as the newly appointed Governor at the Federal Reserve Board.  He is a well-educated young man with some very controversial ideas about how to fix the massive U.S. global trade imbalance. And he may very well be Trump’s pick to head the Fed once Powell’s term expires, so it makes sense to understand his economic theories.

Dr. Miran’s thinking is summarized in a paper entitled, “A Users Guide to Restructuring the Global Trading System.”  It is not particularly easy reading, but I recommend it nevertheless because we might be living with its consequences for a very, very long time.  If Miran’s plan could be executed perfectly, it might work out as he suggests, but unfortunately, the likelihood of that happening is infinitesimally small, so I am writing about his thinking in this special report because we need to be prepared for what the Trump administration might be activating next.

The initial step in Miran’s plan was for Trump to implement aggressive tariffs to get the full attention of the nation’s trading counterparties.  That has been done – clumsily – but so far without any catastrophic problems.  It is the next steps of Miran’s plan -- and Treasury Secretary Scott Bessent has apparently bought into it so far -- that I find terrifying.  The plan is structured with such a small margin for error or unexpected surprises that we could be at the cusp of an extremely contentious overhaul of global trade relations, a collapse in the dollar, an historic crash in equities, surging inflation in the U.S., widespread deflation abroad, and the possible widespread political isolation of the U.S.  In a worst case scenario that is, sadly, not too far-fetched, it could lead to the formation of new geopolitical alliances that carry heightened risks of military conflict. 

The U.S. is burdened with a number of  dangerous and unsustainable economic conditions:  a dramatically overvalued dollar, a horrifying level of government debt, the hollowing out of domestic manufacturing capacity, and over $30 trillion dollars of foreign money that is parked in U.S. stocks and bonds.  Let me be perfectly clear about one key issue: as I noted above, the ownership of the embarrassing fiasco that is the U.S. debt is the fault of both political parties. The keys to the treasury have been passed from right to left and back again, leading us to the present crisis.  But regardless of which political party may be in charge, yesthe dollar is the world’s reserve currency, so if foreigners decide the U.S. is no longer a safe place to hold their surplus savings, then the dollar – and U.S. assets -- will crash precipitously.  And that’s just the easy part!

Let me summarize the key points:

The Mar-a-Lago Accord is a proposed economic and trade initiative developed during President Donald Trump's second term. Named after his Florida estate, the accord outlines a dramatic restructuring of global trade and monetary systems and draws inspiration for its name from historical agreements like the 1944 Bretton Woods Agreement and the 1985 Plaza Accord. The Mar-a-Lago Accord is based on a paper authored by Miran in November, 2024, entitled A User’s Guide to Restructuring the Global Trading System, which can be found in this link. 

Core Objectives Of The Mar-A-Lago Accord:

• Devalue the U.S. dollar while preserving its role as the global reserve currency -- a delicate balance aimed at resolving the Triffin paradox. (Read on for an explanation of Triffin.)
• Reduce the U.S. trade deficit and revive domestic manufacturing through protectionist policies.
• Realign global economic relationships by linking trade agreements to national security concern.

The goals might sound sensible from the perspective of the U.S., but this plan will be nearly impossible to implement..   One of the obvious pitfalls with this plan is that the methods for achieving these goals are draconian, unrealistic, and to be honest, utterly frightening, because to accomplish them, the U.S. would undoubtedly need to resort to autocratic style, strong-arm negotiating techniques.  This would be a hideous process to watch,  not unlike the negotiating tactics of a mafioso don when he wants to move in on a new territory.  It is also important to point out that once any of the strategies have been implemented, they will be exceedingly difficult to reverse.

Key Strategies:

• Tariffs and trade enforcement: Aggressive use of tariffs to protect U.S. industries and pressure trading partners.  (This first step has already been initiated, but more tariffs could follow.)
• Currency and capital controls: Measures to influence exchange rates and capital flows.  This includes  the stated threat of imposing crushing taxes on U.S. treasuries owned by countries who don’t cave to the U.S. new demands!!
• Debt restructuring: A controversial proposal to swap long-term Treasury holdings for 100-year, non-tradeable, zero-coupon bonds, reducing interest payments but locking in debt for a century.  (Miran believes that U.S. foreign counterparties will agree to this in exchange for continued U.S. military security.  He doesn’t go so far as to say that countries that don’t agree to this debt restructuring will face the wrath of the U.S. military…but such a consequence can certainly not be excluded.) Yes, you understood it correctly: Miran is betting that any nation or sovereign wealth fund holding Treasuries as part of their reserves will willingly forego access to the money they invested in the U.S. government or the interest they locked in when they made the investment, and put it all in reserve for an as-yet unborn generation to enjoy – in 2125.
• Implied risk:  There are a number of informal discussions about the idea of the U.S. Treasury converting all of their long-term paper for zero coupon bonds, essentially forcing this condition onto all investors.  This would enable the U.S. to avoid a technical default on its debt while minimizing the crushing annual cost of its ever-rising debt service.  This is not officially part of the Mar-a-Lago Accord, but there are ongoing discussions about this.
• Dollar recalibration: While publicly supporting a strong dollar, the administration’s policies are designed to weaken it to lower borrowing costs and boost exports.
• Long-term moderate interest rates:  Miran essentially admits that in order to offset the price hikes of tariffs and dollar depreciation, monetization of assets by the Federal Reserve might be required.  This is clearly one of the reasons that Trump is so keen to get control of the Fed’s decision-making process.  We have seen the heavy-handed strategy he has used to try to force Fed Chairman Jerome Powell to resign and then try to fire Fed Governor Lisa Cook for mortgage fraud – even though Treasury Scott Bessent presumably did the same thing Cook did with his mortgage applications.  For sure, there will be more such efforts to follow. 

In support of the Fed’s purchase of long-term Treasuries, Miran has cited a long-overlooked clause in the Federal Reserve Act: the Fed must pursue “moderate long-term interest rates” in addition to price stability and full employment. This opens the door for the Fed to actively manage long-term yields, not just short-term rates -- potentially by buying long-dated Treasuries to suppress borrowing costs

• Strong-arm tactics of President Trump:  Even as Trump is trying to engineer the decline of the dollar’s value, he is explicitly threatening U.S. trading partners with yet higher tariffs if they stop using the dollar as their reserve currency and start transacting their global trade with other currencies.

The Triffin Paradox:

The Triffin Paradox -- also called the Triffin Dilemma -- is a concept in international economics that highlights a fundamental tension faced by any country whose currency serves as the global reserve currency. This paradox is central to debate --  including proposals for a new global reserve currency or the Mar-a-Lago Accord’s attempt to recalibrate the dollar’s role -- about reforming the international monetary system.

Coined by economist Robert Triffin in the 1960s, the paradox describes the dilemma faced by a reserve currency nation, like the U.S. with the dollar.

• The nation must run trade deficits to supply the world with enough of its currency for global trade and reserves, BUT
• Those persistent deficits eventually undermine confidence in the currency’s value and stability.

Why It’s a Paradox

To meet global demand for dollars:

• The U.S. must export dollars, often by importing more goods and services than it exports (i.e., running a trade deficit), BUT…
• Over time, this leads to debt accumulation and questions about the dollar’s long-term viability. HOWEVER….
• If the U.S. stops running deficits to protect its economy, the world suffers from a dollar shortage, disrupting global trade.

Real-World Impact

• The Triffin Paradox contributed to the collapse of the Bretton Woods system in 1971.
• It remains relevant today because the U.S. continues to run large deficits while maintaining the dollar’s dominance in global finance.

How Can Miran's Plan to Weaken the Dollar Lead to Lower Interest Rates?

Stephen Miran’s plan to weaken the dollar – a key component in the broader Mar-a-Lago Accord strategy -- aims to lower interest rates through a combination of monetary, fiscal, and structural maneuvers. Here are the steps needed to make his plan work:  

1. Dollar Weakening Reduces Real Debt Burden

• A weaker dollar lowers the real value of U.S. debt held by foreign investors.
• This theoretically makes it easier for the U.S. Treasury to refinance or restructure debt, potentially at lower yields.  I seriously question this logic, however, because one of the reasons foreigners don’t typically hedge their massive U.S. equity holdings is that the dollar tends to rise during periods of crisis.  If the dollar is driven lower during a crisis period, we could see dramatic sales of dollars – on the order of three or four trillion US dollars initially, but potentially much more.  This would almost certainly put the brakes on foreign demand for U.S. debt and other U.S. assets.
• Miran’s proposal to swap existing debt for 100-year, zero-coupon bonds locks in ultra-low borrowing costs for the long term.  This would require very blunt and very dictatorial-type negotiations with the current foreign holders of U.S. treasuries. Miran’s plan would impact all international U.S. trading counterparties.  Right now, Miran seems to be focusing on governments and sovereign wealth funds that hold U.S. bonds as part of their reserves, but if this strategy were to be implemented across the board,  the impact would be devastating for millions of ordinary private citizens that have looked to T-bonds as a safe place to park their retirement money.
• It is a slippery slope to force foreign nations to accept zero coupon bonds in a massive debt restructuring, as this same strategy could very easily be adapted for all holders of U.S. treasuries.   This would be a horrific abuse of power with crushing effects on millions of people, but don’t discount this is an impossibility over time if things get really desperate at the Treasury Department.

2. Boosts Domestic Production and Employment

• A cheaper dollar makes U.S. exports more competitive, stimulating manufacturing and job growth, but it would also lead to a likely surge in inflation in the U.S.   Put simplistically, the dollar’s purchasing value would be diminished, which is by definition how inflation works. 
• In Miran’s plan, the stronger domestic demand would reduce reliance on foreign capital inflows,  theoretically giving the Fed more room to cut interest rates without triggering inflation.  The challenge, of course, is what sort of machinations would the Fed and Treasury have to go through in order to finance the staggering, and ever-growing U.S. debt.  Our deluge of debt, after all, is one of the core problems that is driving Miran’s wild plan in the first place.   
• The other point that needs to be addressed is how the Fed will manage to keep long term interest rates at moderate levels given the likely mass exodus from the dollar and dollar assets.  My bet is that the Fed would be forced into the market as a buyer of treasuries as a last resort, at which point  this whole strategy implodes.

3. Improves Trade Balance, Reducing Rate Pressure

• By shrinking the trade deficit, the U.S. reduces its need to attract foreign capital to fund imports.  Miran’s logic here is faulty because the U.S. is still running a multi-trillion dollar annual deficit.  If the dollar is still a reserve currency -- which is part of this plan -- who is going to buy all of those bonds?
• Less dependence on foreign capital means less upward pressure on interest rates, especially long-term rates.  In a fantasy world, this is fine, but not in the world in which we live.  With $37.5+ trillion of debt -- and climbing -- we need gigantic demand from foreign investors to buy our debt  The problem is that this plan could easily frighten away the same foreign investors we need to purchase our debt.  
• Monetization by the Fed – in which the Fed becomes the buyer of last resort for the Treasury’s bond issuances – is a perilous move.  This is exactly what happened in Germany in the 1920’s.  They were saddled with too much debt due to huge war reparations, so they decided to devalue their currency to reduce the value of the debt.  To meet reparations, the Weimar Republic printed massive amounts of money, triggering hyperinflation. We’ve all seen how well that worked out, but let's look at some of the details: 
  • By late 1923, 42 billion Deutsche marks equaled one U.S. cent. Compare that exchange rate to the rate in 1900, when one Deutsche mark was worth about 24 cents.
  • In 1923, prices doubled within hours; workers were paid twice a day – setting the stage for the rise of Adolf Hitler.

4. Creates Room for Looser Monetary Policy

Miran suggests that if inflation remains contained, a weaker dollar allows the Fed to ease monetary policy without risking runaway price increases. But this is a big  and very dangerous “if” because if inflation is not contained,  the very fabric of our nation could get torn asunder, just as it was in Germany, Argentina, and Zimbabwe, to name a few. 

Here are a few other examples of uncontrolled monetary policy and its effects:

Ancien Régime (France, late 18th century)

• Cause: Crushing debt from wars (Seven Years’ War, American Revolution) and lavish royal spending.
• Effect: By 1788, France was paying creditors in IOUs. Attempts to print paper money (assignats) led to inflation and collapse of public trust.
• Outcome: The monarchy fell in the French Revolution of 1789.

Spanish Empire (16th–17th centuries)

• Cause: Endless wars and reliance on New World silver led to reckless borrowing.
• Effect: Spain defaulted multiple times (1557, 1575, 1596, 1607), and inflation from silver imports destabilized the economy.
• Outcome: Imperial decline and loss of European dominance.

Tsarist Russia (early 20th century)

• Cause: Heavy borrowing to fund WWI, combined with poor tax collection and monetary expansion.
• Effect: Inflation soared, wages collapsed, and food shortages triggered unrest.
• Outcome: The Bolshevik Revolution in 1917 repudiated Tsarist debts and dismantled the empire.

Miran argues that interest rate cuts can be used strategically to support growth while managing debt costs.  In some alternative universe that might be the case, but here on planet Earth, it just can’t happen. Why?  Sadly, the our deficit is so massive that without the monetization of the treasuries, it is unlikely that interest rate cuts can manage debt costs without inflation rocketing skyward.

Holes Large Enough to Drive a Truck Through:

Miran’s plan uses dollar depreciation as a lever to restructure debt, stimulate growth, and reduce the need for high interest rates -- but it’s a high-stakes gamble that depends on absolute perfect coordination between fiscal and monetary policy, and requires sovereign nations to agree immediately and completely.  It is also requires negotiating tactics that bludgeon our trade counterparties with threats and ultimatums.  Ultimately, it requires the catastrophically dangerous policy of the Fed monetizing the U.S. debt by buying huge amounts of bonds to keep interest rates down.  This would be extremely inflationary and lead to a massive loss of the dollar’s buying power. 

• The Mar-A-Lago Accord strategy walks a tightrope: too much dollar weakening could trigger inflation and erode confidence in U.S. assets, which would lead to capital flight.  Foreign buyers of U.S. debt will  demand higher yields if they fear currency losses. This would, in turn, offset gains from the lower nominal rates. It becomes a vicious circle that puts you right back where you started.
• Domestic buyers of U.S. debt will demand higher yields if they believe Fed policies  artificially contain long-term interest rates will cause inflation to rise.
• Miran has one notion that is so ludicrous that it calls into question every other pillar of his proposal: he insists that tariffs are not inflationary because the price hike only causes price rises to hit us one time.  Huh??  If there is a 10% tariff and the dollar doesn’t rise to offset that price increase, then there will likely be a 10% rise in the associated cost of the product.  Miran suggests that this price rise is not “inflationary” because it won’t be repeated.  Sorry, but that is not the way things work.  Prices  almost certainly will not drop back down the next year.   In other words, a price hike due to a tariff would almost certainly be baked in a  with a subsequent loss of buying power for U.S. consumers.  And a price rise doesn’t have to happen every year for it to be labeled as inflationary.  The very essence of inflation is when our dollars buy less of the same product, irrespective of the calendar.

Once you understand Miran’s plan, it is easy to see why Trump has been so preoccupied with trying to get control of the Fed’s decision-making process.  Trump, Bessent, and their team knows that responsible central bankers would never go for this flagrantly dangerous strategy, so he is trying to fill the Fed with people who will carry it out.

The Most Radical Move

Stephen Miran’s proposal to restructure U.S. debt by converting existing Treasuries into 100-year, non-tradeable zero-coupon bonds is arguably the most radical element of the Mar-a-Lago Accord -- and it has sparked intense debate.  Before you read more, I’d like you to ponder the implications of essentially freezing the trillions of dollars that governments, sovereign wealth funds, foreign institutions, and possibly even private citizens invested in the bonds backed by the “full faith and credit” of the U.S. government, only to be told, “Yeah, your great, great grandkids will be paid – in 100 years -- and in the meantime, we’re not going to pay you any interest.”

Would This Happen Without Investor Approval?

No, not realistically. While Miran’s plan outlines a mechanism for restructuring, it’s not technically a unilateral mandate.  Investors -- especially foreign governments, central banks, and institutional holders -- would need to agree to the swap. Here's why:

Why Investor Consent Is Crucial:

• Legal contracts: Treasury securities are binding agreements. The U.S. cannot retroactively change their terms without violating contract law and risking lawsuits.
• Market confidence: Forcing a swap would shatter trust in U.S. debt markets, potentially triggering a global financial crisis.
• Dollar status: The dollar’s role as the world’s reserve currency depends on its liquidity and reliability. Coercive restructuring would undermine both.
• Fortunately, this critical component of Miran’s overall plan is very, very unlikely to be implemented…unless investors are bulldozed, bullied, and threatened into accepting the deal.

Miran’s Strategic Framing

Miran’s team frames the swap as a “patriotic investment” -- a way for allies and domestic institutions to support U.S. stability while earning long-term returns.  His document frames it as more of a voluntary refinancing offer than a forced conversion. The belief is that this new structure would appeal to long-term holders like pension funds, sovereign wealth funds, and central banks.  Call me crazy, but I seriously doubt that foreign investors would feel a great deal of patriotic support for the U.S. for a plan in which their holdings:

• Are non-tradeable, reducing speculative volatility.  This would also reduce demand enormously.
• Carry zero coupons, meaning no annual interest payments – EVER!
• Matures in 100 years, locking in ultra-long-term financing for the U.S. but decimates the investor’s here-and-now cash flow.

I have been in the finance world for decades, and short of the threat of imminent military action, I can’t imagine one investor – not one – who would agree to forego returns on their investment (not to mention the ability to trade or sell the bond) for 100 years without undue pressure. Miran does suggest that the Fed would offer repo lending facilities at par, allowing holders to access short-term liquidity, but this is a very tricky issue that would need to be clarified and sorted out.

Risks and Pushback:

• Foreign resistance: Nations that hold substantial amounts of U.S. paper -- think China, Japan, UK, Canada, France, Saudi Arabia, Hong Kong, and many others -- will almost certainly reject the proposal because it would strip them of both liquidity and control. Even suggesting it could lead to the destruction of multiple already frayed bilateral trading relationships.
• Domestic backlash: Critics of Miran’s plan argue that it is a stealth default that could damage U.S. credibility.  I am of the opinion that it is actually not that stealthy.
• Market disruption: If uptake is low – as any student of economic history would expect it to be -- the plan will backfire, resulting in higher borrowing costs (instead of lower), and lead to a mass exodus from U.S. assets.

While Miran’s proposal is not explicitly authoritarian… it certainly is close. Theoretically, it can be implemented with persuasion, incentives, and strategic framing, but ultimately,   the plan’s success depends on how it is received by global markets and key stakeholders.  Given how little upside there is for the investor, my bet is that it would require autocratic negotiating techniques.

The primary leverage that the U.S. would try to use would be its assurance of (military) security in exchange for acquiescing to these demands.  Frankly, that sounds  more like blackmail than diplomatic negotiations.

What Miran’s Strategies Imply for Gold:

• Symbolic anchor: Referencing the Bretton Woods system in which the dollar was convertible to gold, Miran views gold as a psychological and historical anchor for monetary credibility.
• Not a return to the gold standard: Miran doesn’t advocate a full return to the gold standard but does suggest that gold could play a signaling role, perhaps as part of a basket of assets backing a new dollar framework.
• Reserve diversification: Miran hints that central banks may increase gold holdings if confidence in fiat currencies wanes, and the U.S. should be prepared to leverage its gold reserves strategically. 
• My bet: Gold will explode higher if this Accord were to be further implemented. There is a very real possibility that the Treasury Department will revalue the price of gold to a very, very high price – perhaps something as high as  $10,000 per ounce, or even $20,000 per ounce.  This would give the Treasury extra buying power because of the nation’s store of gold – 261.5 million troy ounces -- but it isn’t clear how they would use this buying power. 

How Big a Dollar Devaluation?

• Target range: While Miran avoids naming a precise figure, I would expect a drop of at least 30% to 40% over several years.
• Impact On the Dollar:  It needs to be large enough to boost exports and reduce the trade deficit, which could happen over a span of several years. Still, it is not clear whether this could avoid triggering runaway inflation or a collapse in investor confidence.

Since I’ve hit you with quite a bit of information about this bizarre, and to my mind, dangerous proposal, here’s a recap of how Miran’s strategy blends policy tools with psychological tactics:

• Tariffs and trade enforcement: Raise costs on imports to shift demand toward domestic goods.
• Capital controls: Limit speculative inflows and outflows to stabilize currency movements.  (This would essentially be the end of the free flow of goods and capital.)
• Debt restructuring: Offer long-dated, zero-coupon bonds to reduce interest payments and signal fiscal discipline.  (Perhaps with sufficient brow-beating and coercion, a few victims would consent to this part of the plan.  On the other hand, I can’t imagine there being much appetite to send American men and women to war over monetary policy.
• Monetary coordination: Pressure the Fed to maintain low rates while managing inflation expectations.  (Monetization would definitely be on Miran’s agenda.)
• Narrative control: Frame the devaluation as a patriotic reset, not a crisis – echoing the 1985 Plaza Accord.  A more elegant depiction would be to refer to this as a paradigm shift ... but at what cost?

What Could Go Wrong???

• Inflation spiral: If the dollar weakens too fast, import prices could surge, triggering inflation and forcing the Fed to hike rates.
• Investor flight: Foreign holders of U.S. assets might dump Treasuries and stocks, fearing currency losses or coercive restructuring.
• Reserve status erosion: The dollar’s dominance could be challenged by the euro, yuan, or gold-backed alternatives.
• Trade retaliation: Tariffs and capital controls could provoke countermeasures from allies and trading partners.
• Worst case:  We could start to hear the drum beats of military conflicts in the distance.

What Miran Says About Other U.S. Assets:

• Equities: He sees U.S. stocks as overvalued due to dollar strength and foreign capital inflows. A weaker dollar could reprice assets more fairly and boost domestic ownership.  It is true that if the dollar were to drop by 30% or 40%, then on a relative basis, our equities might appear to offer more value than before the drop.
• Real estate: Foreign investment in U.S. property is viewed skeptically. Miran favors restrictions on foreign ownership to preserve national control.  (Clearly, Miran really doesn’t like the idea of free and unencumbered capital flows.)
• Tech and IP: Strategic sectors like semiconductors and AI should be shielded from foreign influence, with investment tied to national security goals. 

What Other People Say About the U.S. Debt:

I’m not the only one writing about the perils of our crushing – and growing – national debt. Ray Dalio raises many of the same points that I have been warning about for so long.  According to Dalio,

• Roughly $9 trillion of our debt needs to be rolled over, with $2 trillion more in new borrowing  every year expected due to ongoing deficits.
• This is crowding out essential economic functions -- like clogged arteries squeezing blood flow.
• The world is losing its appetite for U.S. debt, creating a dangerous mismatch between supply and demand.
• Foreign holders are shifting to gold, signaling declining confidence in the dollar’s long-term value.  (I highlighted this precise shift in a recent write-up.)
• He cautions that if the Federal Reserve’s independence is compromised -- e.g., pressured to keep rates artificially low -- investors may lose faith in the dollar.
• This could trigger a decline in the value of money, accelerating the debt spiral.

No Easy Fix

• Dalio argues the U.S. cannot realistically cut spending, citing political and structural constraints.
• Perhaps most importantly, he sees parallels to 1928–1938, a period in this country that was marked by state capitalism, protectionism, and monetary upheaval.

Current Status: 

As of late 2025, the Mar-a-Lago Accord remains in early negotiation stages. Many of its exact provisions are confidential, and its success is uncertain due to the complexity of global economic interdependence.

Let me again state that the federal deficit is not something Donald Trump created by himself; it has been steadily growing under presidents from both the left and the right. But Miran’s plan – which is clearly supported by Trump and his team – is bold, controversial, and deeply rooted in a belief that economic sovereignty and national security are inseparable. Whether it succeeds depends on how well it balances ambition with realism. It also hinges almost completely on a factor we cannot control –  how the rest of the world reacts – which makes it exceedingly dangerous. 

Surely, there are safer, far more sensible plans to reduce the interest costs of huge federal deficit. 

I will return to my normal market updates and forecasts in my next write-up, but I felt this was important information for you to think through.  In the meanwhile, I would like you to ponder one simple question – which current elected officials have ever thought seriously about reducing their borrowing and spending and getting the budget under control? 

Wishing you all the best of luck with your trading.

Andy K