(Bloomberg) – sounds too radical to even guarantee another thinking. This President Donald Trump could force some of the US foreign creditors to replace their treasuries into ultra -long bonds to alleviate the burden of debt in the country.
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Yet, this is what Jim Bianco belonged to their clients to talk on Thursday after the rumors of the so-called ‘MAR-a-LABCA ACCORD’ began to make rounds.
To be clear, Bianco is not visible that this is happening soon, if ever. But in some way it is next to the point. Trump, he said that uncertain, could very well increase the entire global financial order over the next four years, and Wall Street must be ready.
The idea of dramatically restructuring the American debt load is part of the daily row of Trump’s team to renew the global tariff trade, weaken the dollar and eventually reduce borrowing costs, all with the aim of putting the US industry even more in accordance with the rest of the world, said Bianco, veteran of over three decades and founder Bianco Research.
Other elements of the plan include the creation of a sovereign wealth fund – which Trump has already launched – and forcing US allies to take over a higher share of security consumption.
“You have to start thinking big and you have to start thinking bravely about what’s going on here,” Bianco told listeners for about an hour of Webinar. “MAR-a-LABRA agreement is not really a matter, it’s a concept. It’s a plan basically processing part of the financial system.”
The term “MAR-ACCORD” RIFF is at the 1985 Plaza Agreement and, before that, the 1944 Bretton Woods Agreement, both main turning points in establishing a modern global economic system. Each one was named after the resorts where they negotiated.
Many ideas behind the agenda come from a document from November 2024 by Stephen Miran, Trump’s candidate for running the Council of Economic Advisors of the White House. In it, the former treasury official set a folder of the global trade system reform and the removal of economic imbalances guided by “persistently overpricing dollars”. He also states that “the desire for the reform of the global trade system and the placement of the US industry on the fairer terrain over the rest of the world for decades is a consistent topic for President Trump.”
Bianco said that such attitudes do not necessarily have to be conflicted with the Minister of the Scott Treasury, which said on Thursday, Bloomberg said that “they still have a strong dollar policy now.”
What do Bloomberg’s strategists say …
“It is time to take the risk of Trump’s administration more seriously to orchestrates the weaker dollar. Trump administration has a suitability for bold maneuvers with high roles. “
– Simon Flint, a macro strategist
Click here for his complete comment
This is because, although I can seek a weaker trade dollar in the US currency opposite her trade partners-a long way to reduce trade deficit, the financial measures of the green return index, such as the Bloomberg Dollar Spot Index, could strengthen Uu the same time. This meter increased by 2.3% of Trump’s victory in November.
“Stephen seem to be a peaceful and scott bezen somehow singing from the same anthem,” Bianco said. “We hope that the whole idea is a lower value of dollars, lowering the value of interest rates, to overthrow the burden of debt in the country. And that’s what they try to do. “
Bianco, like Mirin’s work, called the work of former Credit Suisse Group AG Strategy Zoltan Pozzar, who has been calling for “Bretton Woods III” for several years as part of his theory that the dollar will play a much less dominant role in global finance in the coming decades.
One key idea of Pozzar is that other nations should pay more for the safety and stability they provide. A way to do this would be by changing some of their treasures in 100-year-old, irregular bonds of zero-Coupon. If these nations needed cash quickly, federal reserves could temporarily do them through a borrowing facility.
Bianco emphasized that this type of debt replacement may not really happen, and if that should be followed, it would require significant international cooperation and could potentially affect global financial stability. Bond investors have shown a bit of concern so far, and trading on the treasury market in recent days is especially peaceful.
However, the point of discussion of these ideas with clients is to emphasize the size of potential changes in the store, Bianco said.
“Take them seriously, don’t take it literally,” he said, referring to the idea of replacing debt and some of Trump’s more radical proposals in general. “If Trump is willing to blow up NATO, why not be willing to blow up the financial system?”
