Dollar destruction derby

Trump and his presumed Mar-a-Largo Accord plan to cut interest rates and lower the dollar. Markets are asleep to the inflationary threat to dollars, bonds, and equities.

The widely recognised author of the so-called Mar-a-Largo Accord, Stephen Miran, is being nominated by President Trump to serve on the Fed’s board. Trump has also moved to sack Lisa Cook, a serving governor appointed by Biden. Separately, he sacked Erika McEntarfer, the Bureau of Labor Statistics (BLS) commissioner last Friday, accusing her agency of faking the latest employment figures for political purposes.

Clearly, Trump is surrounding himself with like-minded executives more aggressively than past presidents, even in defiance of the law and Constitution. Officials better be on message, or they will be sacked. Fear rules in government agences.

While we can sympathise with a president getting rid of obstructive personnel, policy is increasingly being determined by groupthink. Stephen Mirran, whose appointment to the Fed is yet to be ratified is the author of a paper for Hudson Bay Capital upon which the intended Mar-a-Largo accord is said to be based. The intention is to undermine monetary policy and weaken the dollar, already telegraphed by Trump. And it might not turn out to be a wild conspiracy theory to see Miran being proposed by Trump as Jay Powell’s replacement as Fed chairman next year, if he manages to get him appointed.