While the world was jumping up and down about Elon Musk and his short-lived influence in the Oval Office, there were other equally significant figures whispering in the President’s ear.
Two of the most notable are far-right, anti-immigrant campaigner and Trump Policy Chief, Stephen Miller – and Chairman of the President’s Council of Economic Advisers, Stephen Miran.
Miller is, by any measure, a reprehensible figure. A man who cut his teeth picking fights with Black and Hispanic student groups, name-calling author Maya Angelou, and advocating for Trump’s travel ban and the policy of separating parents from their children. The Southern Poverty Law Center – a leading civil rights organization – lists him as an ‘extremist’.
But Miran is a more complex figure.
A Harvard-educated economist, he is a senior strategist for Greenwich, Connecticut-based Hudson Bay Capital, co-founder of asset management firm Amberwave Partners, and is a fellow of the Manhattan Institute, the conservative think tank set up by William Casey, Reagan’s CIA Director.
He is also ‘the brains’ behind what we can loosely call Economic Trumpism.
Last November, just as the nation went to the voting booths, Miran published a pamphlet entitled – A User’s Guide to Restructuring the Global Trading System.
No, I didn’t read it either.
The paper argued for tariffs and currency control in the context of dollar overvaluation and addressing balance of payment deficits.
With its praise for the first Trump administration’s policy of adding tariffs on Chinese goods, the paper caught the eye of the returning President’s backers and supporters.
In short, the pamphlet sets out a blueprint for economic and monetary policies which the Trump administration seems to have embraced, and Miran entered Trump’s inner circle.
The paper, and its author’s ideas, have now become central to the latest four-letter acronym sweeping Trump-world – MALA.
While MAGA – Make America Great Again – is the rallying cry to all those fed up with politics, harbour a little resentment towards anyone ‘not like them’, and fueled by Stephen Miller’s sharp-tongued assault on freedoms and liberties, MALA is the mechanism through which returning America’s greatness is to be delivered. And Miran is its driving force.
MALA is short for Mar-A-Largo Accord. This is the revolution in waiting.
The idea is to host a summit at the President’s private Florida compound to reset the global trading system. As protocol determines, the name of these accords is set by the place they are staged and the idea of hosting the next one in Trump’s house must surely appeal to his ego too.
This isn’t actually new. Almost every 40 years since the Second World War the world’s richest nations have gathered to do just that. In 1944 they met in Bretton Woods and the world’s top economies agreed to peg their currencies to the U.S. dollar which in turn was convertible to gold at $35 per ounce. This was abandoned in the 1970’s and in 1985, the partners plus West Germany and Japan – re-integrated since the war – met again, this time at the Plaza Hotel in New York to sign the Plaza Accord.
The goal was to again correct US trade imbalances with West Germany and Japan by devaluing the dollar versus the Deutsche Mark and the Yen.
And now, another 40 years on, the plan is to devalue the dollar again.
The first step in Maran’s MALA playbook was to disrupt the current trading arrangements.
Trump has achieved this in spades by applying tariffs and trade restrictions across the board. While many argue the tariffs won’t achieve the rebalance the President and his backers and financiers desire, everybody agrees the move has been a simple and effective way of affecting change through chaos.
The second step is to prioritise domestic growth. Trump and his economic team have been relentless in advocating for US-based manufacturing, calling on jobs to be repatriated and for significant investment in the US.
That too has been successful. Since ‘Liberation Day’ when the first wave of tariffs was announced, world leaders and those companies who are bigger than many national economies have committed to investing more than $3trillion in American manufacturing. Bosses from United Arab Emirates, Saudi Arabia, Apple, Nvidia, Taiwan Semi-Conductor, and GE have all met with the President and pledged to invest in manufacturing jobs and factories across the States.
That is what has happened so far, the groundwork has been set, so what is the next stage?
The MALA plan is now looking to build strategic alliances.
Both previous Accords were made against a backdrop of significant world events. The rebuilding of Europe after the Second World War inspired the Bretton Woods talks, and the shifting sands of the Cold War surrounded the Plaza meetings.
In both cases, America was able to influence the talks by leveraging what it has always excelled at – military might. The US pledged to tuck the rest of the world under its defensive umbrella in times of great uncertainty, and that loyalty was to be economically rewarded.
Trump has already started reminding global trade partners that American defence protection shouldn’t be taken for granted and Europe and others need to start paying their way. It is unlikely the US will withdraw entirely from the west’s defence consortium, but the financing of it or the deals and favours needed to provide it are about to be renegotiated.
Part of the plan to build these new strategic relationships is also to isolate China.
The US is keen to establish new trade blocs to rival the ‘Belt and Road’ initiatives which has strengthened China’s political and economic might in key geographies like resource rich Africa and rapidly urbanizing Asia.
With this in mind, Trump’s negotiations with Ukraine for mineral rights, Saudi Arabia for technology and energy, all make more strategic sense.
But MALA is not a trade and tariffs negotiation, it is about controlling the global financial system.
To do that demands control of money. That means the US dollar must retain its status as the world’s reserve currency despite the discussions occurring within BRICS – Brazil, Russia, India, China and South Africa – and a number of other nations including Iran and Indonesia.
BRICS ambition to decouple the dollar from pricing oil and gas, gold and other assets and materials needs to be stopped. Likewise, the idea that Bitcoin or another blockchain-based system could usurp the dollar is a threat too.
The so-called Tiffin Paradox is clearly also in play whereby nations with reserve currency status struggle to balance short term domestic aspirations with longer term international objectives. How do you improve your own fortunes without damaging those of others in a zero sum game?
And that is why for Trump, MALA is needed sooner rather than later. He needs the World’s biggest economies to buy in to the plan quickly.
Can he achieve it?
The challenge for Miran and Treasury Secretary Scott Bessant – his co-partner in achieving MALA – is to find the right mix of levers, sweeteners and outright threats to persuade other countries to raise their currency values relative to the dollar.
Ronald Reagan achieved this in 1985. Or more accurately his Treasury Secretary James Baker did. The world’s major powers – Britain was represented by Nigel Lawson – agreed to sell their dollar holdings to reduce the amount in circulation and devalue the dollar accordingly, helping US manufacturing and exports to rebalance trade deficits.
The challenge for Trump is not in what he wants to achieve but, as ever, how he is going about it.
The Plaza Accord succeeded because Baker was a master politician and the deal was built on trust, credibility, and shared strategic purpose. In contrast, the Trump administration has undermined most of the diplomatic and institutional relationships he needs.
As I wrote in the last dispatch, Trump could have played his cards better in making himself – and by extension America – ‘more likeable’ to do business with.
Rather than drawing countries into his new consensus, Trump has managed to push Japan, South Korea and China away from their historic animosity and to increase their coordination on trade and currency policies to counter potential US tariffs. The UK and European Union have backed away from earlier efforts to distance themselves from China, instead seeing Beijing as a counterweight to an increasingly unpredictable US.
Trump’s petulance at G7 and other multilateral meetings isn’t helping either. Add to that, all his big policy pronouncements have stumbled, and his deal making is now seriously called in to question with the Iran Nuclear Deal failed, Abraham Accords in tatters, and USMCA – his replacement for NAFTA – broken following unilateral tariff imposition on Canada and Mexico.
But money has few or no feelings, and in troubled and uncertain times, with wars looming, global stocks and bond markets in flux, the natural place to safely park money probably remains America.
What a dilemma for Stephen Miran. His life’s ambition to reset the global finance system was only given a flicker of life by Trump and his America First agenda.
So how ironic that it should also be the President’s inability to play politics, act in a statesman-like way, or his cack-handedness when it comes to building coalitions and strategic relationships which now seems most likely to snuff that dream out.
Without MALA there may be no more MAGA, and for Trump that is an existential threat.
