House of Paine

the plaza accords

 some things aren't what they appear to be


take the infamous 
plaza accord  # 18
                         back in  1985


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here's a typical; rendering of that dirty decision:


  " uncle sam's
so-called twin deficits, 
trade and fiscal, 
are what led 
to the Plaza Accord(S).

 In September 1985,
 the U.S., U.K., France, Germany and Japan 
sat down to reengineer
 the world's main exchange rates. 

That agreement saw the dollar
 fall by half 
against other major currencies.

 The result set in place 
the conditions that caused
 the Japanese bubble to expand and burst
 damaging that economy
 for more than a decade. 

Their goal was to stimulate 
demand outside the U.S
. -- and most particularly in Japan --
 to help the world's largest economy 
reduce its dangerous imbalances.
 In that they were successful: 
in real terms, growth in Japanese imports
 rose from an average of 1.6 percent a year 
in 1983-85 
to 11.3 percent in 1986-88. 
At the same time, 
U.S. imports slowed,
 from 14.5 percent per annum
 to 6.1 percent a year. 

One side effect 
of this tinkering 
was to drive down inflation 
in the then-European Economic Community 
 from 5.9 percent a year 
n the three years prior to the Plaza Accords 
to just 2.8 percent. 

Germany and Japan ran 
a real risk of deflation 
in the process, 
as their average annual rates 
of household inflation
 slowed to just 
0.4 percent and 0.6 percent, respectively,
 in 1986-88. "

here's

 FAMOUS MONSTER POINT 18 OF THE ACCORDS:

18. The Ministers and Governors 
agreed that exchange rates
 should play a role
 in adjusting external imbalances. 

In order to do this, 
exchange rates
 should better reflect
 fundamental economic conditions
 than has been the case.

 They believe 
that agreed policy actions
 must be implemented 
and reinforced
 to improve the fundamentals further
and 
that in view 
of the present 
and prospective changes 
in fundamentals
, some further orderly appreciation
 of the main non-dollar currencies
 against the dollar is desirable. 

They stand ready to cooperate
 more closely to encourage this 
when to do so would be helpful. 


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the cure for the twin deficits ?

sounds like inevitable 
prudent 
remedy  for a serious imbalance

and again two years ago 
as the twins raged
 IN UNCLES HOUSE
      once more?

was there 
a second round of plaza ?

if not really then why? 
what makes 85 and 02 diff ?

oil price policy perhaps

or third world dollar debt?

or or or

why not find out gang
and report back
i'l give ya two weeks

good luck

oh heres a lead

the reaganites
wanted to torpedo gorby 
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