No. of Recommendations: 16
The link below is to an interview with Gillian Tett of the Financial Times and Kings College (Cambridge) about what is going on in today's economy e.g. tariffs etc. I've found her to be very insightful in the past
https://www.nytimes.com/2025/03/14/opinion/ezra-kl...The paywall might allow a one-time view, in any event I provide some snippets below, as well as NotebookLM links that summarize the paper she discusses.
Is this some dry academic discussion of a paper by a guy named Stephen Miran?
Far from it, Stephen Miran is now chair of Trumps' Council of Economic Advisors.
Tett's view is that what we're seeing, e.g. tariffs etc, are not ad hoc policies but are part of a published plan that is being executed by the proponents of the plan, e.g. Miran and colleagues, who are now in power. The plan involves tariffs, currency realignments, and national security realignments.
Snippets of the Tett interview:
<snip>
On the one hand, they want to ensure that the dollar remains supreme as a global reserve currency and that the dollar-based financial system continues to dominate.
<snip>
But at the same time, they also think that the dollar is overvalued by virtue of the fact that it is the world's reserve currency, which means that people keep buying dollars and so that pushes up the value. And that's made American manufacturing and industry less competitive and contributed to the hollowing out that they really don't like.
<snip>
It would essentially entail a number of countries coming together to agree to weaken the dollar and, in exchange, America offering some form of tariff relief, some form of military protection, being allies and potentially doing other things like maybe swapping long-term U.S. debt for other forms of debt.
It's extraordinarily bold. Who knows whether it will actually happen? Who knows whether America will actually be able to persuade or bully other countries to take part in this or not?"
<snip>
The strategy about a wider reset of the global financial and trading system has actually been bubbling as a set of intellectual debates for a long time, well before Donald Trump actually won the election. You can go back to almost a year ago and see the treasury secretary Scott Bessent giving speeches, talking about a new Bretton Woods moment and a Bretton Woods realignment. You can look at the papers and the work that people like Stephen Miran have been doing, which, again, predated the election.
tedthedog note: she talking about U.S. government bonds below
<snip>
a large part of the debt today or the bond market seems to be in the hands of hedge funds. The International Monetary Fund itself has estimated that the hedge funds now account for around 11 percent of the holdings.
And that implies that if something causes them to cut and run and panic, you could suddenly see a very big wave of selling pressure in treasuries. And the underlying plumbing of the treasuries market is not strong at all - we've seen flash crashes erupt on several occasions in the last few years
<snip>
Of course, the other way you can also get rid of the debt is by restructuring or defaulting, which has always been assumed that America wouldn't do. One of the ideas they're thinking about, which is forcing so-called allies to swap their holdings of treasuries and dollars and gold for perpetual bonds, long-term bond instruments, is actually tantamount to a quasi debt restructuring. And how the markets would react to that is anyone's guess.
</end>
Miran paper:
www.hudsonbaycapital.com/documents/FG/hudsonbay/research/638199_A_Users_Guide_to_Restructuring_the_Global_Trading_System.pdf
NotebookLM audio "deep dive" of Miran paper (I found this easier to digest. As always, check what an AI says)
https://notebooklm.google.com/notebook/a5d7c172-f8...NotebookLM "briefing document" i.e. summary of the Miran paper
https://notebooklm.google.com/notebook/a5d7c172-f8...Question:
How might one hedge against such a bold policy move failing?
I'm personally interested because roughly half of my assets are now in U.S. government backed short-term funds like SNVXX, SGUXX etc, which I previously viewed as the ultimate defensive position. My remaining equity positions have some "disaster puts" and are also mostly things that are very long term holds.
Please leave out of your reply your personal opinion about the policy. Personal opinion is not relevant because the people in power are proponents of the plan, and they seem to be executing it.
