(Bloomberg) — It sounds too radical to even warrant a second thought. That President Donald Trump could force some of the US’s foreign creditors to swap their Treasuries into ultra long-term bonds to ease the country’s debt burden.
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And yet, that’s what Jim Bianco corralled his clients to discuss on Thursday after rumors of a so-called ‘Mar-a-Lago Accord’ began making the rounds.
To be clear, Bianco doesn’t see it happening anytime soon, if ever. But in some ways that’s beside the point. Trump, he said in no uncertain terms, could very well upend the entire global financial order over the next four years, and Wall Street needs to be prepared.
The idea of dramatically restructuring America’s debt load is part of the Trump team’s agenda to revamp global trade via tariffs, weaken the dollar and ultimately reduce borrowing costs, all with the goal of putting US industry on more even footing with the rest of the world, said Bianco, an over three-decade market veteran and founder of Bianco Research.
Other elements of the plan include the creation of a sovereign wealth fund — which Trump has already set in motion — and forcing America’s allies to shoulder a larger share of security spending.
“You have to start thinking big and you have to start thinking bold about what is going on here,” Bianco told listeners during the roughly hour-long webinar. “The Mar-a-Lago Accord is not actually a thing, it’s a concept. It is a plan to basically remake some of the financial system.”
The term ‘Mar-a-Lago Accord’ is a riff on the on the 1985 Plaza Accord and, before that, the 1944 Bretton Woods Agreement, both major milestones in the establishment of the modern global economic system. Each were named after the resorts where they were negotiated.
Many of the ideas behind the agenda come from a November 2024 paper by Stephen Miran, Trump’s nominee to lead the White House Council of Economic Advisers. In it, the former Treasury official laid out a road map for reforming the global trading system and weeding out economic imbalances driven by “persistent dollar overvaluation.” It also states that “the desire to reform the global trading system and put American industry on fairer ground vis-à-vis the rest of the world has been a consistent theme for President Trump for decades.”
