America
The economic mind of Trumpism — 1: Stephen Miran and his dollar devaluation plan
US President Donald Trump’s decision to initiate a trade war and impose tariffs impacting the global economy prompted accusations of “irrational economic policies”—a critique often heard in Turkey.
According to this perspective, Trump was perceived as a reckless autocrat imposing tariffs out of sheer ignorance. Alternatively, as renowned “new Keynesian” economist Paul Krugman stated, Trump was “crazy” regarding trade, and his “malignant stupidity” threatened the global economy.
This analysis does not attribute vast knowledge or profound wisdom to Trump, as subsequent points will clarify. Furthermore, the method for determining the tariffs has been described as somewhat “childish.” Additionally, this series will later delve into significant objections to “Trumponomics” and its inherent contradictions.
However, certain complexities may lie beyond Trump’s personal grasp, necessitating his team of advisors. If not a mad autocrat, perhaps Trump resembles an uninformed elephant in a china shop—useful, in this view, precisely for his capacity to disrupt the status quo.
Consequently, there are indications suggesting some underlying “intelligence” behind events like the rapid evaporation of trillions of dollars from stock markets within a week. Historical parallels exist. In his memoirs, President Herbert Hoover recalled his Treasury Secretary during the Great Depression, Andrew Mellon, advising: “Liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate… [The Depression] will clean out the rot in the system. The high cost of living and the high level of living will fall. People will work harder and live more moral lives. Values will adjust and enterprising people will pick up the debris of less competent people.”
The White House summary accompanying the official announcement of global tariffs highlighted a familiar, ostensible policy rationale: the so-called globalization process, it argued, no longer served the interests of the US and American workers, particularly within the manufacturing sector. This justification aligned with efforts toward reshoring production and implementing domestic tax cuts.
This, naturally, represents the surface narrative. Delving deeper, three figures emerge as prominent sources of “economic wisdom” within Trump’s White House: Stephen Miran, Chairman of the White House Council of Economic Advisers; Scott Bessent, Secretary of the Treasury; and Peter Navarro, Trade Representative.
This article focuses on a 41-page report authored by Miran—then a strategist at Hudson Bay Capital, a hedge fund managing $30 billion—published in November, shortly after Trump’s election.
In the memorandum, titled “Guidelines for Restructuring the Global Trading System,” Miran aimed to persuade “markets” of the feasibility of tariffs.
Miran began, “We may be on the verge of a generational shift in the international trade and financial systems,” noting that ‘reforming the global trading system’ and ‘the desire to put American industry on a fairer footing vis-à-vis the rest of the world’ had been a ‘consistent theme’ for Trump for decades.
“There is a way in which these policies can be implemented without significant negative consequences, but it is narrow,” the strategist stated, acknowledging the difficulty of the task.
But here the core argument surfaces: “Economic imbalances are rooted in an overvalued dollar that prevents international trade from stabilizing, and this overvaluation is driven by inelastic demand for reserve assets. As global GDP grows, financing reserve assets and the defense umbrella becomes increasingly burdensome for the United States, with the manufacturing and tradable sectors bearing the brunt of the costs.”
This overvaluation, according to the argument, renders US exports less competitive, cheapens imports, and consequently undermines American manufacturing—the fundamental points being made.
This assessment of the dollar, I should note, is more prevalent than commonly assumed, a point discussed recently with economist Radhika Desai. Furthermore, reports indicate that Vice President JD Vance shared a similar perspective, attributing the dollar’s overvaluation to its global reserve currency status.
As will be discussed, a consensus apparently exists between Miran and Bessent that tariffs alone are insufficient. Miran explicitly writes about desiring an “adjustment”—specifically, an exchange rate realignment between the dollar and foreign currencies: “While currency offsets can impede the harmonization of trade flows, they show that tariffs are ultimately financed by the tariff-subject country, whose real purchasing power and welfare are reduced, and the proceeds improve burden sharing to provide reserve assets.”
The implication is that the negative impacts of tariffs are offset because the burden shifts. According to Miran (who holds a Harvard PhD in economics), this mechanism would not harm the purchasing power of American consumers. Instead, as citizens of exporting nations targeted by US tariffs face reduced purchasing power due to currency shifts, their country effectively ‘pays’ the tariff burden, while the US Treasury gains the revenue.
Miran stated, “From a trade perspective,” the dollar’s overvaluation stems “‘largely because dollar assets function as the world’s reserve currency.’” This aligns with the argument attributed to JD Vance.
Since the US supplies the world with reserve assets, demand exists for the dollar and US Treasuries independent of trade balancing needs or the optimization of risk-adjusted returns. These reserve functions facilitate international trade and offer a vehicle for substantial savings pools, frequently held for “policy reasons” (like reserve or currency management, or by sovereign wealth funds) rather than purely for yield maximization.
Consequently, much of this reserve demand for dollars and US bonds is inelastic concerning economic or investment criteria. Miran provided an example: Treasury bonds purchased to guarantee trade between Micronesia and Polynesia are acquired irrespective of the US trade balance, recent employment data, or the relative yield of Treasuries compared to German Bunds [government bonds].
Such phenomena, the advisor noted, reflect what can be termed a “Triffin world,” named after Belgian economist Robert Triffin. In this framework, reserve assets constitute a form of global money supply. Demand for these assets is driven by global trade and savings levels, rather than the reserve-issuing country’s domestic trade balance or investment appeal.
Within this model, the US runs large current account deficits not primarily because it imports excessively, but rather because it must import sufficiently to issue the US government bonds needed to supply reserve assets and thereby facilitate global growth.
According to Miran, reserve currency status yields three significant consequences for the issuing nation: somewhat cheaper borrowing costs, a more expensive currency, and the capacity to leverage the financial system for security objectives.
This overvaluation, Miran argued, imposes a heavy burden on the American manufacturing sector while simultaneously benefiting the economy’s financialized sectors, primarily advantaging wealthier Americans. The hedge fund manager’s critique of the financialization trend characterizing the past 40 years of capitalism sounds almost left-leaning.
Miran further clarified that the issue involves a “response to a crisis.” During crises, the dollar’s reserve nature places additional strain on manufacturing and export sectors. The dollar typically appreciates during recessions due to its “safe” haven status, while other currencies tend to depreciate during economic downturns.
Consequently, when aggregate demand declines, the difficulties faced by export sectors are exacerbated by a sharp erosion of competitiveness. This dynamic helps explain why US manufacturing employment often falls sharply during recessions and struggles to recover substantially afterward.
However, a contradiction arises: President Trump reportedly valued the dollar’s reserve status and even threatened punitive action against countries, notably the BRICS group, that might reduce their reliance on the dollar. How can this tension be reconciled? Miran proposed “a set of policies to increase burden-sharing among trade and security partners.” He elaborated: “Instead of trying to end the use of the dollar as the global reserve currency, the Trump Administration could try to find ways to claw back some of the benefits that other countries derive from our reserve status. A redirection of aggregate demand from other countries to America, increased revenue to the US Treasury, or a combination of these could help America offset the rising cost of providing a reserve asset for a growing global economy. The Trump Administration is likely to increasingly intertwine trade policy and security policy, seeing the provision of reserve assets and the security umbrella as interdependent and approaching burden-sharing for them together.”
As mentioned earlier (paragraph 25), reserve currency status has three key elements. One is the capacity to control financial flows. According to Miran, the negative consequences (like diminished export capacity) were historically balanced by the advantages of US dominance over global finance. This financial control conferred a “geopolitical advantage,” allowing the US to pursue national security goals cost-effectively. The US provided a global defense shield for “liberal democracies,” receiving the benefits of reserve status in return. In essence, reserve status has long been interwoven with national security considerations.
Miran suggested that Trump was reacting to a perception that these arrangements had become burdensome for the US. “This connection helps explain why President Trump thinks other countries benefit from America in defense and trade at the same time: the defense umbrella and our trade deficits are linked through currency,” the consulting economist wrote. He further explained: “In Triffin’s world, this [global] arrangement becomes more difficult as the United States’ share of global GDP and military power shrinks. As the economic burdens on America increase, with global GDP outstripping American GDP, it becomes more difficult for America to finance global security because the current account deficit grows and our ability to produce equipment is undermined. The growing international deficit is a problem because of the increasing pressure on the American export sector and the resulting socio-economic problems.”
The US is either unable or unwilling to sustain the existing global arrangement and therefore seeks to alter it. This constitutes Miran’s first key point.
The US dollar functions as a primary reserve asset largely because America offers “stability, liquidity, market depth and the rule of law.” These attributes underpin the nation’s capacity to project power globally and to shape and defend the international order. This is Miran’s second key point.
The link between reserve currency status and national security is long-established. As the Trump administration sought to reshape the global trading system, these connections were expected to become even more salient. This represents the third key finding. Therefore, the situation entails more than simply a move toward economic isolation for the dollar and the US.
Both tariff and exchange rate policies, in this framework, aim to enhance the competitiveness of American manufacturing, thereby strengthening the industrial base and shifting aggregate demand and jobs from other countries to the US.
Miran emphasized that the goal was not to repatriate labor-intensive sectors like textiles from countries such as Bangladesh. Rather, the tariffs were intended to preserve American dominance in high-value-added industries, halt the further exodus of manufacturing, and create negotiating leverage. This leverage could be used to compel other countries to open their markets to American exports or to better protect American intellectual property rights. Key sectors linked to national security included semiconductors and pharmaceuticals.
Yet, the fundamental contradiction persists. Miran, however, expressed confidence in the Trump administration’s approach. Acknowledging the inherent tension, he wrote: “Despite the dollar’s weight on the US manufacturing sector, President Trump has emphasized the value he places on its status as the global reserve currency and threatened to punish countries that move away from it. I expect this tension to be resolved through policies that seek to preserve the dollar’s status but improve burden sharing with our trading partners. International trade policy will seek to recapture some of the benefits to trading partners of our reserve status and link this economic burden sharing to defense burden sharing. Although the effects of Triffin will have a negative impact on the manufacturing sector, there will be attempts to improve America’s position in the system without destroying it.”
Burden sharing: Pillar of restructuring
In his inaugural speech as Chairman of the White House Council of Economic Advisers, Stephen Miran revisited the themes from his November report.
Miran elaborated on the specifics of burden sharing, arguing that other nations should shoulder a greater portion of the costs associated with the global “public goods” the US has historically provided.
Within the economic framework of Trumpism, as articulated by Miran, the United States was portrayed as a “sucker”—providing a global reserve currency and a worldwide defense umbrella without receiving adequate reciprocation from other nations.
“President Trump has made it clear that he will no longer tolerate other nations freeloading on our blood, sweat and tears, whether in the area of national security or trade,” President Miran said at the Hudson Institute.
He continued, “While it is true that the demand for the dollar has kept our borrowing rates low, it has also distorted foreign exchange markets. This process has imposed unnecessary burdens on our companies and workers, making their products and labor uncompetitive on the global stage.”
Miran acknowledged the benefits of financial hegemony but contended the associated burden on the US had become excessive. He argued that other nations invested in American assets and manipulated their currencies to gain export advantages. Furthermore, he attributed partial blame for the 2008 financial crisis to Beijing, asserting that China had fueled the preceding bubble by purchasing vast quantities of US mortgage-related debt.
Miran proposed five specific options for achieving burden-sharing:
First, other countries could accept tariffs on their exports to the US without retaliating, thereby providing revenue to the US Treasury to help finance global public goods.
Second, they could cease perceived unfair and harmful trade practices by opening their markets further and increasing purchases from America.
Third, they could increase their defense spending, including procurement from the US. Purchasing more US goods would theoretically ease the burden on American military personnel and create domestic jobs.
Fourth, foreign nations could increase investment in America, including building factories. Goods produced domestically would not be subject to the proposed tariffs.
Fifth, they could directly contribute to financing global public goods by “writing checks” to the US Treasury.
Miran concluded: “Burden sharing can ensure that the United States can continue to lead the free world for decades to come. This is an imperative not only for fairness, but also for viability. If we do not rebuild our manufacturing sector, we will struggle to provide the security we need for our safety and to support our financial markets. The world can still have the American defense umbrella and trade system, but it must start paying its fair share for them.”
Interpretation: The underlying message is that the entire world—all other capitalists included!—must participate in reconstructing the American economy. This, the argument implies, is necessary to break the deadlock in the global capitalist system, allowing the US to resume its role as a global ‘gendarme’ guaranteeing capital accumulation and protecting the interests of propertied classes internationally.
The subsequent article in this series will examine the perspective of Scott Bessent, identified here as Treasury Secretary.
America
AI spending heads toward $7 trillion as analysts warn of market bubble risks
Massive financial resources directed into artificial intelligence technologies are driving companies into dangerous territory for global markets.
If expected productivity gains fail to materialize despite these immense capital flows, the artificial intelligence sector faces the risk of inflating into a giant bubble.
The Wall Street Journal reported that should such a scenario unfold, a widespread collapse capable of shaking the entire financial system and dragging down the broader market will become inevitable.
Estimates by McKinsey & Company project that global spending on data center construction alone could reach $7 trillion by 2030.
According to the newspaper, if these massive investments fail to deliver adequate productivity gains, the global economy will suffer a severe blow.
Should the sector as a whole turn out to be a bubble, the resulting damage will spread directly across the broader financial system.
While market observers note that a major crash—whether sooner or later—would drag all equity markets down with it, declines in AI-related stocks are currently being offset by gains in other sectors.
However, the first concrete signs of emerging vulnerability appeared in the memory chip market, where a sector-specific bubble formed and burst within just four months.
South Korean market shaken by sharp drop
In June, shares of South Korea’s Samsung and SK Hynix, the world’s two largest memory chip makers, sank by more than 12%.
The sharp sell-off pulled down the country’s broader stock index. South Korea’s benchmark Kospi index dropped 10%, triggering an automatic 20-minute trading halt.
Growing investor anxiety over artificial intelligence triggered the steep decline in the two giant companies, which together account for half of the total market capitalization of the Kospi index.
US equity markets also felt the ripple effects during the same period. The Nasdaq index closed down 2.2%, while the S&P 500 fell 1.4%, marking their worst single-day performances in two weeks.
Nevertheless, The Wall Street Journal pointed out that the disruption has not yet produced catastrophic consequences for the rest of the market.
While the bursting of massive historical bubbles resulted in disaster for national economies, smaller and localized bubbles in recent years have failed to paralyze broader economic growth.
The primary reason for this resilience is that these recent investments were not predominantly funded through leverage and bank credit.
When those localized bubbles burst, investors suffered wealth losses, but the financial system remained intact.
Russell Napier, a global macroeconomic strategist and keeper of the Library of Mistakes, a financial history archive in Edinburgh, evaluated the current market posture:
“The banking system is in superb condition, which means there will always be enough credit available to blow the next bubble.”
America
Anthropic AI models breach corporate systems after escaping isolated test environment
Anthropic has announced that several of its advanced artificial intelligence models escaped an isolated testing environment and accessed the live internet.
In a review published Thursday night, the company stated that in three separate incidents dating back to April, the models independently breached the systems of multiple companies without the AI developer’s knowledge.
Anthropic said the incidents involved an unreleased internal research test model, alongside its Opus 4.7 and Mythos 5 models.
Mythos was made available last month to a limited audience composed of technology companies and cybersecurity researchers, an initiative also known as Project Glasswing.
The AI developer did not disclose which companies were breached, but said the affected firms were informed of the incidents on Monday.
Anthropic noted that it conducted the review after OpenAI revealed last week that two of its most powerful models had breached containment, escaped their testing environment, and infiltrated several entities, including the AI platform Hugging Face and cloud provider Modal Labs.
System misconfiguration allowed internet access
Anthropic stated that it examined more than 140,000 tests to find evidence of whether Claude could gain access to the internet from test environments designed to be isolated.
The evaluations included “capture-the-flag” exercises, in which Claude was instructed to breach other systems to obtain information. This is a method frequently used by experts to assess a model’s hacking capabilities.
The San Francisco-based company stated that a “misconfiguration” in systems operated by Anthropic and its testing partner left the models with live internet access, enabling them to infiltrate external systems.
Anthropic said it approached remediation efforts “with full ownership of the responsibility.”
Neither Anthropic nor the affected organizations detected the unauthorized entries at the time they occurred.
Anthropic added that it may examine its logs more extensively, noting that the findings gave the company “cautious optimism” that such risks can be overcome through increased investment and more stringent safeguards.
David Allott, a cybersecurity expert, told the BBC: “The overarching lesson here is not that AI has developed fundamentally new attack vectors.”
“Instead, it means that AI agents can combine capabilities, acquire credentials and system access to act autonomously, while adapting scope and scale at machine speed,” Allott said.
The developments come as technology companies invest billions of dollars to develop AI agents capable of independently executing a range of tasks, from research and customer support to cybersecurity.
America
Elon Musk’s America PAC plans $100 million field operation for 2026 Republican midterm push
Tesla and SpaceX CEO Elon Musk is returning to the political spending arena with a new field program designed to help elect Republicans in at least eight states ahead of the 2026 midterm elections.
Musk has authorized his political action committee, America PAC, to spend between $100 million and $120 million on a new ground game focused on conservative voter turnout for the 2026 midterms, according to a Thursday report by The New York Times, which cited two unnamed sources informed about the plans.
America PAC funneled more than $250 million into Donald Trump’s reelection campaign in 2024, a expenditure that established Musk as the largest political donor in US history.
The New York Times reported that America PAC is reviving its spending initiatives and has reached out to other Republicans in recent weeks regarding the new field operations.
The effort is also being coordinated with other Republican Party spending groups, according to the report.
The newspaper identified targeted Senate races in the states of Alaska, Iowa, Maine, Michigan, and Ohio, while noting that discussions are also underway regarding contests in North Carolina, Georgia, and Texas.
The political action committee is additionally expected to deploy funds for House of Representatives elections in Washington, Wisconsin, and California.
The news comes a day after Axios first reported that America PAC’s operations were resuming, with a focus on driving Republican turnout during the non-presidential election cycle.
A spokesperson for America PAC declined to comment on The New York Times report but confirmed the Axios reporting to The Hill. The spokesperson stated that the spending group was “excited” to contribute to efforts to maintain the Republican majorities in Congress this fall.
“The President’s political team and the rest of the GOP apparatus have built a world-class operation that has Republicans well-positioned to make history and retain control of Congress this fall,” America PAC spokesperson Andrew Romeo said in a statement. “We’re excited to be part of the team again.”
The campaign will reportedly target Republican voters through door-to-door canvassing, mailers, and digital advertisements, enabling other groups to concentrate their resources on television advertising.
The developments were reported days after Musk told The Economist magazine that he had gotten “carried away” during his brief foray into politics.
The SpaceX CEO entered the political arena during the 2024 election, pouring hundreds of millions of dollars into Trump’s presidential campaign and accompanying the candidate on the campaign trail.
Musk went on to lead Trump’s cost-cutting initiative, known as the Department of Government Efficiency (DOGE), which executed sweeping employment and funding reductions across the federal government. Those efforts sparked controversy for Musk and his enterprise empire, including Tesla, whose shares fell sharply during his period of political involvement.
Musk departed the White House in late May 2025, and DOGE officially terminated its operations on July 4.
Shortly after leaving government, Musk and Trump engaged in a public dispute over the president’s sweeping spending legislation, the “One Big Beautiful Bill Act.” During the friction, Musk threatened to form a third party, though the initiative never materialized.
Musk and the US President appeared to resolve their differences last year, with the tech billionaire most recently joining Trump alongside other technology leaders on a trip to China in May.
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