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
US national debt hits record $40 trillion as borrowing accelerates
The US national debt has reached a record $40 trillion as borrowing expanded at a historic pace.
The development has heightened investor concern over the state of US public finances, despite Donald Trump’s pledge to bring spending under control.
Gross federal debt crossed the threshold on Tuesday, according to Treasury Department data published on Wednesday.
Calculations by the Financial Times show that debt climbed by $3 trillion over the past year, registering the fastest rate of increase in history outside the pandemic period.
Marc Goldwein, senior policy director at the Committee for a Responsible Federal Budget think tank, said:
“This is like a giant, flashing ‘check engine’ light. It doesn’t mean your engine will melt down tomorrow, but it is a clear sign that things have gotten quite out of hand. And it’s not just the size of the number; it’s the speed at which we’ve reached it.”
The US national debt has surged over the past two decades, climbing from below $6 trillion at the start of the century (about $12 trillion in 2026 dollar terms) as massive public spending during the financial crisis and the Covid-19 pandemic compounded enormous budget deficits.
In the past 10 years alone, the total debt load has doubled. Debt held by the public—a key gauge tracked by markets that excludes intra-governmental holdings—now exceeds $32 trillion, roughly equal to the size of the US economy.
The non-partisan Congressional Budget Office expects debt held by the public to surpass the post-Second World War record of 106% of GDP by the end of the decade and to reach 120% by 2036.
As borrowing increased, investors began demanding a higher premium to hold US bonds.
This has driven interest rates higher, leaving debt servicing costs larger than national defence spending.
The situation has created unease in Washington. On Wednesday, prior to the release of the debt data, the Treasury Department announced it would double its buybacks of long-term government debt in a bid to halt a recent sell-off.
Last week, the US paid its highest borrowing costs since 2001 to sell 30-year bonds.
Wednesday’s 10-year Treasury auction produced the highest yields since 2007 as investors fretted over the scale of the debt.
Ed Yardeni, president of Yardeni Research, said: “That is an awful lot of money being borrowed. It is going to feed on itself with interest expenses. If interest rates rise because of concerns about the high debt load, that will lead to even more interest expense. It’s a vicious cycle.”
Trump returned to office in 2025 promising to rein in “wasteful” government spending.
Treasury Secretary Scott Bessent pledged to reduce the budget deficit to 3% of GDP by the end of Trump’s term.
However, measures to trim spending in some areas were offset by broad tax cuts in the president’s signature 2025 fiscal legislation, the “One Big Beautiful Bill”, which will add more than $4 trillion to the debt by 2034.
Trump also requested an increase of more than 50% in annual defence spending, seeking $1.5 trillion in the largest budget request in US history.
The deficit fell to 5.9% of GDP in 2025 from 6.3% the previous year. The CBO expects the deficit to decline to 5.8% this year. The US national debt comprises years of accumulated deficits compounded by interest charges.
Analysts noted that both US political parties missed opportunities during periods of economic expansion to take significant steps toward curbing spending.
Calculations by the Congressional Joint Economic Committee indicate that over the past year, total national debt grew by roughly $7.9 billion a day, or approximately $91,000 per second.
Budget specialists said they hoped crossing the $40 trillion threshold would spur politicians from both parties to take meaningful steps to bring borrowing back under control.
Michael Peterson, head of the Peterson Foundation, a think tank dedicated to returning debt to a sustainable trajectory, said:
“My hope is that this serves as a national alarm and wake-up call to address our fiscal future. If we keep borrowing this much, we are going to face a day of reckoning in financial markets… People will wake up one day and decide: ‘You know what? I’m more worried about the United States now. I’m going to demand higher interest rates, or I’m going to put my money somewhere else.'”
America
Independent US oil firms set to sign output deals in Venezuela
Several independent US oil producers are expected to sign production contracts with Venezuela’s state-owned oil company in the coming days.
According to sources who spoke to Politico on condition of anonymity because details of the event have not yet been made public, a signing ceremony involving several small US producers and Petróleos de Venezuela (PDVSA) was scheduled to take place in Houston on Tuesday (18 August) evening.
One source said Venezuela’s oil minister and the head of PDVSA’s exploration division were scheduled to attend the ceremony. Another source added that the event could be postponed until Wednesday morning.
The White House, which did not immediately respond to a request for comment, was not expected to be officially involved in Tuesday’s ceremony.
However, the development follows a visit by senior officials to Caracas in late April, where they signed memorandums of understanding that established the framework for formal production agreements in the country, which holds some of the world’s largest oil reserves.
Despite the tailwind provided by high crude prices, negotiations had stalled over key details such as dispute resolution, while officials in Caracas contended with two devastating earthquakes in June that claimed thousands of lives.
Venezuela’s interim president, Delcy Rodríguez, announced new regulations last month that offer more favourable fiscal terms to international oil companies.
According to an industry source close to the negotiations, the signing of the contracts comes after the Trump administration renewed pressure on Rodríguez to ensure PDVSA concludes agreements with American firms.
The source said these efforts included outreach by Secretary of State Marco Rubio to discuss how increased oil revenues could assist the country following the devastating earthquake earlier this summer.
The source added:
“Delcy reached a renewed awareness that increased oil production is the way to rebuild after the earthquakes and to achieve what her government wants to do for the people suffering from the earthquakes.”
David Goldwyn, president of the international energy consultancy Goldwyn Global Strategies, said investments from independent oil producers and boosting output from existing fields would serve as the “primary source of new oil growth for the next few years” for Venezuela.
“While the oil majors are trying to buy time to see how the political situation clarifies and whether they can cherry-pick the best assets, independent companies can de-risk their projects in the short term,” Goldwyn said.
However, Goldwyn noted that these investments would add no more than 300,000 barrels per day to the country’s oil production over the next year, falling far short of the multi-million-barrel increase that officials in Caracas and Washington wish to see.
“Until the framework improves, electricity is restored, and the political picture becomes clear, all we will see is incremental production growth,” the strategist said.
America
US-Brazil rift widens over proposed sanctions and trade tariffs
Diplomatic tensions between the two countries remain at a peak as the US government considers new sanctions targeting a judge on Brazil’s Supreme Court.
According to sources familiar with the matter who spoke to the Financial Times (FT), the Trump administration is evaluating new measures against Justice Alexandre de Moraes, whom it sanctioned last year on human rights grounds before subsequently rescinding that decision.
Washington’s renewed focus on the magistrate threatens to widen the rift between Brazil and the US across trade and political spheres, casting a shadow over upcoming elections in Latin America’s largest nation.
A little over a year ago, De Moraes was subjected to sanctions under the Global Magnitsky Act. US Treasury Secretary Scott Bessent accused him at the time of engaging in a “repressive censorship campaign, arbitrary detentions that violate human rights, and politicized prosecutions,” including measures directed at former Brazilian President Jair Bolsonaro.
Bolsonaro, an ally of Donald Trump, was sentenced last year to 27 years in prison for plotting a coup.
However, sanctions targeting the judge, his wife, and a company owned by his family were lifted in December following a meeting and phone conversations between Trump and his Brazilian counterpart, Luiz Inacio Lula da Silva.
According to a source familiar with the matter who requested anonymity, US interest in De Moraes was revived partly due to a case that ignited a debate over press freedom in Brazil.
The judge authorized police raids against a journalist and two sources as part of an investigation into media coverage concerning a Supreme Court justice and his family.
De Moraes defended the action, arguing that the information in question had been illegally obtained and disclosed, thereby endangering the safety of the justice’s family.
The judge gained global prominence several years ago following a public conflict with Elon Musk, which briefly led to the billionaire’s X platform being blocked in Brazil.
Supporters say he “helped protect Brazilian democracy against a wave of misinformation.”
However, critics, including the Trump administration, view him as violating free speech rights.
“He went after the president’s supporters. Not just Elon Musk, but MAGA supporters in Brazil as well. Even if we want to build good relations with Brazil, it is clear that this man is an adversary,” said a person familiar with the US government’s thinking.
Another person stated that the reimposition of Magnitsky sanctions is “under evaluation,” noting that such sanctions entail the freezing of US-based assets and a prohibition on American companies and individuals conducting business with targeted parties.
While it remains unclear whether or when a decision will be reached, any such move would intensify an escalating retaliatory spiral between the two most populous countries in the Americas.
Tensions initially erupted more than a year ago when Trump imposed a 50% tariff on Brazil while demanding that prosecution proceedings against Bolsonaro be dropped.
That tariff was subsequently invalidated by the US Supreme Court.
A brief period of de-escalation since then has drawn to a close, with the US applying a 25% import tariff on numerous Brazilian products in July.
Last month, Brazil denied entry to two Trump envoys over concerns regarding potential interference in its upcoming October elections. Washington rejects those allegations.
Lula, who is seeking re-election for a fourth presidential term, suggested that the US might act to support his main opponent, Senator Flavio Bolsonaro, the jailed former leader’s son.
The 80-year-old president has also engaged in a sharp public exchange of words with US Secretary of State Marco Rubio.
On Sunday, thousands of supporters gathered to welcome Lula at a stadium in Sao Bernardo do Campo, an industrial suburb of Sao Paulo, for the official launch of his election campaign.
Lula originally achieved prominence in the area during the late 1970s as a union leader heading metalworkers’ strikes.
Speaking at the venue, Lula said, “I thank the working men and women of this country who believed that someone like themselves could achieve more than someone different from them. As long as I am alive, I will not stop fighting, and I will not allow the right [to prevail].”
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