The Plaza Accord: Reagan's Role, USD Collapse & Japan's Fall
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- čas přidán 5. 06. 2024
- As fears of a US dollar collapse loom large due to current manipulations and strained international relationships, understanding the Plaza Accord has never been more critical:
In 1985, the G5, with the US as the instigator, coordinated a declaration to lower the value of the US dollar. But the consequences of this coordinated effort were dire...
This video takes a controversial stance on many historical events connected to the Plaza Accord, and I welcome any constructive feedback and debate.
So buckle up and get ready for a bumpy ride!
For the full article, with all the sources and graphs, click here: www.konichivalue.com/p/the-pl...
00:00 - Intro
01:00 - A Historic Day for the Dollar
04:10 - Behind the Plaza Accord: Reaganomics
08:34 - How Japan Was Forced to Open Its Financial Markets
11:54 - How Did a Weak Dollar Create a Bubble in Japan?
14:36 - Conclusion
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Thank you very much for this. I needed this.
You are saying what must be said, even if it makes some people unhappy. Over many years, the Plaza Accord has been ruinous for Japan. Of course, the Chinese have seen this & won't put up with the same treatment. De-dollarization is on its way & Uncle Sam needs to stop meddling in other nations affairs.
That's why oblige uncle sam to pull out all the US military bases all over the world! If he won't do it, tie him up and lock him forever!
The world is tired and suffering af because of uncle sam!
Y'all muricans must do something about this! Uncle sam created this mayhem in the world. Thus, y'all fix this damn it!
Good please do dedollarization and make USD depreciates once more like what Plaza Accords wanted (it will ruin those countries export to the US but psst stronger Yuan = better, right?)
@@MissionControlTet Dedollarization is for the purposes breaking US hegemony. Whether USD depreciates or not is immaterial. It will just be another country with a currency.
@@dashong8912 You don't understand the macroeconomics enough to understand why when Dollar depreciates, it's benefiting USA.
And also "It will just be another country with a currency.", it won't: There is no viable alternative that markets trust more than USD, Euro is far second. Even if national government around the world is ditching the USD on their reserves, it won't deter their citizens buying USD because of relative stability it offers over other currencies. Sure USD will be less influental than today it is, but it won't dethrone them. Soon national governments will just backtrackked their policy because it only hinders trade between nations.
@@MissionControlTet When did I say anything about Dollar depreciating? What stability has the USD offered? It's been losing value for decades. You hope governments will backtrack. But in actual fact governments are sick of dollar hegemony and its implications. Keep sleeping. The rest of the world is working to break free.
imagine if South America demanded to set the dollar exchange rate because of US farm subsidies. I don't think complaints about another country's protectionism justify one country's demand to be able to manipulate the exchange rate. And no the plaza accord did not demand that the Yen/USD rate be allowed to float by market forces, it was explicit in demanding the devaluation of the dollar and appreciation of the yen.
nah, the CIA would make sure it'll never happen
@@pyrophobia133you’re correct, the CIA is the world’s ticking time bomb
A very underrated channel.
high quality education, overwriting naive and oblivious view of Japan as a youth, raised with Nintendo & Gameboy Pokemon, watching every Godzilla movie and then growing up on Dragon ball Z. As an adult having worked in the commercial mortgage business understanding world economics is so awakening. Fresh Air. Thank you
Been hoping for a video explaining the conditions surrounding the plaza accord and the effects it had on the Japanese economy, fantastic video, thank you
日本語の字幕のおかげでわかりやすいです。経済の英語の勉強にもなります。他のも面白そうです。
It's funny that Japanese still love American after they bomb their country and collapsed their economy 😢
Oh boy here we go.
Like watching these videos.
Can't wait for your channel to grow and you produce a lot of good videos!
I appreciate that!
Gee Reagan and Thatcher sure stuffed things up
inb4 this video absolutely blows up. great work as usual mate, love ya editing
Great content! History tends to repeat itself.
A few minor mistakes in the Reaganomics section:
1. His name is Paul Volcker, not James Volcker
2. The early-80s disinflation has nothing to do with Reagan. Paul Volcker was appointed by Carter (and caused Carter to lose the 1980 election with his first recession).
3. There's plenty of empirical evidence that the Laffer curve is real; search for NBER working papers on the Laffer curve. The marginal revenue of new taxes decreases as taxes get higher.
The issue is instead that the peak of the Laffer curve was much, much higher than conservatives think.
Thank you for the corrections:
1. Will fix it will notations
2. I don't think I claim it was Reagan administration that created the disinflationary environment, just that they agreed to it in the beginning and later switched course when they saw the issue core votes took with it.
3. Thank you, I read "HOW FAR ARE WE FROM THE SLIPPERY SLOPE? THE LAFFER CURVE REVISITED" and yes, as you say, of course there is a tax rate where tax revenues start to go down, but it seems that this level corresponds to the rational level where people just barely earn more for every hour worked, which is basically the same argument as the economic principle of Homo economicus. The paper even states that there seem to be no such level for consumption tax
@@konichivalue Thanks for the response.
@@_human_1946 Thank you for your comment :) I love how civilized and objective the comment section under my videos are
@@konichivaluethank you for the excellent presentation.
Forgive me if you have discussed this on your channel, but in America we had a process to work around and repeal something called the Glass Steagal Act, wereby commercial banks were separated from financial institutions.
Credit created money was somewhat blocked from inflating asset markets by GS.
Beginning in the late 1960's court challenges began to erode the power of Glass Steagal.
The evil of financialization became more profound.
Credit created money left investment in upgrades in American factories and into parasitic financial shenanigans.
The collapse of the Midwest "rust belt" because of leveraged buyouts.
Once a country like Japan becomes too expensive for labor, global money moves on, like they did from America.
This may be one of the reasons why BRICS exist, many countries are eager to leave Dollar dependency right now,
If the criticism is that the US is too aggressive about monetary policy, it's hard to see a world where a majority of the BRICs handle that better. Russia is an especially pathetic case.
@@bouncehouseofficialbrics wants multipolar world idiot no one needs a monopoly
Please do dedollarization, we Americans would like to stop importing your cheap trashy stuffs and buy local
@bouncehouseofficial , hopefully, the BRICS nations learn from the mistakes made by the US and create a better world ahead. The BRICS is made up of a group of 10 countries and is likely to come up with a fairer solution which benefits all rather than a single nation like the US.
@PranicEnergy pretty much they are failing as of rate and the Yuan is so unreliable that they will have to concede to the Rupee if they want a major currency that can be at least "reliable" if they cannot create their own version of the "Euro." The thing is, only Russia is interested because they are the ultimate benefactors of such a currency.
BRICS💩 isn't going anywhere unless they can be an actual competition not just on the economic sense but also on the socio-political front.
A bloc of very corrupt oligarchies with very little economic social mobility is inferior even against the worst periods happening in the "collective West."
I have been interested in this subject for years and it was the work of Professor Werner and his book "Princes of the Yen" that opened my eyes.
Slightly off subject, but will help the understanding is chapter 17 and the Professor's explanation of the Southwest Asian Financial Crisis.
Russell Napier wrote a book on it and describes a kind of benign happenstance, whereas the Professor lays out a sequence of events that ended in a very beneficial result for foreign investors, i.e. the Financial sector.
Thank you for the great video! I learned a lot.
great video.
How did it affect other countries singing Plaza accord like Germany?
It rather but the US back on the top of Economy after the 70s. Right now there is a push for removing the dollar as a currency for energy. While the US had a great 90s, the rest had a bad decade. But the funny thing, the anti-american movement doesnt use the Plaza accord as a reason for their cause, its more about militarism that is the cause.
can't we all agree about one thing ; government spending doesn't lead to the panacea promised
great video. it would have been great to see why a similar thing didn't happen in germany.
There are many reasons, but the biggest one was that only West Germany was involved at the time, whose economy was substantially smaller than Japan's, so its currency was never as interesting for currency traders and governments. The second reason is that because of West Germany's relatively modest size, its export economy was much more focused on specialized- rather than mass- production, which was less affected by currency fluctuations. Thirdly, the West German government continued to have a much more restrictive monetary policy than Japan, even after fears of a recession, which helped the country avoid the massive asset bubble we saw in Japan
@@konichivalueit did effect germany and france, it was one of the reasons why they created the euro
Also germany and france already had their currency overvalued against the dollar so the plaza damaged them little
Not to mention they did not have even a quarter of the trade japan had with america
I want to know more details
Do you know Japan signed plaza accord on world trade center in 1985
I think you are ignoring the moral dimension to taxes. Reagan was hostile to big government and hoped that a reduction in taxes would be matched with a reduction in government spending. Unfortunately, like Trump, he failed to take into account the moral bankruptcy in the system, which ultimately led him to make ridiculous statements like "deficits don't matter".
Reagan was trying to do the right thing - which made him very popular with the electorate - but he didn't know how to achieve it. He thought that the public sector operated by the same rules as the private sector.
Funny that Reagan criticized FDR yet resorted to the same massive military spending that Roosevelt was eventually forced into in 1938!
You can be assured that I didn't vote for him again in 1984, although he did some good things.
Crippling Japan economically, is a loss for all of humanity.
Japan's financial markets never recovered their 1990 levels, even four decades later.
Their population numbers are shrinking. People struggle to afford to have a family. This is a loss for all of us.
Japan population shrinking because Japan is sexism country.
Meh there will be other japans
Meh not for all of us though, just Japan, anyways South Korea will replace Japan's soft power.
@@Nagvanshieus Nan SK is already finished but at least it's rich unlike you know china
@@feliz2892why? Did south Korea's bubbled pop too? Did it even had a bubble to begin with?
(13:29) A similar event happened during the Great Depression.
But fir the USA evolved a bubble before the great depression it was just a normal to oblivion crash?
Paul Volcker
The Champions of Free Trade is actually afraid of Free Trade.
比较客观，说的是大实话
5 countries signed the plaza accord, but why only Japan get the hit?
Only Japan have population and economy to surpass usa
Japan had most flourishing high value export products of all of them and at the time their manufacturing had a very large pie of their gdp. It was really a manufacturing giant.
The long term effect of the Plaza Accord is excessively amplified. Accusation that the Plaza Accord led Japan into the lost decade is factually flawed. Japan inability to maintain its technological lead and its aging and declining population has a far long lasting and deep impact on Japan's economy. The invention of internet, wireless communication, social media, e-commerce, mobile devices, and semiconductors rapidly transform the global economy and consumer behavior. Japan lacks the catalyst to put it back as a superpower in the global arena. Here is one example, Kodak was once very popular but the corporate refused to disrupt itself by promoting digital camera.
The Laffer curve tax cut did increase tax revenues, no idea why this guy has claimed otherwise.
can someone summarize in baby language
Japan currency was lower so it could cheaply export its products and because they were high quality quickly caused a giant surplus over America and the world. America told the Japanese to stop this and appreciated the yen which made Japanese products more expensive which crippled the Japanese economy causing a recession in mid 80s. The Japanese government quickly dropped interest rates to stimulate the economy which in turn caused a bubble that popped in 1993 and japan has never recovered since.
America dropped its candy. Instead of picking it up and cleaning the dirt off, it went and took candy from other kids especially Japan. Japan tried to pull more candy out of its pocket but fell over and never got up. America keeps looking at Japan saying "what a shame, you've lost all these decades."
The Japanese are well aware of this and do not trust the United States wholeheartedly, but China has a different risk than the United States,
Japan's military initiative is controlled by the USA and dependent on the USA.
So Japan does not approach China.
This is Japan's complicated diplomatic situation.
This is the complex reality of modern Japan.
"the US was going to put tariffs on Japanese goods"
GOOD.
Japan could do the exact same back, and no one would bat an eyelid. And if people still want to buy Japanese goods - and pay for price they should for the much greater quality of the product - so be it. It's not like America could compete. Japan, France, and West Germany should have ripped up the pieces of paper in front of the Americans and thus given them a massive middle finger.
The US SERIOUSLY needs to be given its own medicine, and governments around the world must see through the bulls**t and strike back at the very imperial economic coloniser that decides other countries' fiscal policies for them! The US needs to learn that the US is a bigger s**thole than any African or South American country.
The Plaza Accord was the economic equivalent of the atomic bombings during WW2 of Hiroshima and Nagasaki. It it because of this forced policy by the US corporate overlords that Japan experienced its three lost decades, resulting in the near complete collapse of contemporary Japanese civic society, not least of which is its shockingly low birth rate. At least Japan rose back up from the ashes of the atomic bombings. But for a low birth rate, you either force women to start having babies, or the population will become extinct. And don't forget when Japan willingly self-isolated itself during the mid 19th century, only to be forcibly opened up by the US naval commander Commodore Matthew Perry, following Portuguese trading outposts in Nagasaki a few centuries earlier. The only true way to reverse any of these alarming trends, ranging from acute deflationary periods to a very low birth rate, is for Japan to shed the shackles of American imperialism and embrace its cultural ties with its immediate neighbors of Korea, Taiwan, and China, and bring more younger people into positions of leadership, whether corporate, government, or even charitable organizations. America nor any other country could not care less if the last Japanese baby were to be born today, because this is a problem for the Japanese people to solve!
Top 1 Anime betrayal since Italy
can you do a video if the US china trade deal phase one can destroy chinese economy too?
the US was exactly added tariffs to chinese goods while they did this to Japan back to 80s 90s
Cant since china counter manipulates its own currency
China doesn't roll belly up for the states, so that's unlikely.
Stirring up war in the region. Putting more troops and selling more weapons to Taiwan, baiting for the Chinese to attack. The Philipines might be another flashing point since the US got Bong Bong by the balls.
The devaluing of the dollar caused the Yen 💹 to remain high against the dollar causing Japanese 🍙🍡 products to be more expensive..notice how now SONY is not the leader in electronics anymore but they were in the 80's and 99's.
The America trap
1
USA 😂
Do you know Japan signed plaza accord on world trade center in 1985
Why would the US intiate something they wont benefit from...Japan got outsmarted so i guess all is fair.
I think the main lesson is that global intervention is extremely hard and unpredictable. A lot of us like to think that world leaders know how to manipulate and steer the world exactly how they want it, but in reality, they mess up all the time and actively make things worse for everyone...
@@konichivalue yeah, i've had it with JP political leaders. Especially the Head of Cybersecurity who did not know how to use a computer. He is just some of the few who has been found out to be incompetent. A lot are still undiscovered.
They have been acting like the thug of the world, and it is coming to an end, luckily
👏👏👏🔥🔥
Thank you ☺️
japan has been a us colony since they gifted japan the bombs
15:10 It's kind of easy to blame the US as capable of wrecking Japanese economy, but in the reality it's much better for Japan (and Germany, UK, France) to sign Plaza Accords over not, because US was (and still) world's largest consumer market. You don't want your country's export to be banned completely by the US, especially if your economy have been tangled so much to Americans buying your exports.
All countries with trade deficit posseses higher negotiating position than the ones exporting, because they literally hold your economic lifeline especially if the particular country has 300m million people and their currency is a reserve currency trusted by the global market. This is exactly why US imposing tariffs to China is more detrimental to China than the reverse is to the US.
In other words, Plaza Accords must be signed, but then also followed by government of the rest 4 nations to apply more responsible and fully-reviewed policies to mitigate or facilitate transition caused by the devaluation of USD.
The lefner curve has decades of empirical evidence. And he won the Nobel prize for economics.
Laffer was never awarded Nobel prize. Moreover, no country has ever managed to increase total tax revenue after implementing lower total taxes. It has never happened so far in any country. Laffer curve is nothing but a laughing curve, sold as voodoo economic to economically illiterate people.
Lower Taxes = More Taxes 🤪
You can't make this shit up folks
Yep, that's the basic argument for the Laffer Curve
@@konichivalue I heard about it in school, it's funny how it was taught to us as if it was 'true'. They never really deep dived into the idea or plausability but then again they barely deep dive into anything at school. Just listen and regurgitate and get graded for how well you do that. Critical thought? That would take too much time and effort.
As long as people buy it, that is all that matters. Apparently, many did. "I made China pay billions for my tariffs" DJT
Lol, the 'ol reliable "let's blame Reagan and the US".
A dear child has many names
@@konichivalue In the 80's Japan's influence was everywhere in North America. Japan went from selling junk to outperforming American and European products for less money. We wanted Kuwahara not Norco, Honda not Pontiac, Sony not Philips. Japan was a threat and the US had just the amount of weight to topple any economy. It practically controls the price of the natural resources in my country so it's no surprise it having an influence on Japan's economy.
I really am enjoying your work on this channel!
@@stephenmorrissey1254 I don't think the lost decades would've happened without Japan *halving* its interest rate (which the US didn''t demand AFAIK).
If you’re laughing then you don’t need to read others comments. You know the truth already
When USB fails to compete, it will find evil ways to make sure that it wins. This is the habit of the devill
USB is the cause of the lost of Japan Economics for the past 40 years and beyond. 🎉🎉🎉
比较客观，说的是大实话
比较客观，说的是大实话