"History repeates itself, first as tragedy, second as farce" by Karl Marx
Plaza Accord AKA 廣場協議
From 1980 to 1985, the US dollar had appreciated by about 50% against the Japanese yen, Deutsche Mark, French franc, and British pound, the currencies of the next four biggest economies at the time. This caused considerable difficulties for the American industry, but at first, their lobbying was largely ignored by the government. The financial sector was able to profit from the rising dollar, and a depreciation would have run counter to the Reagan administration's plans for bringing down inflation.
The Plaza Accord was a joint agreement signed on September 22, 1985, at the Plaza Hotel in New York City, between France, West Germany, Japan, the United Kingdom, and the United States, to depreciate the U.S. dollar in relation to the French franc, the German Deutsche Mark, the Japanese yen and the British pound sterling by intervening in currency markets. The U.S. dollar depreciated significantly from the time of the agreement until it was replaced by the Louvre Accord in 1987.
Some commentators believe the Plaza Accord contributed to the Japanese asset price bubble of the late 1980s.
Effects:
Trade deficit: For the first two years after the Accord, the US trade deficit worsened, as rising prices of imports outweighed the decline in import quantity and rise in export quantity in the short run. However, the deficit eventually began to fall, as imports had fallen and exports had risen sufficiently for quantity effects to outweigh the valuation effect.
Successes and failures: The Plaza Accord was successful in reducing the U.S. trade deficit with Western European nations, but largely failed to fulfill its primary objective of alleviating the trade deficit with Japan. This deficit was due to structural conditions that were insensitive to monetary policy, specifically trade conditions. ... The Louvre Accord was signed in 1987 to halt the continuing decline of the U.S. dollar.
The signing of the Plaza Accord was significant in that it reflected Japan's emergence as a real player in managing the international monetary system. However, the rising yen may also have contributed to recessionary pressures for Japan's economy, to which the Japanese government reacted with massive expansionary monetary and fiscal policies. That stimulus, in combination with other policies, led to the Japanese asset price bubble of the late 1980s. Because of this, some commentators blame the Plaza Accord for the bubble, which, when it burst, led into a protracted period of deflation and low growth in Japan known as the Lost Decade, which has effects still heavily felt in modern Japan.
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