Someone once ranked the major events that took place in the global financial world in the 1980s. Among them, the Plaza Accord signed by the finance and foreign ministers of the United States, Japan, Federal Germany, France and the United Kingdom at the Plaza Hotel in New York on September 22, 1985 is recognized as the event with the greatest impact on the global financial economy in the 1980s.
From the perspective of the time, the signing of the Plaza Accord did prevent the US economy from overheating and the dollar from being too strong, and temporarily restored the world's economy to a reasonable state. However, if we analyze the issuance of this agreement from the perspective of later generations, we will find that it actually had many drawbacks.
At that time, due to the Reagan administration's economic stimulus policy, a large amount of international hot money poured into the United States, making the dollar continue to be strong, causing the U.S. trade deficit to continue to expand, and the fiscal deficit to increase every day, which eventually made Japan the world's largest creditor country.
The Japanese were probably the craziest people in the world in the 1980s. The fast-growing economy and the yen, which had always remained at a low level, made the Japanese wealthy. They waved checks and bought the Rockefeller Center, the Empire State Building, and Columbia. The real estate value of tiny Tokyo was actually more valuable than all the real estate in the United States.
Under such circumstances, how can those vested interests in the United States still sit still?
The tiny country of Japan is nothing more than a dog that our great America keeps on the west coast of the Pacific Ocean. Now that this dog has had enough to eat and drink, how dare it turn around and bite its master, me?
No, this situation is absolutely intolerable!
As a result, many large American manufacturing business owners and congressmen began to get restless and lobbied the US government, strongly demanding that the Reagan administration intervene in the foreign exchange market to devalue the dollar in order to save the increasingly depressed US manufacturing industry. Many economists also joined the team lobbying the government to change its strong dollar stance.
As America's godsons, the Japanese naturally did not dare to confront their godfather when they saw that he was about to get angry. So, the Japanese backed down. Their then Finance Minister Noboru Takeshita even publicly declared on behalf of the Japanese government that the Japanese were willing to cooperate with the depreciation of the US dollar and that they were willing for the yen to appreciate.
Since the godson was willing to cooperate, as the godfather, he had to give him some face. So, under such circumstances, the Plaza Accord was finally released.
It is estimated that the finance ministers of the G5 countries who participated in the formulation of the Plaza Accord had no idea that this agreement, which seemed to be good for all countries at the time, was actually an absolute economic bomb.
The signing of the Plaza Accord caused the dollar to plummet by 20% in just 90 days, and the yen to appreciate by 20%. If people could restrain their greed a little at this time, then the Plaza Accord would have played a positive role. In fact, the yen appreciation ratio agreed by all countries in the Plaza Accord was about 20%...
But the scary thing is that human greed is endless.
The plummeting U.S. dollar and the appreciation of the Japanese yen made some vested interests see the huge benefits it brought. Therefore, under the joint promotion of many vested interests, the Japanese yen continued to appreciate wildly. From 1 U.S. dollar to 250 Japanese yen before the signing of the Plaza Accord in September 1985, in just two years, by September 1987, the exchange rate between the U.S. dollar and the Japanese yen had reached a terrifying 1 U.S. dollar to 120 Japanese yen. The appreciation of the Japanese yen in two years was as high as 111%!
This is really a bit ridiculous. You two are not some unknown small country in Africa. These are the two most important currencies in the world at that time! One is the US dollar, the only settlement currency in the world, and the other is the Japanese yen, the currency of Japan, whose economic output was close to that of the United States at that time. How can the world tolerate your two of you playing like this?
As a result, Japan's economy fell into a decade-long economic stagnation, and later generations even called this decade "Japan's lost decade."
Japan is not feeling well, do you feel good when you are the godfather of the United States? Do you feel good when you are the other countries that follow the United States and fan the flames? They played too hard, and as a result, when the Japanese were in agony and other developed countries were laughing behind their backs, the stock market crash that affected the world on October 19, 1987 immediately gave these countries a blow!
Ultimately, the root cause of all this lies in the endless greed of those vested interests.
It is no exaggeration to say that the Plaza Accord signed in September 1985 and the Louvre Accord signed in February 1987 were tools for a group of vested interests to share the fat of Japan, but they went too far, which resulted in the stock market crash that affected the world and the global economy suffered a severe blow.
Okay, this is all a bit off topic. No matter what consequences the Plaza Accord will ultimately bring, it will be nothing to Yang Jing!
You guys just mess around and I'll just follow behind quietly and secretly drink a few sips of the delicious soup.
Seeing that Yang Jing had been silent for a long time, Cesar coughed and asked, "Boss, how should we operate? Should we hold Japanese yen directly or operate through foreign exchange futures?"
Cesar's words woke Yang Jing from his deep thoughts. He looked at the people around him who were all looking at him, smiled slightly, and then said very calmly: "Since we want to invest, we naturally cannot operate by holding currency. The profit will be too small. We will use foreign exchange futures to operate this investment."
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