Mar-a-Lago Accord
Tectonic shifts
“Nothing magnifies life more than the act of noticing its details, and nothing sanctifies it more” …. Maria Popova
I am reminded of the conversation between the late Byron Wien and George Soros in which Soros expressed:
“The trouble with you, Byron, is that you go to work every day, and you think that because you go to work every day you should do something. I only go to work on the days that make sense to go to work. ... you go to work, and you do something every day and you don’t realize when it’s a special day”
Juxtapose the current policies of the Trump administration, assume away any constraints, and the ex-poste of the heuristic is “inflation”. Scott Bessent’s sentence “We are going to monetize the asset side of the U.S. balance sheet for the American people.” delivered subtlety but with much aplomb, will most probably in hindsight come to define a major shift in the global monetary regime of the world. B.SC (Before Scott Bessent) and A.SC (After Scott Bessent).
The most important person to watch and follow in the Trump administration for any active financial participant is not Elon Musk but Stephen Miran, Trump’s pick to head the Council of Economic advisors. His article published in November 2024 “A User’s Guide to Restructuring the Global Trading System” provides a clear guiding post of the methodology Scott Bessent is using to steer the US Treasury.
Jim Bianco on Macro Voices (amazing podcast) conjured the following hypothesis as to what Scott Bessent might mean by monetizing the asset side of the US balance sheet. The US Treasury gold certificates currently held at the Fed are valued at the fixed price from 1972 of $42.22/ounce. These would be revalued at today’s market rate of USD 3,000/ounce. It would instantaneously provide over eight hundred billion dollars (800 billion), that the Fed would credit the US Treasury General Account. Carrying this thinking to its logical conclusion, it would be in the inherent interest of the US Government to delay and push the price of Gold up prior to this re-evaluation. Have gold trading at 6,000 USD or 8,000 USD and the new Sovereign Wealth Fund of the US, could be capitalized with 2 or 3 trillion dollars overnight.
Further a portion of existing treasury holdings held by Foreign Governments would be swapped for a Special 100-year, non-tradeable zero-coupon bonds as compensation for the security guarantees America has offered and continues to offer. This should significantly reduce US debt. The skewed terms in favor of the US would bring into question the exorbitant privilege of the dollar and cause its depreciation. However, it would be in the interest of the US to have a weak dollar. As John Connally put it best in 1971 “It is our dollar but your problem”.
Through my subjective lens I view the current Trump administration as a participant of reality the same way the Italian Mafia is Catholic. The latter takes the relics of Catholicism very seriously, observing mass, benediction, confession, baptism, sacrament but its practical implications and constraints on their behavior are extremely limited. The former takes reality seriously, albeit a kayfabe reality. There, a strange circuit of simulation and willing deception thrives: What is often referred to colloquially as “Reality TV” per excellence.
Executive order ceremonies have become the norm. A Large marker signs on an exceptionally large paper made for TV. There have been so many of these signing ceremonies that the mind seems to grow giddy trying to keep count.
Trump informs us he wants the equivalent of 500 billion (five hundred billion) worth of rare earth minerals from Ukraine. The mainstream media seriously discuss this proposal. Yet we know that the value of ALL the world’s rare-earth minerals production is less than 15 billion a YEAR. The opinion piece today by Javier Blas of Bloomberg “Rare Earths in Ukraine? No, Only Scorched Earth.” explains the absurdity of it all.
By executive order, the Gulf of Mexico is now the Gulf of America, but only when searching from within the United States. Searching from across the globe both names are shown.
Trump and Musk insist that DOGE has already found billions, maybe tens of billions, of waste and fraud. The hard truth is there is not much to write home about. But there is more … while questions are asked, the magical DODGE dividend is teased. With so much apocryphal money saved, every citizen should expect $5,000 us dollars. Who will argue with such a beautiful reality?
In the realm of physics if one’s epistemology is wrong, one’s ontology must be wrong. However, when it comes to the flawed psyche of the human mind, untruths repeated often enough are often soon equated with reality. As active participants, our cognitive function affects the reality we experience, modified by our participating function. Reflexivity. (Eric Weinstein’s 3-part series worth watching)
The concept of Government waste and the DOGE efficiency team has informed the mind of the public to expect massive funds that very soon will be made available for serious investments. Meanwhile in actual reality fortunes can now be made with Government contracts allocated to companies with proximity to Trump’s inner circle. Anything owned by Peter Thiel, Elon Musk, and those in the Trump administration’s orbit is worth speculating on. For a while they will bend reality to the Kayfabe universe and corresponding companies could profit absurdum from government contracts.
Financial traders are deeply superstitious of being portrayed on the cover of a widely circulated magazine: The “curse cover”. It often signals peak performance and an imminent downturn. The inauguration ceremony of Trump 2.0 had all the trappings of the curse cover. Tech billionaires were paraded like influencer models before the world. I wouldn’t help but draw parallels to a magazine cover and wonder how many will be left standing when the bubble busts.
I saw the whole thing, first it started falling over and then it fell over.
But before the bond vigilantes show up to proclaim a new sherif in town, a kayfabe reality will float on a sea of turtles bubbles. Its turtles bubbles all the way down. Suspend logic and float on this magical sea in a world where the axioms of science are suspended: It’s a magical time to be alive and to make an obscene amount of money if you show up ready for a kayfabe world of simulated reality.
“I had never realized that markets were such a theater, and in a theater, you are usually the only audience member who is aware that the actors are just playing roles. Dont make the mistake of showing up with the same stern face. Join the folly, join the madness.”