The Case for a New Plaza Accord

By Elliott J. Schuchardt

For decades, American policymakers and economists have treated a strong U.S. dollar as an unassailable metric of national economic health. The prevailing orthodoxy asserts that a powerful currency reflects a robust economy, suppresses domestic inflation, and cements the United States at the center of global finance. However, this perspective overlooks a structural distortion that has slowly hollowed out our industrial core. The U.S. dollar is profoundly overvalued, and this artificial appreciation acts as a permanent tax on domestic manufacturing, exports, and long-term economic stability. To restore competitiveness, revitalize local production, and correct massive global trade imbalances, the United States must actively pursue a strategy to devalue its currency.

The fundamental driver of this overvaluation is not the strength of our domestic economy, but rather the structural plumbing of international trade—most notably, the global energy market. Under the decades-old petrodollar framework, oil is priced and transacted almost exclusively in U.S. dollars. Because every industrialized nation requires oil to function, central banks worldwide are forced to maintain immense dollar reserves simply to buy fuel. Global oil production and consumption hover around 100 million barrels per day. At an average price of $75 to $80 per barrel, this single commodity market generates a baseline demand of roughly $7.5 billion to $8 billion per day that must be settled in U.S. dollars. This massive, mandatory daily liquidity requirement artificially inflates the value of the greenback, decoupling its exchange rate from the underlying competitive realities of the American economy.

While this "exorbitant privilege" allows the United States to print money to finance foreign debt and cheap consumer imports, it carries a devastating domestic cost. In my book, America's Achilles Heel: How to Protect Your Family When America Loses the Reserve Currency, I detail how this overvalued currency renders American labor and goods uncompetitive on the global stage. I argue that by keeping the dollar artificially high, the international monetary system has effectively penalized our local factories and incentivized corporations to outsource their production to nations with weaker currencies. The result is a depleted industrial base, vulnerable supply chains, and a massive structural trade deficit that worsens every year.

Furthermore, as I warn in America's Achilles Heel, relying on the petrodollar to sustain an overvalued currency creates a critical vulnerability for our nation. As geopolitical dynamics shift and the BRICS nations—Brazil, Russia, India, China, and South Africa—increasingly seek to settle energy contracts in alternative currencies, the structural demand keeping the dollar aloft faces unprecedented risks. If the world's oil markets pivot away from the greenback, the abrupt drop in demand could trigger an unmanaged, chaotic collapse of the dollar, sparking severe domestic inflation and supply chain shocks. Rather than waiting for a geopolitical crisis to force a chaotic adjustment, the United States should take proactive steps to manage its currency downward through a structured, intentional devaluation.

We have faced this exact dilemma before and successfully resolved it through international diplomacy. In 1985, a surging U.S. dollar had pushed the American trade deficit to record highs, crippling domestic manufacturers and triggering intense protectionist sentiment. In response, finance ministers from the world's leading economies—the United States, Japan, West Germany, France, and the United Kingdom—met at the Plaza Hotel in New York City. The resulting agreement, known as the Plaza Accord, established a coordinated framework for central banks to intervene in foreign exchange markets to deliberately depreciate the U.S. dollar against the Japanese yen and the German Deutsche Mark.

The Plaza Accord demonstrated that currency devaluation does not have to be a sign of national weakness or economic ruin; instead, it can be a highly effective, calibrated tool for economic rebalancing. Within two years of the agreement, the dollar depreciated by over 40% against the yen and the mark, significantly lowering the cost of American exports, reducing the trade deficit, and providing immediate relief to our domestic industries.

Today, our economy urgently requires a new Plaza Accord or a similar multilateral mechanism to bring the dollar down to a realistic, competitive level. A modern agreement would require coordinated interventions from the Federal Reserve and major foreign central banks to ease the dollar's exchange rate in an orderly manner. Alternatively, the United States could implement internal policy mechanisms, such as capital flow management tools or market access charges on foreign capital, to curb speculative inflows and suppress the artificial demand generated by the petrodollar system.

The benefits of a managed devaluation extend far beyond balancing the ledger of international trade - it is a prerequisite for rebuilding national wealth. When a currency is artificially strong, it rewards consumption over production, turning a nation into a society of debtors dependent on foreign manufacturing. Conversely, a weaker, accurately valued dollar acts as a powerful catalyst for capital investment in domestic infrastructure and technology. It changes the economic calculus for multi-national corporations, making it more profitable to build automated, high-efficiency factories within American borders rather than expanding overseas. Reestablishing our manufacturing dominance is not merely an economic goal; it is a matter of national security and social cohesion, providing high-wage, stable employment for millions of citizens who have been left behind by globalization.

Ultimately, maintaining an overvalued currency is a short-sighted strategy that prioritizes cheap foreign consumer goods over the long-term structural health of the nation. As I emphasize throughout my writing, a nation cannot remain resilient if it lacks the capacity to manufacture its own essential goods. By orchestrating a controlled devaluation of the dollar, we can level the playing field for domestic factories, spur job creation in the manufacturing sector, and build a more self-reliant and balanced economy. It is time to abandon the illusion that an artificially strong dollar equals a strong America and take the necessary steps to restore currency equilibrium before global markets do it forcefully.

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Elliott J. Schuchardt is the author of America’s Achilles Heel:  How to Protect Your Family When America Loses the Reserve Currency.  In 2026, Schuchardt was a candidate for the Tennessee General Assembly.