From: Gene McAloon 

On Fri, 02 Jan 2004 13:39:37 -0800, Randall Parker
 wrote:

>The Plaza Accord did shrink the US trade deficit. So we have a more recent
example
>where it worked.
>
>Nixon: The US shortly thereafter experienced the huge increase in oil prices
and that
>caused inflation and a trade deficit. Plus, the Fed was too loose with the
money supply.

Although Reagan pulled the plug on the dollar, that had little to do with
helping the trade deficit. In essence the Plaza Agreement was about getting
Japan to import more US goods. It did so and that is what lowered the trade
deficit, although obviously cheapening the dollar contributed to that as
well.

Contrary to the usual Republican excuses, it was not the increases in oil prices
that caused massive inflation. That didn't cause massive inflation anywhere else
either. The massive inflation in the US was directly attributable to
Nixon's lowering of the dollar and the increase in import prices that
caused it, combined with US industry's commensurate increases in its
prices. Recall Ford's railing against those latter increases, but getting
nowhere.

You will have to do better than repeat tired old Republican arguments
defending Nixon and Reagan's policies if you are going to have a chance of
contradicting what I have said.

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