Published on Jan 22, 2026 • Updated on Sep 30, 2026
This article was written by Adem Tumerkan
Content Editor, Dunham | 2025 ThinkAdvisor Luminary Award Winner | 2026 Wealthies Finalist — Thought Leader of the Year | Macroeconomics, markets, geopolitics & global trends
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Over the last 150 years, the global monetary system has gone through several resets.
Sometimes, countries worked together. And sometimes, they didn’t, and chaos came about.
But the cycle is the same. Stability → Instability → Collapse → Reset.
Gold Standard (1870s–1914) - Countries tied their currencies directly to gold. This meant you could exchange paper money for a fixed amount of gold, keeping currency values stable. But World War I killed this game as countries needed more paper money than they had gold to back it.
Gold Exchange Standard (1920s–1930s) - After the war, countries tried a somewhat new approach. Instead of holding gold outright, they also held “reserves” in currencies that were backed by gold - like the U.S. dollar or British pound. But economic chaos (aka the Great Depression) ended this system too.
Bretton Woods System (1944–1971) – After WWII, 44 nations created a new system. Picture an upside-down pyramid: gold at the base, the dollar (pegged to gold at $35/oz) in the middle, and other currencies fixed to the dollar on top. It birthed the IMF and World Bank - but was undone in 1971 when the U.S. dropped the gold peg. Too many dollars, not enough gold.
Floating Exchange Rates (1970s–Present) - Since the “Jamaica Accord”, currencies have floated freely against one another based on supply and demand. That’s the system we still use today.
The U.S. runs a massive . Meanwhile, nations like China, Germany, and Japan run chronic surpluses. Think of it as the U.S. government taking money it earns from things like taxes, natural resources, or investments, and instead of spending it all, it puts some aside into a big fund. That fund would then invest the money – such as stocks, real estate, companies, even other countries’ debt.Other countries already do this – like Norway (sitting on $1.5 trillion), Saudi Arabia, China, Singapore, etc.There’ve been other major milestones – like the Plaza Accord (more below) and the birth of the Euro. But through all of it, the U.S. dollar has stayed on top.
But there’s a deeper principle at play - something borrowed from physics.
Entropy.
Entropy is the idea that systems naturally move from order to disorder unless energy is put in to maintain them.
Ice melts. Leftovers spoil. Cars rust. Global monetary systems are no different. History shows this clearly - nothing great lasts forever.
So, is another monetary shakeup just around the corner?
It might be. And it's worth keeping top of mind because resets like these tend to ripple across global economies and financial markets.
President Trump ran on rebuilding U.S. manufacturing. It was a big reason he won the Sun Belt states.
But the reality is, you can’t just tariff your way to a trade surplus (as outlined in "Trump's Tariff Policy Explained: Winners, Losers & Its Global Impact").
Why? Because the current global monetary system won’t allow it. . .
I recommend reading our older articles dissecting all this, but to give you some context, there are two main reasons:
For the U.S. to export more, the rest of the world needs to import (consume) more. That means they’d have to run deficits. But they don’t want to..
Just look at the numbers:
Put simply, we buy in the hundreds of billions what they don’t consume.
Thus, for a U.S. manufacturing resurgence to work, this would have to completely flip. The U.S. would consume less. The rest of the world would consume more. But tariffs can't control that second part.
Furthermore, the U.S. can’t try to export more while everyone else is also exporting (not everyone can run a surplus at once). Thus, it would be like pushing on a string.
The U.S. dollar is kept artificially stronger than it should be, making imports cheaper and exports more expensive.
Let’s say a bike made in China costs 1,000 yuan.
This makes importing Chinese bikes more attractive as they cost 50% less now.
The problem? Well, it completely prices out U.S. bike makers and exporters – potentially sinking profits, spurring layoffs, and an angry community that depended on the bike business.
This matters because foreign nations have done this over the last few decades - intentionally weakening their currencies to boost exports. This has pushed the dollar up, making U.S. goods expensive abroad.
To put this into perspective, the U.S. broad dollar index has risen steadily - even as the U.S. runs massive twin deficits, which should theoretically weaken the currency.
It’s important to remember that currencies are a relative game. Thus, for one to be strong, another has to be weak. To buy a USD, you have to sell a peso, euro, yuan, etc.
The point is, as long as foreigners continue to deliberately bid up the dollar, the U.S. will struggle to export more, and imports will be cheaper (it also creates a global dollar shortage that puts emerging markets and dollar-denominated borrowers under real pressure).
Note that the U.S. dollar’s strength and status as the world’s reserve currency is a double-edged sword. It keeps borrowing and imports cheap but crushes exports and hollows out American factories (more on this in Triffin's Dilemma: Why the U.S. Dollar's Global Role Is a Double-Edged Sword.)
Thus, without addressing these two things, tariffs would most likely not fix the underlying problem.
And that’s why there’s chatter about a new global monetary system reset.
Just like previous monetary resets, America would require a full global effort to rebalance the economy.
Hence, the Mar-a-Lago Accord – named after Trump’s Florida residence – may just be it.
Here’s the basic idea:
How would this work?
It seems like tariffs and a U.S. sovereign wealth fund – which are both being discussed - would be the tools of choice.
Meanwhile, the wealth fund would buy foreign currencies to push the dollar down relative, boosting U.S. export competitiveness.
Sure, it could.
But there’s a catch. The plan is riddled with conflicting issues.
For them to accept this, they’d have to completely restructure their economies from export-driven to consumption-driven, which is not easy.
Need proof?
Look at how Japan tried and imploded spectacularly. . .
After World War II, Japan became a manufacturing powerhouse. Following the Gerschenkron growth model - prioritizing exports over domestic consumption - Japan ran persistent current account surpluses. By 1984, exports made up 15% of GDP.
Then came the Plaza Accord4 in 1985. Reagan's administration pushed for a deal to weaken the dollar against the yen and German mark to address trade imbalances. A stronger yen would make U.S. goods more competitive in Japan.
The result: between 1985 and 1990, the yen appreciated from 251.8 to 135.75 per dollar - a 45%-plus move. Japan's exports dropped from 15% to 9% of GDP by 1989. Household debt surged from 53% to 70% of GDP as import prices fell and domestic consumption rose.
Because of this, Japan’s exports took a steep hit - dropping to just 9% of GDP by 1989 from 15% just five years earlier.
Meanwhile, household debt surged from 53% to 70% of GDP as import prices fell and domestic consumption rose.
These two items helped trigger Japan’s infamous economic spiral in 1991, which it has struggled with ever since.
But here’s where things get interesting. . .
After the Plaza Accord, the Japanese Prime Minister in 1986 essentially formed a ‘brain trust’ to try and change Japan’s economy from export-driven to demand-driven to match the stronger yen policy.
This birthed the Maekawa Report5 - led by former Bank of Japan head Haruo Maekawa – which proposed bold reforms, such as:
It was Japan’s shot at economic rebalancing - but powerful political and industrial opposition shut it down. They didn’t want to lose the perks of the export and infrastructure-driven subsidies. It also would have required a sharp slowdown period over years.
Now, decades later, Japan still faces weak consumption, sluggish growth, and chronic trade surpluses.
Japan and Europe are big reminders of how difficult it is to rebalance the global monetary system – and that a single country alone can’t force it.
Please keep in mind that this isn’t about right or wrong, good or bad.
It’s just about what may be coming.
The idea behind a Mar-a-Lago Accord taps into real pain points: U.S. deindustrialization, soaring deficits, and the burden of an overly strong dollar.
But history shows monetary resets only work with broad global cooperation.
In the 1980s, Japan and West Germany were deeply reliant on U.S. military and economic support. That gave Washington leverage to push through the Plaza Accord. China today is a different story. Facing its own economic headwinds and building its own sphere of influence, Beijing has far less incentive to cooperate on America's terms.
Will the global monetary system change? It will - one day.
But the real question is: who benefits most when it does?
Time will tell. But things are getting interesting.
What is a global currency reset? A global currency reset happens when the dollar-based system gets too out of balance to keep going—things like trade deficits, a too-strong dollar, and rising debt push countries to renegotiate. History shows this doesn't happen overnight. It's slow, political, and rarely clean, following a cycle of stability, instability, collapse, and reset.
What is the Mar-a-Lago Accord? The Mar-a-Lago Accord is a rumored plan where the U.S. offers security guarantees and access to its consumer market in exchange for other countries helping weaken the dollar and buy long-term U.S. debt, like century bonds. The idea would use tariffs and a sovereign wealth fund to push trade partners toward buying more from America.
Why did the Plaza Accord work when a modern reset might not? The Plaza Accord succeeded because Japan and West Germany depended heavily on U.S. military and economic support, giving Washington real leverage. Today's China has far less incentive to cooperate on America's terms since it's less reliant on the U.S. and building its own influence. That makes a modern reset much harder to pull off.
Why is the U.S. dollar staying so strong despite huge trade deficits? The dollar stays artificially strong partly because other countries deliberately weaken their own currencies to boost exports, a pattern sometimes called a currency war. This makes U.S. imports cheaper and exports pricier, hurting American manufacturers even while the U.S. runs large trade deficits that would normally push the dollar down.
Can tariffs alone fix the U.S. trade imbalance? No. Tariffs can pressure trade partners but can't force the rest of the world to consume more or make the dollar less attractive to foreign buyers. Since currency strength is relative, fixing the imbalance also requires other countries to move from export-driven to consumption-driven economies, something Japan and Germany never fully did after the Plaza Accord.
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