The Mar-a-Lago plan: behind-the-scenes financial manoeuvring

• Jean-Christophe Rochat
  CIO
  Banque Heritage

The new Trump administration has been firmly in control since its inauguration at the end of January. While observers and markets were expecting changes, they remained sceptical about how and when they would be implemented. We now have a clearer picture. The central theme, led by techno-entrepreneurs, is a profound rebalancing of the economy, with a pullback from the public sector and a resurgence of the private sector. “Rome wasn’t built in a day”, they say. In the face of emerging doubts, patience will be key.

The immediate focus is on geopolitics, tariffs and the dismantling of the state apparatus – three areas that crystallise the tensions likely to affect the economic climate. Pro-business reforms, such as deregulation, tax cuts and potentially lower tariffs, will come later.

The deterioration of the business climate signals a slowdown for 2025. However, a rebound in activity is expected to accelerate in 2026, ahead of the midterm elections.

Clear historical lessons

Niall Ferguson, an Anglo-American historian renowned for his work on international economic history, warns: “Debt has always been the ruin of the great powers. Are the United States next?”

From the Spain of the Habsburgs to Donald Trump’s America, via the Dutch Republic, France under the Ancien Régime, Hanoverian Britain, the Ottoman Empire, Austria-Hungary and Tsarist Russia, right up to the United Kingdom since 1919, no great power has survived when the servicing of its public debt has lastingly exceeded spending on national defence. Initially, however, the leaders tried unprecedented economic measures to rectify the situation.

According to the Congressional Budget Office (CBO), the US net interest burden is expected to exceed 4% of GDP as early as 2025, while the ratio of military spending to GDP will also be around 4%. The last time the US experienced a similar situation was in the 1960s, a period marked by the accumulation of World War II debt, high interest rates and other economic challenges.

However, there is no immediate pressure or short-term deadline. Especially as the United States has repeatedly demonstrated its expertise in financial engineering. Examples include the TARP and Covid plans, the mobilisation of the Federal Reserve’s balance sheet (quantitative easing), and the rescue of regional banks. However, the current administration seems less frightened by the prospect of atypical economic manoeuvres than its predecessors. Is it not already officially warning the countries of the Global South against a possible decline in the dollar as the dominant reserve and transaction currency?

No smoke without fire

In recent weeks, rumors have intensified around the implementation of a major plan known as the ‘Mar-a-Lago plan’. This would involve a significant monetary realignment, including a restructuring of sovereign debt, accompanied by the creation of a sovereign wealth fund fed by seized bitcoins and revalued gold from Fort Knox. Several versions of this plan are currently under consideration. In short, it would aim to encourage massive and productive investment in the United States. This encouragement would be accompanied by the possibility of exchanging Treasury bonds held by foreign central banks for new perpetual debt that does not generate interest income. A form of disguised restructuring… In exchange, generous participants would benefit from exemption from customs duties and/or US military protection.

The main aim of these manoeuvres would be to lower the value of the dollar and reduce the overall public debt level. Some experts see the recent rise in gold prices, announcements of colossal investments in semiconductor technology (TSCM), and decrees related to crypto currencies, as signs of this project. Whether these speculations will materialize remains to be seen.One of Donald Trump’s defining characteristics is his ability to disrupt the post-World War II global order and challenge the principles of the rule of law. Prudence therefore suggests that we should not underestimate his ability to go even further in his economic and geopolitical manoeuvres. The confirmation of the Mar-a-Lago project could have far-reaching consequences for all currencies, markets and commodities. Against this backdrop, and more than ever, we recommend broadly diversifying asset portfolios, being agile in managing allocations and maintaining a significant proportion of decorrelated assets, particularly to protect against market risks.