Back in 1978, I was admitted to Northwestern Polytechnical University.

Chapter 547 The Plaza Accord and the Price Barrier

At the intersection of Fifth Avenue and 59th Street in Manhattan, New York, stands a 19-story French Renaissance-style building. It looks like a castle from the outside, but it is actually just a square building with windows and nothing particularly special.

However, this is one of the most famous hotels in New York, and even in the whole United States: the Plaza Hotel.

After it opened in 1907, celebrities from all over the world, including kings, presidents, ambassadors, and movie stars, would choose to stay here! Thus, a new proverb arose: nothing that happens at the Plaza Hotel is unimportant.

Today, the Plaza Hotel once again welcomes a group of important guests, for a momentous event that will shock the world is about to take place!
A stretched Rolls-Royce pulled up in front of the restaurant. Several short men got out of the car, and then...

Wow…

A group of reporters surrounded them.

"Mr. Takeshita, I heard that you came here this time to ask the island nation to help the United States solve its economic problems. Will this drag down the island nation's economy?"

"Of course not! Our island nation's economy has been developing rapidly and will not be dragged down."

"What if the United States asks island nations to resolve their trade deficits?"

"We'll find a way, everyone. My name is Takeshita Noboru, and we'll climb higher and higher!"

With an air of indifference, old man Takeshita Noboru walked inside.

The interior is luxuriously decorated. The lobby after entering is the famous Palm Hall, with palm trees reflected in marble columns, crystal chandeliers reflecting in layers, and gold-inlaid silverware placed on white tablecloths...

Takeshita Noboru glanced at it, and then...

Hmm, this place is nice. We'll buy it someday! We'll stay here when we come to the US on business!

In the conference room.

James Baker greeted Takeshita Noboru with a smile as he entered, saying, "Mr. Takeshita, please have a seat."

Takeshita Noboru sat down opposite James Baker, looking at the others.

The Finance Minister of West Germany, Gerhard Stoddenboir, the Finance Minister of France, Pierre Bergeber, the Finance Minister of the United Kingdom, Nigel Lawson, and the central bank governors they brought were already seated there, their gazes toward him filled with pity.

What do you mean?
"Alright, everyone's here, let's begin the meeting," James Baker said. "Over the years, the island nation's economy has developed rapidly, which we envy. This is a great achievement of our free world!"

There was a burst of applause.

Takeshita Noboru also felt a sense of elation.

The economy of island nations has even surpassed that of the United States!

If we had known that we could defeat the United States economically, why did we even have to fight a war back then!

Little did he know that James Baker's words were merely polite formalities, a prelude to his next move!

"However, the economic development of island nations is also built on the price paid by us, the United States. In recent years, the exchange rate of our US dollar to Japanese yen has been rising. For example, it is now 250 yen to 1 US dollar!"

"Because this exchange rate is too high, it has led to increased labor costs and inflation in the United States. Our American industry has suffered a major blow. If this continues, our dollar will collapse."

At this point, James Baker's expression turned serious: "Mr. Takeshita, you can't just bask in the joy of your own development. The entire West is one. If the American economy has problems, your island nation's overseas businesses will also suffer!"

This is a very simple principle. If the US economy collapses, the dollar will become worthless. Island nations are the world's largest creditor nations, holding the most US debt. At that time, all of this US debt will also become worthless!

Takeshita Noboru's expression changed.

He knew that coming here wouldn't be good news; these Americans actually wanted the island nation to be the sucker and save the American economy!

"Mr. James, the main problem facing the United States right now is the fiscal deficit, which is because you spend money recklessly, as long as..."

"What do you mean by extravagant? It's only right that we spend money! According to your logic, if the United States wants to save money, should we first withdraw our troops stationed in East Asia?"

Takeshita Noboru was in a panic. They couldn't retreat! If they did, the Russians would come up!

In the 1980s, Japan was an economic giant, but its military strength was nowhere near that of Russia, whose Pacific Fleet had two aircraft carriers! There was even a Japanese writer who wrote a military fantasy novel called "Minsk Attack," which featured these two aircraft carriers as the main characters.

Two years after the Plaza Accord, the five countries met again at the Louvre Museum in France to discuss the economic changes over the past two years. They concluded that after the exchange rate adjustment, US export trade had not grown, and the problem with the US economy lay in its huge domestic fiscal deficit!

Actually, who doesn't know the reason?

Simply put, they've overspent. They don't care about the country's situation; every department's budget must be higher than the previous year's. By the end of the year, the money will definitely be spent, since there are so many Commissioner Smiths waiting to fill their pockets with national wealth.

Spending money is unavoidable, but the country doesn't have that much money, so the only option is to fleece other countries from all over the world. America's strength is nothing more than a result of plundering other countries.

Takeshita Noboru had mixed feelings. It was impossible to get the Americans to spend less money, and the island nation couldn't compete with the United States. The only thing they could do was try to negotiate.

"Okay, we can let the dollar drop by 20%."

"Twenty percent is definitely not enough! It has to be reduced by half! Within two years, one US dollar should be exchanged for 120 Japanese yen!"

"No, no, no, absolutely not!" Takeshita Noboru was stunned. This was going to be the death of the island nation!

“No?” James Baker rolled his eyes at him. “Then we’ll have to withdraw. After all, we have to solve our fiscal deficit problem.”

"Could you... could you give us a little more time?"

“Then let’s make it three years,” James Baker said. “However, within three months, we need to achieve an exchange rate of 200 yen to the dollar, and by the end of next year, around 150 yen to the dollar… This gives your island nation plenty of time!”

Seeing Takeshita Noboru's disgusted expression, James Baker put on a nice face and continued to deceive him.

"Actually, this is also beneficial to you. With the appreciation of the yen, you can become an economic power, and you should take on the responsibility of global economic development!"

This rhetoric was prepared long ago; with a carrot and stick approach, I don't believe the islanders won't give in.

"With the yen appreciating, you can import raw materials in large quantities at a lower cost, alleviating your resource shortages. You can also shift your manufacturing overseas and obtain more profits..."

The appreciation of the yen is beneficial to imports and also to the massive influx of foreign capital. On the surface, the island nation will become increasingly wealthy and may even surpass the United States to become the world's leading economic power.

But this money has to be spent eventually!
However, currency appreciation is detrimental to exports, so surplus domestic money needs to find suitable places, and the real estate and stock markets become the best destinations for hot money.

When stock prices rise, corporate financing costs are low, so large companies issue stocks to raise funds to repay bank loans. Banks then have a large amount of idle funds tied up, which can only be invested in the real estate industry, thus causing the bubble to grow bigger and bigger.

Although exports are unfavorable, manufacturing can be transferred to developing countries! Any country, once its economy develops to a certain level, will experience the hollowing out of its domestic industries. After all, high wages and various taxes will drive manufacturing companies to seek ways to relocate to places with abundant resources and low labor costs.

After the Plaza Accord was signed, island nation companies began to relocate overseas in large numbers. Toyota, Sony, and others built factories overseas. By the new millennium, many island nation companies had earned more money overseas than they did domestically.

As for domestic jobs? Few capitalists care.

Takeshita Noboru took a deep breath. He knew that today's blow meant he had to be killed.

"We can agree, but we can't be the only ones whose yen appreciates, can we?"

What about other countries?
“That’s right, the West German mark also needs to appreciate!” James Baker looked at the Germans. “Who told you to have such a good economy, and to be a defeated nation, especially with a large number of American troops stationed there? In the event of war, you’ll be on the front lines.”

Therefore, the Germans had no choice but to accept the American threat and obediently appreciate the value of the mark!
Hart Stoddenberg replied expressionlessly, "Okay."

Since it's unavoidable, we might as well just enjoy it. As long as we take the necessary precautions, it shouldn't have too much of an impact.

As for Britain and France... they really can't be cut off.

Britain's economy is on the verge of collapse; it's good enough that they're not asking for aid. France isn't a NATO member, and it opposes the US on many issues. Pushing them too far will bring them no benefit!
"What about... the East? In recent years, the Eastern economy has developed rapidly, and they can also help the United States share some of the pressure. In particular, the East has a fixed exchange rate, and the specific exchange rate is just a matter of an executive order."

Since I can't refuse myself, I have to drag others down with me!
"Moreover, some industries in the East are very developed, such as aerospace and machinery and electronics. They export a lot of products. We, the developed Western countries, are strongly impacted by their products on the international stage. Even our island nation is importing a lot of their products, such as electronic computers and mobile communication technologies."

Takeshita Noboru spoke up: "Now, let's take this opportunity to deliver a heavy blow to the Eastern economy!"

James Baker took a deep breath and then shook his head: "No."

"why?"

"Because... if we do this, we will only push the Easterners to the Soviet side!"

Are you kidding me!
Even now, the East is still an object that the Americans are trying their best to win over!

They once tried to bind the East to their war machine, but the people of the East refused.

Then, they tried to put pressure on Dongfang, but Dongfang launched a targeted counterattack. They still remembered their previous defeats, so why would they provoke Dongfang now?
Not cost-effective.

Being an enemy of the Americans is dangerous; you could get beaten up at any time. Being a friend of the Americans is even more dangerous; you could get exploited at any time.

The best approach is to maintain a relationship with the Americans that is neither too close nor too distant—we welcome cooperation, but we are not afraid of confrontation.

Just like now, trying to fleece the East? The East will turn against them in a heartbeat!

Takeshita was speechless. You are America, the most powerful America in the world! And you're afraid of angering the East? How could we in the West have a leader like you!
The meeting lasted all day, and when Takeshita Noboru left, his mind was in turmoil.

The agreement has been signed, but how do we explain this back to China?
There will definitely be a group of economic experts criticizing him! And some will call him spineless and a traitor...

We have to find a way!

Wow…

A group of people gathered around.

"Mr. Takeshita, may I ask, does this newly signed agreement pose a significant threat to the island nation's economy?"

"Mr. Takeshita, didn't you say your name was..." before the meeting?

Hearing these words, his mind was in turmoil, but he couldn't show it on his face.

"Ladies and gentlemen, we are very satisfied with the signing of this agreement. Our yen is about to appreciate, which is an important step for the economic development of our island nation. Our island nation will become a global financial center..."

We have to get it out there first!
East.

Qin Liang yawned as he walked into the conference room.

"Distinguished leaders, what does this meeting in the United States have to do with us? Besides... Northwestern Polytechnical University is an industrial institution. Why would you call me here for a meeting of your economic departments?"

Normally, it's one thing to be called by Professor Lin, after all, Northwestern Polytechnical University is all about building airplanes, so we have to be polite to our clients. But this economic stuff... it's completely unrelated!

The leader presiding over the meeting, Mr. Li, said with a smile, "I've heard that all the companies under your Northwestern Polytechnical University have already taken action, raising funds to enter the stock and real estate markets of island nations. In particular, Pacific Company has already withdrawn funds from all over the world, even before the Plaza Accord was signed, so..."

Leader Li looked at Qin Liang and said, "President Qin, your Northwestern Polytechnical University also has strong capabilities in the economic field. You're setting up operations in Japan to make a lot of money from there, aren't you?"

"Well... if any of you are interested in making money, you can join us in entering the Japanese market. As long as you withdraw before 90, you will make a fortune."

If we can make money together, Qin Liang doesn't mind making this friend. As for this matter, he feels he has done his bit in the process.

"It seems you have a good understanding of market economics."

"This... I know a little, I know a little."

Leader Li began by explaining: "Take steel for example, the price is 700 per ton within the plan, and 1400 per ton outside the plan. Crude oil is a little over 100 per ton within the plan, and a little over 500 per ton outside the plan. This has led some criminals..."

Leader Li didn't finish his sentence; those who understand, understand.

"So, we want to completely open up, but we don't feel very confident. You can accurately predict the economic behavior of those developed countries, so could you give us some advice?"

Qin Liang took a deep breath: "Leaders, there is a prerequisite for us to fully open up."

"What premise?"

"The abundance of social resources, otherwise..."

Everyone was stunned.

The abundance of social resources is something that China certainly cannot achieve now. In other words, trying to overcome price barriers in one step is destined to fail.
"Comrade Qin Liang, could we conduct an experiment?"

"Well, if we're going to do experiments, we can start with industries like steel and oil. But we absolutely mustn't use everyday products, things that affect people's livelihoods. If prices skyrocket, there will be big problems."

Everyone frowned again; they had originally planned to start with daily necessities!
After a moment's thought, Leader Li suggested, "How about we start with the aluminum alloy industry?"

(End of this chapter)