Triffin dilemma

That arrangement financed globalization.

It also produced the Triffin problem.

The reserve issuer must supply the world with its currency, and the usual way of doing that is to run deficits and to let foreigners accumulate the national debt.

Industry at home pays for that privilege in the form of an overvalued exchange rate and a hollowed capital stock.

So a system that removes all of that friction and allows for programmable, virtually instant settlement that is also tied to a debt claim maintained onshore for the US is an existential threat to their survival.

An official dollar token that works is a bid to pull that friction back onto an American stack, or at least to keep Beijing from writing the alternative.

Part four: Triffin, the short end and the long end.

Robert Triffin told Congress in the early 1960s that a national currency cannot be the world's reserve without a contradiction.

You are trading long term stability for short term survival.

And the predicament is exacerbated by the U.S. dollar's role in the global economy, which brings us to a foundational economic concept Dixon references called Triffin's Dilemma.

Right, because the U.S. can't just stop issuing debt even if it wanted to.

The system literally demands it.

Exactly.

Triffin's dilemma dictates that the country whose currency serves as the world's reserve currency must run a massive perpetual trade and budget deficit.

It sounds backwards, but it makes sense.

It does, because the entire global economy, the euro dollar system, international trade, energy settlements, it all runs on U.S. dollars.

And I think we also, you know, want to do away with the United States.

We want to do away with the Triffin's Dilemma part of the U.S. dollar as well.

Get rid of the reserve

currency.

And the question is, if QT continues, that means they'll be selling bonds, which in Japan will continue to push their rates up.

What happens to treasuries in that case if Japanese capital starts staying home because of the higher rates and more attractive bonds? ability just to keep their money at home.

What happens to the U.S. Treasury market? And by the way, I completely agree with you about the relinquishing Triffin's dilemma, relinquishing the reserve status.

Vance has talked about it, the knucklehead that was Biden's previous economic advisor, Jared Bernstein wrote the report to throne King Dollar.

benefits or having the dollar as the world reserve currency benefits the United States.

Talk about the Triffin's dollar.

I mean, there's so much that all ties in with what I think you've just put forward there about us being in the sea of World War III.

Our definition of right is that a mental model predicts And in fact, our specialty is making long shot predictions at a success rate statistically better than luck.