According to Grok:
The Triffin Dilemma, also known as the Triffin Paradox, is an economic concept that highlights the inherent conflict of interest faced by a country whose currency serves as the global reserve currency. It was first articulated by Belgian-American economist Robert Triffin in the 1960s, primarily in the context of the U.S. dollar and the Bretton Woods system.
Here’s the core idea: When a country’s currency (like the U.S. dollar) is used as the world’s primary reserve currency, that country must supply the world with enough of its currency to facilitate international trade and liquidity. This often requires running persistent trade deficits—exporting more dollars than goods—to ensure there’s enough currency circulating globally. However, these deficits can undermine confidence in the currency’s value over time, as they suggest the issuing country is accumulating debt or devaluing its money.
So, the dilemma is this:
• If the country (e.g., the U.S.) runs deficits to provide global liquidity, it risks destabilizing its own economy and the currency’s status as a reliable store of value.
• If it stops running deficits to protect its currency’s stability, it restricts global liquidity, which could disrupt international trade and economic growth.
Under the Bretton Woods system (1944–1971), the U.S. dollar was tied to gold, and other currencies were pegged to the dollar. Triffin argued that the U.S. couldn’t sustainably meet the world’s growing demand for dollars without undermining the gold backing, which eventually contributed to the system’s collapse in 1971 when the U.S. suspended dollar-to-gold convertibility.
Today, the Triffin Dilemma remains relevant in discussions about the dollar’s dominance, global imbalances, and potential alternatives like digital currencies or a multi-currency reserve system. It’s a classic catch-22: the privilege of having a global reserve currency comes with economic trade-offs that are tough to escape.
HashBros đź‘Ł / DrDanielHowell
npub1dp…uk7g2
2025-04-06 22:33:33
in reply to nevent1q…202f
Author Public Key
npub1dprrjdmndj3clhjc24hcdvmf0s4sez6ql6h0chx4k9lag4f74j9sfuk7g2Published at
2025-04-06 22:33:33Event JSON
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"content": "According to Grok:\nThe Triffin Dilemma, also known as the Triffin Paradox, is an economic concept that highlights the inherent conflict of interest faced by a country whose currency serves as the global reserve currency. It was first articulated by Belgian-American economist Robert Triffin in the 1960s, primarily in the context of the U.S. dollar and the Bretton Woods system.\nHere’s the core idea: When a country’s currency (like the U.S. dollar) is used as the world’s primary reserve currency, that country must supply the world with enough of its currency to facilitate international trade and liquidity. This often requires running persistent trade deficits—exporting more dollars than goods—to ensure there’s enough currency circulating globally. However, these deficits can undermine confidence in the currency’s value over time, as they suggest the issuing country is accumulating debt or devaluing its money.\nSo, the dilemma is this:\n\t•\tIf the country (e.g., the U.S.) runs deficits to provide global liquidity, it risks destabilizing its own economy and the currency’s status as a reliable store of value.\n\t•\tIf it stops running deficits to protect its currency’s stability, it restricts global liquidity, which could disrupt international trade and economic growth.\nUnder the Bretton Woods system (1944–1971), the U.S. dollar was tied to gold, and other currencies were pegged to the dollar. Triffin argued that the U.S. couldn’t sustainably meet the world’s growing demand for dollars without undermining the gold backing, which eventually contributed to the system’s collapse in 1971 when the U.S. suspended dollar-to-gold convertibility.\nToday, the Triffin Dilemma remains relevant in discussions about the dollar’s dominance, global imbalances, and potential alternatives like digital currencies or a multi-currency reserve system. It’s a classic catch-22: the privilege of having a global reserve currency comes with economic trade-offs that are tough to escape.\n",
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