And there in lies the rub. To keep countries placated we need to create more debt, a metric ton of more debt and hence more broad currency. But doing so at the moment is political suicide as is proven by the left's efforts (deficit spending blah blah etc).
Triffin paradox predicted in the 60s at it's full glory.
It's also worth noting that at the moment both the Fed and the Treasury (obv) are mandated to be operating with an inward looking view only. Meaning we run a global reserve currency with no 'department' in charge of the global part.
I don't think this should be downvoted. I believe this is all 100% correct.
Maybe because of the "left's deficit spending" part, which is not wrong, but ignores the right's historical deficit spending (e.g. TCJA). Or perhaps the "political suicide" part is misinterpreted: It would be political suicide for a politician to interfere with Fed policy and undercut their blunt force effort to reduce domestic inflation.
But any way you slice it, right now the Triffin dilemma is indeed exactly what we're experiencing.
Why? The eurozone can’t hold itself together, China is a house of cards with bad planned economy failures, the uk isn’t worth mentioning any more, and everywhere else either has unstable economies or economies based on volatile or limited lifetime commodities.
The dollar is the global reserve currency because the US has centuries of reasonable behavior and military and natural resources that guarantee long term stability. There isn’t a better option unless you’re playing temporary political games or if your macroeconomic situation is so bad you can’t play the game normally.
Triffin paradox predicted in the 60s at it's full glory.
It's also worth noting that at the moment both the Fed and the Treasury (obv) are mandated to be operating with an inward looking view only. Meaning we run a global reserve currency with no 'department' in charge of the global part.