Before spouting off it is often prudent to heed the witticism attributed* to Abe Lincoln:
It is better to remain silent and be thought a fool, than to open your mouth and remove all doubt.
First up, some background, Wikipedia with a straightforward overview of Triffin:
Triffin dilemma
In international finance, the Triffin dilemma (sometimes the Triffin paradox) is the conflict of economic interests that arises between short-term domestic and long-term international objectives for countries whose currencies serve as global reserve currencies. This dilemma was identified in the 1960s by Belgian-American economist Robert Triffin. He noted that a country whose currency is the global reserve currency, held by other nations as foreign exchange (FX) reserves to support international trade, must somehow supply the world with its currency in order to fulfill world demand for these FX reserves. This supply function is nominally accomplished by international trade, with the country holding reserve currency status being required to run an inevitable trade deficit.[1] After going off of the gold standard in 1971 and setting up the petrodollar system later in the 1970s, the United States accepted the burden of such an ongoing trade deficit in 1985 with its permanent transformation from a creditor to a debtor nation.[2] The U.S. goods trade deficit is currently on the order of one trillion dollars per year.[3] Such a continuing drain to the United States in its balance of trade leads to ongoing tension between its national trade policies and its global monetary policy to maintain the U.S. dollar as the current global reserve currency. Alternatives to international trade that address this tension include direct transfer of dollars via foreign aid and swap lines.
The Triffin dilemma is usually cited to articulate the problems with the role of the U.S. dollar as the reserve currency under the worldwide Bretton Woods system established in 1944. John Maynard Keynes had anticipated this difficulty and had advocated the use of a global reserve currency called 'Bancor'. Historically, the IMF's SDRs have been the closest thing to the proposed Bancor but they have not been adopted widely enough to replace the dollar as the global reserve currency.
In the wake of the 2007–2008 financial crisis, the governor of the People's Bank of China named the reserve currency status of the US dollar as a contributing factor to global savings and investment imbalances that led to the crisis. As such, the Triffin Dilemma is related to the Global Savings Glut hypothesis because the dollar's reserve currency role exacerbates the U.S. current account deficit due to heightened demand for dollars.....
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Next, at UnHerd, a look at Miran:
Some intellectuals in the Trump orbit have developed a rather elaborate critique of the situation. They might not have a functional plan, but they do have a theory. That theory has come closest to being spelled out in a November 2024 paper by Stephen Miran, the Harvard-trained economist who now serves as the chairman of Trump’s Council of Economic Advisers. Titled “A User’s Guide to Restructuring the Global Trading System”, Miran’s 41-page paper is making the rounds and creating quite a buzz.
It’s a dry, technical slog. But — love or hate the trade war — Miran’s ideas are worth understanding.
He argues that America’s economic crises stem from the fact that the dollar serves as the world’s “reserve currency”. The dollar, more than any other currency, is held in large amounts by governments, central banks, and major financial institutions across the planet, because it serves as the most trusted medium for international trade and is seen to be “as good as gold”.
As the world’s reserve currency, the dollar is used to price commodities like oil or gold, to settle cross-border transactions, and to provide a safe haven during economic turbulence. Because everyone wants dollars, US government debt and Treasury bonds are in constant demand. This gives the US government and American businesses tremendous power and advantage. In a crisis, Americans can more or less print “gold” and spend their way out. Many struggling economies would like to have such “problems”.
But in Miran’s view, several serious interconnected problems flow from the dollar’s global dominance. The dollar is overvalued relative to other currencies because as a reserve currency, it is in constant demand. This undermines domestic manufacturing, by making American exports more expensive. Over the long run, the high expense of the dollar is bound to bring about deindustrialisation.
While Miran is correct about the overvalued dollar’s role, he neglects deindustrialisation’s other causes, not least neoliberal deregulation that has allowed firms to do things with cheaper and cheaper labour, rather than develop labour-saving technologies, and the excessive financialisation that characterises this order. Nor does he address the fact that other countries that don’t issue the world reserve currency have also suffered deindustrialisation.
In the event, Miran contends, deindustrialisation leads to declining productivity and slower economic growth. We now know that when production takes place on one side of the Pacific while engineers and designers labour are on the opposite side, innovation and productivity flag — and, with them, growth. Thus, even as the US economy grows, it grows slower than, and diminishes relative to, those of its emerging rivals, most notably China. Along the way, both the private and public sectors become ever more indebted.
Deindustrialisation, moreover, ultimately undermines the reserve currency issuer’s military prowess — that is, one of the foundations upon which America’s reserve-currency status rests in the first place. A deindustrialised economy has a hard time producing and maintaining a modern military....
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The author of that piece, professor (econ) Christian Parenti at John Jay College, City University of New York, goes on to blow some holes in the the Miran paper while highlighting what he thinks is accurate.
Next up, from the Bank for International Settlements:
Triffin: dilemma or myth?
Abstract
Triffin gained enormous influence by reviving the interwar story that gold scarcity threatened deflation. In particular, he held that central banks needed to accumulate claims on the United States to back money growth. But the claims would eventually surpass the US gold stock and then central banks would inevitably stage a run on it. He feared that the resulting high US interest rates would cause global deflation. However, we show that the US gold position after WWII was no worse than the UK position in 1900. Yet it took WWI to break sterling's gold link. And better and feasible US policies could have kept Bretton Woods going.
This history serves as a backdrop to our critical review of two later extensions of Triffin. One holds that the dollar's reserve role required US current account deficits. This current account Triffin is popular, but anachronistic, and flawed in logic and fact. Nevertheless, it pops up in debates over the euro's and the renminbi's reserve roles. A fiscal Triffin holds that global demand for safe assets will either remain dangerously unsatisfied, or force excessive US fiscal debt. Less flawed, this story posits implausibly inflexible demand for and supply of safe assets. Thus, these stories do not convince in their own terms. Moreover, each lacks Triffin's clear cross-over point from a stable system to an unstable one.
Triffin's seeming predictive success leads economists to wrap his brand around dissimilar stories. Yet Triffin's dilemma in its most general form correctly points to the conflicts and difficulties that arise when a national currency plays a role as an international public good....
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And finally, the headliner from VoxEU/CEPR:
10 Apr 2025
In a recent Vox column, Bordo and McCauley argued that foreign central banks no longer drive US external deficits, and that fears voiced by Stephen Miran, Chair of the US Council of Economic Advisers, of a revived Triffin dilemma are misplaced. This column takes a different view: while agreeing that the Triffin logic no longer applies, it argues that the deeper reason lies in the structural evolution of global finance. We no longer live in a world where the reserve status of the dollar hinges on the US current account. That status now depends on the credibility of US institutions, the depth of its markets, and the robustness of the infrastructure that underpins the global dollar system....
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Is it any wonder that economics is called the dismal science? Here's a 2009 post:
The study of economics does not seem to require any specialised gifts of an unusually high order.
Is it not, intellectually regarded, a very easy subject compared with the higher branches of philosophy and pure science? Yet good, or even competent, economists are the rarest of birds. An easy subject, at which very few excel! ....MORE
*And Lincoln? He probably didn't say the line attributed to him. From The Quotations Page:
...It's been attributed to many persons, but seems to have its roots in the Bible:
It is better to remain silent and be thought a fool, than to open your mouth and remove all doubt . -- George Eliot
Better to remain silent and be thought a fool than to speak out and remove all doubt.-- Abraham Lincoln (also attr. Confucius)
It is better to keep your mouth closed and let people think you are a fool than to open it and remove all doubt.-- Mark Twain (1835-1910)
Even a fool, when he holdeth his peace, is counted wise: and he that shutteth his lips is esteemed a man of understanding. -- Bible, 'Proverbs' 17:28.There are no citations for Lincoln or Twain. I have my doubts about Confucius
