Okay lets do that, lets go to the source and understand exactly what Triffin was saying (and more importantly doing)
Testifying before the U.S. Congress in 1960, economist Robert Triffin exposed a fundamental problem in the international monetary system.
If the United States stopped running balance of payments deficits, the international community would lose its largest source of additions to reserves. The resulting shortage of liquidity could pull the world economy into a contractionary spiral, leading to instability.
If U.S. deficits continued, a steady stream of dollars would continue to fuel world economic growth. However, excessive U.S. deficits (dollar glut) would erode confidence in the value of the U.S. dollar.
This is the real Triffin Dilemna for a world reserve currency. And here is what he proposed as solution:
Triffin proposed the creation of new reserve units. These units would not depend on gold or currencies, but would add to the world's total liquidity.
What Triffin did was, to claim that if there is a world reserve currency it has to be FIAT currency.
If we were to believe this claim, and agree that Triffin Dilemna is true, then for any distributed crypto currency to become a world reserve currency, it is neccesary to be able to issue unlimited amount of cryptos and make the liquidity available for the countries as they need to expand.
This is the exact opposite of what the original video is claiming. In fact, according to Triffin, crypto currencies can never become world reserve currencies without causing the international economy to collapse due to lack of liquidity.
And, if we are to believe that there is a crypto currency that can act as world reserve currency, without allowing any central entity to issue the cryptos, then we are essentially saying that Triffin was wrong.
The reality is, Triffin was half correct and half wrong. He was correct that USD as world reserve currency was unsustainable.
He was wrong in the solution for this - making it FIAT. The real solution would have been to push for a complete overhaul of the international economic system, decouple all countries from relying on a single reserve currency, and encourage each country to issue their own, resource backed, currencies.
This would have meant a massive slowdown in the world economy, which is a good thing because that artificial growth fueled by fiat is what has brought out world to this unsustainable mess.
The real solution would have been to push for a complete overhaul of the international economic system, decouple all countries from relying on a single reserve currency, and encourage each country to issue their own, resource backed, currencies.
Yes I agree with this.
And, if we are to believe that there is a crypto currency that can act as world reserve currency, without allowing any central entity to issue the cryptos, then we are essentially saying that Triffin was wrong.
I also think this is true, there was no crypto in Triffin's time. There is no single country that crypto is issued to. Triffin's Dilemna doesn't work with Crypto.
If we were to believe this claim, and agree that Triffin Dilemna is true, then for any distributed crypto currency to become a world reserve currency, it is neccesary to be able to issue unlimited amount of cryptos and make the liquidity available for the countries as they need to expand.
Not true. You can still have a crypto that is used by the majority of the world and is used as an exchange between currencies. It would also be kept in reserve by governments.
You can have all countries using resource based currencies but there won't be a central banking solution. Crypto will be much more voluntary since you can take the open source code and add to it and/or create a new crypto with the same layout. If something goes wrong with the crypto, it's much easier to remedy.
Not true. You can still have a crypto that is used by the majority of the world and is used as an exchange between currencies. It would also be kept in reserve by governments.
So when countries want to expand and require a lot more of this crypto, how will they go about issuing that?
They'll have to take out a loan in crypto and in that loan they'll have to put up collateral and pay the loan off over time.
But there is a limited amount of the crypto so they can't go unlimited borrowing all the time. They also cant go unlimited printing either or they devalue their currency and people on the ground will just pay in Crypto instead. It will act like gold and silver did over 100 years ago.
When the US govt printed out too much money as gold/silver backed economy, traders would just redeem the dollars for gold/silver and trade the gold/silver in another country to get a profit.
But there is a limited amount of the crypto so they can't go unlimited borrowing all the time
This is the real point. Basically what we are saying is that Triffin's Dilemna is not a dilemna at all. Its a false dilemna.
They'll have to take out a loan in crypto and in that loan they'll have to put up collateral and pay the loan off over time.
Crypto is no good unless every aspect of it is recorded and verifiable in the blockchain. So for something like this to work (loan in crypto + collateral), you need the loan to be recorded + the collateral to be verifiable on the blockchain.
On top of that, there is an additional problem. If a country finds a huge gold mine (for example) and need to get this crypto loan against it to start funding their economy with it, there needs to be an easy way to "mine" additional required crypto, and secure it against these resources.
So what we are really talking about is a resource backed digital currency thats transparent, fully verifiable, and hopefully distributed.
So far, we dont have any crypto that actually does it, but I am sure that work is happening behind the scenes.
Okay lets do that, lets go to the source and understand exactly what Triffin was saying (and more importantly doing)
This is the real Triffin Dilemna for a world reserve currency. And here is what he proposed as solution:
What Triffin did was, to claim that if there is a world reserve currency it has to be FIAT currency.
If we were to believe this claim, and agree that Triffin Dilemna is true, then for any distributed crypto currency to become a world reserve currency, it is neccesary to be able to issue unlimited amount of cryptos and make the liquidity available for the countries as they need to expand.
This is the exact opposite of what the original video is claiming. In fact, according to Triffin, crypto currencies can never become world reserve currencies without causing the international economy to collapse due to lack of liquidity.
And, if we are to believe that there is a crypto currency that can act as world reserve currency, without allowing any central entity to issue the cryptos, then we are essentially saying that Triffin was wrong.
The reality is, Triffin was half correct and half wrong. He was correct that USD as world reserve currency was unsustainable.
He was wrong in the solution for this - making it FIAT. The real solution would have been to push for a complete overhaul of the international economic system, decouple all countries from relying on a single reserve currency, and encourage each country to issue their own, resource backed, currencies.
This would have meant a massive slowdown in the world economy, which is a good thing because that artificial growth fueled by fiat is what has brought out world to this unsustainable mess.
Yes I agree with this.
I also think this is true, there was no crypto in Triffin's time. There is no single country that crypto is issued to. Triffin's Dilemna doesn't work with Crypto.
Not true. You can still have a crypto that is used by the majority of the world and is used as an exchange between currencies. It would also be kept in reserve by governments.
You can have all countries using resource based currencies but there won't be a central banking solution. Crypto will be much more voluntary since you can take the open source code and add to it and/or create a new crypto with the same layout. If something goes wrong with the crypto, it's much easier to remedy.
So when countries want to expand and require a lot more of this crypto, how will they go about issuing that?
They'll have to take out a loan in crypto and in that loan they'll have to put up collateral and pay the loan off over time.
But there is a limited amount of the crypto so they can't go unlimited borrowing all the time. They also cant go unlimited printing either or they devalue their currency and people on the ground will just pay in Crypto instead. It will act like gold and silver did over 100 years ago.
When the US govt printed out too much money as gold/silver backed economy, traders would just redeem the dollars for gold/silver and trade the gold/silver in another country to get a profit.
This is the real point. Basically what we are saying is that Triffin's Dilemna is not a dilemna at all. Its a false dilemna.
Crypto is no good unless every aspect of it is recorded and verifiable in the blockchain. So for something like this to work (loan in crypto + collateral), you need the loan to be recorded + the collateral to be verifiable on the blockchain.
On top of that, there is an additional problem. If a country finds a huge gold mine (for example) and need to get this crypto loan against it to start funding their economy with it, there needs to be an easy way to "mine" additional required crypto, and secure it against these resources.
So what we are really talking about is a resource backed digital currency thats transparent, fully verifiable, and hopefully distributed.
So far, we dont have any crypto that actually does it, but I am sure that work is happening behind the scenes.