Can You Solve The Triffen Dilemma?

When the US Dollar was pegged to $35 an ounce under a system called Breton Woods, a young economist named Robert Triffen predicted that the peg wouldn’t hold. In 1971 he was proven right and the system collapsed.

Even though gold is now trading at around $1,200 an ounce, the Triffen Dilemma still holds true. The US Dollar is currently the global reserve currency. This creates a problem for the Federal Reserve, which is trying to run the economy at home but now needs to also consider how other countries will be affected.

The following passage may be familiar to those of you who have been reading these updates regularly…

By “agreeing” to have its currency used as a reserve currency, a country pins its hands behind its back. In order to keep the global economy chugging along, it may have to inject large amounts of currency into circulation, driving up inflation at home. 

When asked how cryptocurrencies play into the Triffen Dilemma, the Federal Reserve Bank of St. Louis, who has already done a substantial amount of research into crypto, answered quite plainly…

So to answer the question, though you can contribute, you might not be able to single-handedly solve the Triffen Dilemma.

However, efforts like Veem, which has just procured $25 million from Google and Goldman Sachs, are working to integrate Bitcoin as the global reserve currency. A prospect that is not only good news for hodlers but can help bring stability to the entire global financial system.

Today’s Highlights

Traditional Markets

Almost perfectly in line with what we discussed above, Jerome Powell, the Chairman of the Federal Reserve, commented yesterday on the status of the global economy stating that…

US Economy Experiencing “Extraordinary Times”, Outlook Strong

The fact that unemployment is near all-time lows and inflation has yet to show up in the market is truly extraordinary. This also flies in the face of everything we know about economics.