On Triffin and Money and Ideals and Games and the Fed
It’s like what the Wu-Tang Clan once said, “cash rules everything around me.” Or maybe its the case that money rules everything around me? The difference is likely negligible. Moving on…
Is this an ideal scenario? Perhaps not, but I don’t really see anyone out there denying such an observation credibly. Lyrics in the Wu-Tang song include the notable “it gots to be accepted. That what? That life is hectic.” I’d like to further add to or clarify the Wu-Tang message with the qualifier “Life is hectic and modern Keynesian economic thought is seemingly chaotic.” I prefer the Austrian school. The current economic landscape is something like the tower of Babel, many languages seeking to describe the same phenomenon.
Cash rules everything around me. It follows that the U.S. Fed Bank generally rules all the cash around me. The dominant economic thought of any given time also likely rules everything (and every decision made) around the U.S. Fed Bank as well.
The issue I’m looking to wrap my head around as of late relates to something called “the Triffin Dilemma.” It’s indisputably one of the greatest issues facing modern economics today. The Triffin Dilemma is a complicated concept. It relates to the wild, wild (wasteful) world of ForEx and currencies in general. Lest we forget that currency and consequently money is just another product in the market. The money with the best utility ought to win out. Amongst all the talk of trade wars, I think past everyone and their mother calling for the next recession in 2020. I think many are looking past the prospect of potential currency wars associated.
This morning I elicited the following response from the official St Louis Fed twitter account (David Andolfatto who recently did an awesome presentation on cryptocurrencies here). In this tweet, he 1. acknowledged the issue of the Triffin Dilemma and 2. acknowledged the possibility of a potential solution to this issue or at least what one might look like:
Tuur Demeester, prominent crypto economist and founder of Adamant Capital, acknowledged the gravity of the comment.
I am only left with processing what the exact implications of this are given the solutions on the table today. We know the solution must entail the following:
It must be apolitical and not bow to the political pressures implied. It must look something like what the likely greatest mathematician of our time, Nobel Prize-winning and Game Theory-inventing John Nash described here: http://personal.psu.edu/gjb6/nash/money.pdf
Another notable observation might be this:
And more prime info on the topic can be found here: https://medium.com/@rextar4444/on-the-trilemma-of-finance-the-triffin-dilemma-bitcoin-and-nations-and-games-ac8925545aef
The exact implications of this information are certainly still unknown, little understood, and likely up for debate to a reasonable extent going forward. There are some pretty difficult concepts entailed after all.
The market will no doubt continue to paint the picture in some way in the mean time. Any thoughts, comments, or criticisms on concepts touched on in this piece here greatly appreciated. I can also be found on twitter here.