Triffin Dilemma

The Eurozone’s tangle of conflicting goals – a series of ‘trilemmas’ – is not without precedent. This column argues that it is reminiscent of the interwar situation. The interwar slump was so intractable not just due to financial issues,…

In the short term, though, a continuation of the currently lax monetary policy is likely to lead to higher assets prices. The investor mindset is very much in risk-on mode at the moment, as documented by the surprisingly calm reaction to…

Trade data for the US, Germany, Japan and China were released earlier today. While the US, Germany and China had robust export growth that caused their surpluses to swell, Japan's numbers showed weakness despite the recent drop in the value…

Milton Friedman's 1948 article, "A Monetary and Fiscal Framework for Economic Stability" put forward a proposal according to which the government would run a balanced budget only at full employment, with deficits in recession and surpluses…

The ECB is seen to be the key protagonist and the pressure is more acute on it to act. Yet it steadfastly refuses. The other solution that has been advocated is a joint European bond. It is not going to be forthcoming any time soon. Such…

While the usual assumption is that current account deficits lead more-or-less directly to currency depreciation, the evidence for this effect is not clear-cut. Implications of this depend on the currency regime. According to the well-known…

This is a polemic on fiat currency. it is long and detailed. But I believe it is both thorough and logical.

Andy Lees argues insufficient dollars are getting into the system from the US current account deficit to finance the growth in global trade, so the stock of these international dollars is falling relative to the value of world trade. He…

We saw that Joseph Stiglitz proposes a new reserve currency to alleviate pressure on trade imbalances. Michael Pettis is now also proposing a similar move away from the U.S. dollar. In an FT Op-Ed, Michael wrote that every generation we…

This topic needs a lot more attention. And I think today's so-called Bretton Woods II fiat system is unstable. Excess money creation and trade imbalances are secular problems that fiat currency has allowed to become destabilizing. If…