Hacker News Reader

Comment by norswap | Hacker News Reader

> Could this mounting unrest be as a result of the seeming inability of the US Federal bank in checking inflation of the US Dollar.

This is completely backwards. The problem right now is that the dollar is too strong, meaning expensive wrt other currencies. In this context, inflation of the USD supply, leading to devaluation of the USD would actually help other countries that are suffering from the strong dollar.

I'm not saying it would be good for the US, but it certainly would be good for pretty much everybody else.

View on HN

And there in lies the rub. To keep countries placated we need to create more debt, a metric ton of more debt and hence more broad currency. But doing so at the moment is political suicide as is proven by the left's efforts (deficit spending blah blah etc).

Triffin paradox predicted in the 60s at it's full glory.

It's also worth noting that at the moment both the Fed and the Treasury (obv) are mandated to be operating with an inward looking view only. Meaning we run a global reserve currency with no 'department' in charge of the global part.

I don't think this should be downvoted. I believe this is all 100% correct.

Maybe because of the "left's deficit spending" part, which is not wrong, but ignores the right's historical deficit spending (e.g. TCJA). Or perhaps the "political suicide" part is misinterpreted: It would be political suicide for a politician to interfere with Fed policy and undercut their blunt force effort to reduce domestic inflation.

But any way you slice it, right now the Triffin dilemma is indeed exactly what we're experiencing.

And this the entire problem.

The dollar shouldn't be a global currency.

Why? The eurozone can’t hold itself together, China is a house of cards with bad planned economy failures, the uk isn’t worth mentioning any more, and everywhere else either has unstable economies or economies based on volatile or limited lifetime commodities.

The dollar is the global reserve currency because the US has centuries of reasonable behavior and military and natural resources that guarantee long term stability. There isn’t a better option unless you’re playing temporary political games or if your macroeconomic situation is so bad you can’t play the game normally.

An alternative could be a basket of currencies and goods that is somewhat stable even if parts of it are unstable.

"Meaning we run a global reserve currency with no 'department' in charge of the global part."

You are mistaken - there is an enormous "department" in charge of the global part: the US Navy.

Reply on news.ycombinator.com