… there are no doubt a number. One that stands out for its conceptual clarity, however, is the Triffin Dilemma. Formulated by Robert Triffin and publicized in testimony to the US Congress in 1960, it builds upon the simple arithmetical necessity that any country whose currency is privileged with world reserve status is compelled to run chronic trade deficits, in order to supply global monetary liquidity. World economic hegemony is therefore inseparable from a loss of control over domestic monetary policy — since measures that might be required to support the value of the currency would commonly be inconsistent with the responsibility to export money (through a negative current account balance).
‘Chimerica‘ is the Triffin Dilemma exemplified in convenient binary form. On the one hand, economic leadership and the ‘exorbitant privilege’ of seigniorage (through which mere financial signs are swapped for substantial products and services), on the other economic policy dysfunction and de-industrialization, as American business activity is outsourced to China is exchange for symbolic monetary dominance. In this process, and paradox of power, the current instantiation of world order is captured in its essentials. The way modernity presently and concretely works cannot be made intelligible without reference to Triffin.
The strong implication of the Triffin Dilemma — perhaps even ‘Triffin Paradox’ — is that global currency hegemony is ultimately ruinous for the financially sovereign nation. It involves something akin to an economic analog or variant of Paul Virilio’s ‘endo-colonization’ which “happens when a political power turns against its own people” progressing smoothly from predation to auto-cannibalization. The ‘exorbitant privilege’ of accessing real resources in exchange for mere promissory paper is maintained only at the cost of an absolute outsourcing — an international division of labor in which the master is compelled to specialize in financial signs, submitting to an accelerating atrophy of productive capability. An international reserve currency is therefore self-hollowing, in a vicious causal loop that substitutes pure political prowess — symbolic prestige — for the industrial advantages which originally promoted it. The culture it imposes accentuates consumerism, financial politicization, and hysterical sensitivity to the vicissitudes of signs. In the end, only the magic of power remains.
The way out of this deteriorating structure has long been envisaged as a politically-managed international currency, whether the Keynesian ‘bancor’, or the IMF’s SDRs (Special Drawing Rights). The call such a scheme makes upon coherent international governance has reliably exceeded diplomatic and political practicality. It is notable, however, that a certain globalist fantasy is predictably generated by the stresses of currency hegemony, irrespective of all prior or ulterior ideological commitments.
If US Dollar hegemony is unsustainable, and globalist remedies are realistically inaccessible, the world economic order has a catastrophic horizon. Crucially: with currency hegemony now understood as a trap, no sane national regime can be expected to advance itself as the next America. Whatever waits beyond the magic show has to be something new. It is under these conditions that — ‘coincidentally’ — the first post-national and radically depoliticized digital crypto-currencies have begun to appear upon the world stage …