Website: https://bitcoinandmarkets.com/e226/ Hopefully this episode helps you understand the arguments people often make and if they hold water next time the invoke the Triffin Dilemma. My interest in the Triffin Dilemma started several months ago. Little did I know then that I was trying to debunk an ahistorical extension of the original Triffin argument. I initially came to this conclusion: The problem with using Triffin in an argument about a dollar collapse is 1) it's ahistorical and 2) there doesn't need to be a capital account deficit in the US and surpluses in other countries for them to acquire dollar reserves. In this episode, I try to provide you with a basic understanding of the original Triffin Dilemma from Robert Triffin in 1958, and of why the modern extensions of this famous prediction are poor facsimiles. I provide tons of useful links below as part of the show notes. Balance of Payments It all comes down to the Balance of Payments for a country which issues the global reserve currency. The two main parts of the BoP are the current account and the capital account (including the financial account which we don't talk about). These two halves of the BoP must balance. The current account consists main of a balance of trade. Is the country running a trade surplus or a trade deficit. Other factors are things like foreign aid which we don't have to consider because it's very small compared to the trade balance. The capital account consists of flow of assets and liabilities for the country as a whole. When a foreigner buys a US asset (or a dollar denominated asset) this is a positive input for the capital account. In the reverse, when a US person or entity buys an asset in a foreign country it is a negative input for the capital account. Remember, the current account must be offset by the capital account. Therefore, if the US has a trade deficit of say $500 billion, they must have a capital account surplus of $500 billion. Triffin and Trade Surpluses When Triffin was writing the original Triffin Dilemma, in the 50's and 60's, the US ran massive trade surpluses. This means the capital account was negative - the US was losing assets abroad, or more accurately gaining liabilities abroad. Triffin was concerned that when the dollar denominated value of foreign liabilities surpassed that of the US's gold stock which backed the dollar at the time, there would be a run on the gold stock by those foreigners. They would sell their dollar denominated assets and take delivery of the gold, portending the doom of the US dollar peg. Current Account and Fiscal Triffin The US dollar did end up going off the gold standard in 1971, but not for the reasons Triffin predicted. Despite being accidently right, this form of argument became very popular in economics. Today, we can see two main extensions to the Triffin Dilemma, "current account Triffin" which is exactly the opposite of the original theory, and "fiscal Triffin" which is about global demand for US debt to cause the US to run unsustainable fiscal deficits. The current account Triffin is the most used by inflationists to support their dollar bear views, and, well, it's totally false. It reverses cause and effect, and lacks a clear systemic risk. The fiscal Triffin is more sound, but it is also false. It fails to consider other forms of safe assets like Mortgage Backed Securities and other derivatives. These are inferior to US Treasuries, but they are still widely used in their place (with an associated premium surely). Fiscal Triffin also lacks a clear systemic risk to the financial system, so is unlike the original. Hope this helps. A Links Wikipedia entry for Triffin Dilemma BIS Report - Triffin: Dilemma or Myth? BIS Report with my highlights via Hypothesis Understanding Capital And Financial Accounts In The Balance Of Payments - Investopedia FRED - Financial Accounts of the United States Khan Academy - Balance of payments: Capital account

Bitcoin & Markets

Triffin Dilemma: Fact or Fiction? - E226

 Full show notes with images and links at https://bitcoinandmarkets.com/e225 At first glance, the Chinese miracle has survived the virus recession and returned to growth. There is no lack of articles proclaiming the inevitable dominance of the communists, sitting atop the list of largest economies in the world. An idea that a rising CCP will want to stretch its new found legs and exercise influence over international trade and diplomacy, and that will bring them into direct conflict with the declining power, the US. This idea was titled the Thucydides Trap by Graham Allison in 2012. Since then it has been a widely used and debated point. While it makes sense that the West is stuck in a debt trap cycle making them destined to stagnation (unless bitcoin), it does not follow in the least that the CCP will continue to rise. The pattern we have seen in China over the last 20 years, is nearly identical to the pattern we saw in Japan from 1970-1990. In this episode I read the original work by Graham Allison and then a great article debunking this work of ahistorical fiction. Hopefully it helps you next time you hear someone using the Thucydides Trap idea to support a decline of the West. 

Thucydides Trap: China vs US, Real or Debunked? - E225

In this episode I listen and react to Doug French's recent Mises article "Central Banks Put Wind at Bitcoin's Back." It's a short but wide ranging discussion touching on the current bitcoin rally, market manipulation, money, and central bank caused inflation. This article has a misplaced bias saying bitcoin's rally is "FOMO", "misallocation", and "human error". Austrians are missing a huge opportunity to champion bitcoin as free market money. More show notes: bitcoinandmarkets.com/e224

Inflationist Dogma - E224

In this episode, I read through a blog post from ECB President Lagarde about central bank digital currencies. I tackle the strengths and weaknesses of her claims and draw conclusions about their plans, in particular the ECB. Website: https://bitcoinandmarkets.com/e223 The future of money – innovating while retaining trust https://www.ecb.europa.eu/press/inter/date/2020/html/ecb.in201130~ce64cb35a3.en.html 

Europe's Plan for a Central Bank Digital Currency - E223

In this episode, I react to a Simon Dixon interview where he spells out his thinking on the future of Central Bank Digital Currencies (CBDCs) and bitcoin. I respect Simon but couldn't disagree more with his CBDC prediction. We do however agree on bitcoin. Original Video: https://youtu.be/M7XtpvPUqls Website: https://bitcoinandmarkets.com/e222

Simon Dixon's Bretton Woods 2.0 Interview Reaction - E222

In this episode, I listen and react to Michael Saylor's appearance on Hedgeye. Their conversation is pretty straightforward. Michael is a buy and hold guy and is trying to convince a trader of the benefits of picking and sticking to an exponential investment versus trading in and out of a position for a few percentage point gain. Show notes: https://bitcoinandmarkets.com/e221 Follow: @AnselLindner and @btcmrkts Blog: BTCM Research https://btcm.co

Michael Saylor Interview on Hedgeye Reaction - E221

 Original video: https://youtu.be/qL2LfVRl3J0?t=315 Full show notes: https://bitcoinandmarkets.com/e220/ 5:15 - Introducing the problems faced by the USD system I agree there's problems, but not the things he lays out. I believe his arguments show he has not considered monetary convergence and has a relatively mainstream understanding of the current system. 9:50 - CBDC Raoul claims the CBDCs are a way to address the problems he has laid out. Again, I disagree that the problems are what he says, and I also disagree that CBDCs can do what he thinks. The three big problems he lays out: 16:25 - Cash, freedom, and an agreement of nations (Bretton Woods 2.0) 23:15 END 

Raoul Pal "Bitcoin Life Raft" and CBDCs - REACTION - E220

In this episode, I voice my support for Peter Schiff against the baseless allegations currently being leveled at him. Then I dig into a slightly older tweet from earlier this year, where Peter talks about gold and scarcity. I take it piece by piece and discuss all the economic ideas behind why he is wrong. Website: https://bitcoinandmarkets.com/membership/ 

Peter Schiff Scandal and Thoughts on Scarcity - E219

In this episode we walk through a discussion of money supply, Fed policy, and velocity, to find out if inflation is coming to the dollar. This is an important concept for bitcoin because many people believe bitcoin's fate is tied to a weak dollar, which it is not. Website: https://bitcoinandmarkets.com/e218 Twitter: https://twitter.com/btcmrkts https://twitter.com/ansellindner Links M0: https://fred.stlouisfed.org/series/BOGMBASE M1: https://fred.stlouisfed.org/series/M1 M2: https://fred.stlouisfed.org/series/M2 GDP: https://www.investopedia.com/terms/g/gdp.asp  

Is Inflation Coming to the Dollar? M2 and Velocity - E218

The beloved bitcoin podcast is back with a reaction and hot takes on a recent interview between Danielle DiMartino Booth and Bitcoin Magazine's show Fed Watch. The show starts with an update on this podcast's current and future direction, then we listen to the recent interview, and finally react to it.

Reaction to DiMartino Booth Interview and Show Update - E217

In this episode, I read through the new Europol EC3 Cyber Bits April and May issues where they talk about Wasabi wallet and bitcoin mixing in general. Full show notes at https://bitcoinandmarkets.com/e216 My copy:  https://bitcoinandmarkets.com/wp-content/uploads/2020/06/Europol-Wasabi-Wallet-Report.pdf  Original:  https://www.tbstat.com/wp/uploads/2020/06/Europol-Wasabi-Wallet-Report.pdf  Next part is on why you should Delete Coinbase. They are trying to sell your data to the DEA and the IRS. Story:  http://archive.vn/40K7t  Janine thread on Neutrino and now Coinbase's crimes against human rights. Coinbase owns the technology from https://twitter.com/J9Roem/status/1100876184999596054?s=20  

Bitcoin Mixing, Wasabi, and Coinbase - E216

In this episode, I base a discussion about bitcoin and ethereum inflation around a tweet from Ryan Sean Adams, a popular etherean. I touch on the bitcoin halving, the fact that bitcoin's supply is not changing, and how ethereum wants to copy bitcoin and make unwarranted comparisons. Tweet: https://twitter.com/RyanSAdams/status/1259877725550055431?s=20 Full show notes at https://bitcoinandmarkets.com/e215

Comparing BTC and ETH Inflation - E215

In this episode I walk through an understanding of Liquidity and how the actions of the Federal Reserve can't increase liquidity and flow in the economy. I also give a quick definition of the REPO market and interpret it as a money substitute factory - a place that creates and destroys money substitutes. This is the consensus layer of the global financial system and how we need to define what money is. It's money substitutes that flow through the REPO and money markets. Mises on money​ substitutes https://wiki.mises.org/wiki/Money_substitutes Jeff Snider https://www.youtube.com/watch?v=OM_J-4fJYEk ​Excellent REPO market resource ​https://www.icmagroup.org/Regulatory-Policy-and-Market-Practice/repo-and-collateral-markets/icma-ercc-publications/frequently-asked-questions-on-repo/4-how-big-is-the-repo-market/ ​Highlighted Fed paper on Discount Window Stigma and how they try to address it https://hyp.is/go?url=https%3A%2F%2Fwww.federalreserve.gov%2Feconres%2Fnotes%2Ffeds-notes%2Fstigma-and-the-discount-window-20171219.htm&group=__world__ 

The Case for Deflation Part 4 Liquidity and REPO - E214

In Part 3, I answer some critiques and questions from the audience. The discussion on liquidity and Repo, the base layer of the Eurodollar system is now moved to Part 4 coming up soon. Questions from Epistemicrisis, Xan, CryptoGamer and Colin Harper. WTF is happening with the Fed?! - Is this inflation w/ Ansel Lindner - WTF 5  https://podcasts.apple.com/lu/podcast/wtf-is-happening-fed-is-this-inflation-w-ansel-lindner/id1459884105?i=1000472534928  Website: https://bitcoinandmarkets.com/e213

The Case for Deflation Part 3 - E213

In this episode I tackle different types of money, debt, fiat and commodity monies. I discuss how they behave differently as a global money standard. Debt has a unique aspect of global deflation that's not shared with other forms of money. I discuss bailouts at money replacement, not money expansion. Finally, I wrap up with how this all ends.

Case for Deflation part 2 - E212

Keeping you ahead of the curve on Bitcoin price and fundamentals analysis, news and economics. - BitcoinAndMarkets.com | @BTCMRKTS

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Bitcoin & Markets

hubhopper