Economists are misinterpreting ‘Triffin dilemma’, says BIS paper
Michael Bordo and Robert McCauley argue there was nothing certain about the collapse of Bretton Woods
The apparent success of the ‘Triffin dilemma’ – named after economist Robert Triffin, who predicted the collapse of the Bretton Woods system – has led economists to “wrap his brand” around stories to which it should not be applied, according to a recent working paper.
The “dilemma” stemmed from gold’s fixed US dollar value, set at $35 an ounce in 1944, which other countries used as their nominal anchor. As global money supply rose, a gold shortage emerged, requiring ever higher US interest
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