The Triffin Dilemma

If you’ve been reading Field Notes for a while now, you may think a lot of what I write is doom-adjacent. And I agree! But I’m not really a doom-and-gloom guy… I’m quite upbeat and positive.

However, I also have a weatherman’s approach to tomorrow: pay attention to what the meteorological signs are telling you—so that you can prepare for what’s likely.

In today’s dispatch, I’m gonna offer up some long-range forecasting—a look into the 2030s.

And be warned: You’re gonna need a sunbrella.

To my way of thinking, the 2030s are going to be a much brighter time for America, for American manufacturing, and for Americans jobs. Which means… a brighter time for Americans.

But here’s the hell of it: The road to the light goes through a very dark place.

For one moment, let me set the stage because it’s important to what I’m going to tell you.

I’m the Forrest Gump of finance. I’ve been a direct participant in every boom, bust, and flash crash since Black Monday 1987. I was a hedge fund analyst and trader through the Thai baht crisis of the late-1990s. I was in Greece 15 years ago as the southern European debt crisis imploded. I was reporting from the front lines of the dot-com crash in 2001 and America’s housing collapse in 2008 for The Wall Street Journal.

So, I have deep institutional knowledge on markets and economies all over the world, if only because I was there, experiencing and recording the dots as they appeared in real time. And I was looking back in those same moments to understand how we ended up here… which dots led us to this point.

The dots I care about now begin at a system designed years before most of us were born.

It goes back to a resort hotel in Bretton Woods, New Hampshire, in 1944, when the US dollar took on the role of global reserve currency. The dollar was the only viable option for trade in a world that had been ravaged by a global war.

That was brilliant for America and American families… at least for a while.

Global reserve status is a primary reason the American middle class emerged. Every other country was buying dollars to buy all the stuff it needed to rebuild destroyed economies, destroyed cities, destroyed factories.

All the money flooding into America is why the middle class of the 1950s, ’60s, and ’70s could afford TVs and cars and tract homes out in the suburbs.

But hidden inside reserve status was a time bomb. In 1960, Yale economist Robert Triffin warned Congress that the country supplying the world’s currency—America—would eventually have to choose between destroying its own economy or destroying the world’s monetary system.

The reason: To keep global trade moving—and to give central banks the dollars they hoard as reserves—America has to ship more dollars out than it takes in. That means trade deficits by design. Factory closures by design. Debt buildup by design.

And by the 1970s, that’s exactly what started happening.

Cut off the dollar flow to save American factories, and every oil trade, every Korean television, every cross-border loan seizes up.

Keep the dollars flowing to keep the world running, and you get the last 40 years: American manufacturing gutted, the American middle class hollowed out.

That is the Triffin dilemma.

For more than 60 years, every Congress has known of this problem… and each one kicked the can down the road, destroying manufacturing and undermining the American family by doing so. Which is what makes this so infuriating for all of us. We trusted those we elected to do right by Americans.

And they didn’t.

They chose the easy path, left us with the bill, and we’re all looking at our empty wallets and wondering how to pay.

My bet—and this is where both the dark tomorrow and the bright 2030s emerge—is that the dollar is going to relinquish reserve currency status. This is what I’m actually talking about at the Future of Wealth Summit [BM1.1]I’m hosting in Dublin in late October. I’ll go way deeper at the summit, but here’s a taste of what I mean.

I see two paths forward regarding the dollar’s reserve status…

One: Some external force takes away reserve status. That could look something like the world coming together for a new Bretton Woods agreement that creates a new global reserve based on a basket of currencies, not just the dollar… or maybe baskets of regional currencies.

Or, Two: Some internal force in America demands the change. Trump and members of his team are right when they say the US dollar is structurally overvalued because of reserve status. So, we could see some US administration tackle this problem by willingly taking away the dollar’s reserve status.

Either way, that will be a very dark transition period for the US economy and American families. It means a permanent lower reset for the dollar. That’s gonna hurt.

A lot.

But every crisis leads to a rebirth. And that rebirth will be very bright for America.

At its core, it means the dollar is coming home.

It stops being the crutch that every other country relies on, and it returns to its original role: America’s money, not the world’s reserve money.

When that happens, US manufacturing is instantly more competitive because the value of the dollar globally will be fundamentally lower. That means real jobs, real wages, real towns getting their factories back.

Meaning, domestic production is competitive again.

Meaning, labor scarcity returns to the American market, which drives real wages meaningfully higher for the first time in 40 years.

Yes, AI is taking jobs, but the corporate world is learning that AI can’t do everything people thought it would, and AI doesn’t have the human touch that business very often needs.

The dots I see herald an American economy that is truly competitive again, and domestic monetary policy that focuses on what’s best for the US economy.

Basically, the 2030s could well be the brightest decade the American middle class has seen since the 1950s and ’60s.