The US public debt has exceeded $36.2 trillion or 35% of global GDP, which is estimated at just over $100 trillion – while the budget deficit that will be added to the debt is predicted by the CRFB to be $22.7 trillion by 2035. The number one problem of the US, however, is its current account deficit – without balancing which the debt never decreases.
However, the megaton bomb that threatens the planet is the offshore, “unsecured dollars” – the unregulated offshore money internationally that has reached $75.8 trillion, of which $11.4 trillion concerns loans and bonds, while the remaining $64.4 trillion is offshore dollar derivatives! So the next crisis may be triggered by France or Italy, but its consequences will be unpredictable – precisely because of the offshore dollars.
The critical issue of the US current account deficit, which, despite the country’s already high public debt (over $36.2 trillion and approximately 35% of global GDP), continues to worsen its vulnerable macroeconomic position. Then, the “Triffin dilemma” is introduced: economist Robert Triffin has pointed out that countries with a global reserve currency, such as the US dollar, are forced to run current account deficits in order to supply their currency internationally – a choice that conflicts with domestic interests.
However, the article points out that this interpretation completely ignores the functioning of the offshore financial system (e.g. the Eurodollar market), where banking institutions can create foreign deposits – and thus supply dollars internationally – without requiring a current account deficit. Furthermore, the US supply of currency is not limited to current account deficits but also extends through the capital account, which records net financial transactions. The article also explains how money is created on a bank’s balance sheet: when a bank makes a loan, it creates new deposits – a process that involves banks operating independently of reserves.
This analysis essentially challenges Triffin’s theory, arguing that the US can supply dollars internationally without relying solely on current account deficits – a fact that complicates understanding international fiscal stability and the power of reserve currencies.
