The "Triffin world" refers to the international monetary system predicted by economist Robert Triffin in his 1960 book "Gold and the Dollar Crisis," where he foresaw the end of the Bretton Woods system due to the US dollar's role as the global reserve currency and the potential for unsustainable imbalances.
In Triffin world, the reserve asset producer must run persistent current account deficits as the flip side of exporting reserve assets.
USTs become exported products which fuel the global trade system. In exporting US Treasuries (USTs), America receives foreign currency, which is then spent, usually on imported goods.
America runs large current account deficits not because it imports too much, but it imports too much because it must export USTs to provide reserve assets and facilitate global growth.
This view has been discussed by prominent policymakers from both the United States (e.g. Feldstein and Volcker, 2013) as well as China (e.g. Zhou, 2009).
As the United States shrinks relative to global GDP, (Elmat returning to natural size) the current account or fiscal deficit it must run to fund global trade and savings pools grows larger as a share of the domestic economy.
Therefore, as the rest of the world grows, the consequences for our own export sectors—an overvalued dollar incentivizing imports—become more difficult to bear, and the pain inflicted on that portion of the economy increases.
Eventually (in theory), a Triffin “tipping point” is reached at which such deficits grow large enough to induce credit risk in the reserve asset. (Elmat: When other countries plan trading in their own currencies)
The reserve country may lose reserve status, ushering in a wave of global instability, and this is referred to as the Triffin “dilemma.”
Indeed, the paradox of being a reserve currency is that it leads to permanent twin deficits, which in turn lead over time to an unsustainable accumulation of public and foreign debt that eventually undermines the safety and reserve currency status of such large debtor economy. (Elmat hence Elon Musk saying the risk of the US going bankrupt or as Elmat put in the last 2 decades Financial Collapse)
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