Triffin dilemma

I agree with many of the economic ideas put forward by Yglesias, Thoma, Krugman, DeLong and Baker (among others like Waldman and Bernstein and others on my bloglist). I've  learned a great deal from them and not just about economics, but about other things that surround the dialogue of econblogging. How to argue and have sense of humor and good attitude, etc. I almost always agree with them on the economics and usually on the politics which is much more subjective.

So it's illuminating to me when they disagree, which is rare, or on when they have differences of emphasis. It's not a competition of course it's just interesting to learn how these smart guys think.

For one thing they all want full employment. That's not the goal of glibertarians or cranks like Tyler Durden at Zero Hedge who's main focus is that it's all a scam to give banks money and America's days are numbered.

Anywaying it's interest how Dean Baker emphasizes the trade deficit and the strong dollar policy of Summers-Rubin, while DeLong and Krugman do not.

DeLong started off working for Summers and Krugman started off dismissing liberals' complaints about trade and NAFTA, as did DeLong. Bush's radicalism and nihilism pushed them both to the left.

Anyway I'm not clear on all of this but I don't think Dean Baker has mentioned monetary policy and the Triffin dilemma in regards to the trade deficit, except that monetary policy effects the exchange rate.

His story here from this morning makes sense to me. If I understand it correctly, the Triffin dilemma is where a reserve currency has to do monetary policy for the world and is posed with a dilemma, an example would can be seen in Europe which has a common currency but not a common banking union nor common fiscal policy.

Either have policy too tight in the center and appropriate for the periphery or it's appropriate for the center and too loose for the periphery. This is what happened in Europe which had appropriate policy for Germany during the 2000s after adoption of the Euro, but was too loose for the periphery. And now it is too tight for the periphery while appropirate for Germany.

I'm not sure how this fits with Rubin's strong dollar policy, but it did help our trading partners boost exports to the detriment of the U.S. export business. Clinton replaced this lost demand with demand from an asset bubble and Bush did the same with a housing bubble.

I think ultimately you can derive demand and full employment from some combination of trade/currency policy, fiscal and monetary policy. Each can be stimulative or not depending on the policies.