What's Triffin's Dilemma and Why Should You Care?
L. Reichard White

"Triffin's Dilemma" is just a special case of Comparative advantage. What Triffin recognized is that a country which produces "money" most efficiently will, naturally, in line with the law of comparative advantage, trend to produce more and more of it over time and produce less and less of other goods and services -- and other countries will take up the slack through trade. That is, it will become more efficient for the money-producer to specialize in producing "money" and trading it to other countries for the goods and services it no longer produces within its monetary borders or produces less efficiently.

Over time, the money-producing country produces less and less in goods and services and, instead, imports them -- that is, trades "money" for them -- thus losing its productive capacity, know-how, and jobs to other countries. The money-producing country's trading partners, on the other hand, gain productive capacity, know-how and jobs at the expense of being able to create "money" for a living -- and absorbing the increased money supply from the money-producer which, by The Law of Supply and Demand, causes price inflation.

If the "money" it produces should lose trade value, however, the money-producing country will no longer be able to trade for its goods and services -- and it has lost the capacity to produce them for itself. Also, its trading partners will no longer have it as a market and so will lose jobs to the extent the partner counted on the money-producer as a customer.

Should the monetary value of the "money" produced by the money-producer decline suddenly, clearly there will be an immediate reduction in the standard of living of both the money-producer and its trading partners in direct proportion to the amount that trade declines between them.

The BIG Picture: Ron Paul & Ben Bernanke
Testimony to U.S. House, July 18, 2007

This is a problem which simply couldn't happen in a gold standard world since, because of the relatively inelastic supply of gold working through the Law of supply and demand, the relative value of a given mass of gold will not change across borders, let alone change suddenly.