The majority of economic observers seem convinced that the dollar is doomed, and not in some distant future. The basic reason for this unanimity is the reasonableness of the basic thinking, which goes like this:
The Federal Reserve and the U.S. Treasury are "printing money" and flooding the economy with easy money and credit, and the result of this debasement of the nation's currency will be rampant inflation.
In other words, if a nation greatly expands its money supply without expanding its production of goods and services, then all that surplus money ends up chasing scarce goods and services, and you get inflation: the same sum of currency buys less and less goods and services.
This is the goal of State policy, according to the standard line of thinking: The only way the Federal Reserve and the Treasury can "save" the debt-burdened U.S. economy is by creating high inflation, which enables debtors to repay debt with "cheaper" dollars. Everyone who owns debt or low-yield bonds will lose huge chunks of their assets, but for no-asset debtors, inflation will be the cat's meow.
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Yes.
Short dollar, long crude, long cottage cheese.
Overall, I agree with your opinion. When the time comes, dollar will collapse in such a short period of time that it will bring destabilizing effect on the rest of the world economy and currencies. China is already diversifiying away their reserves from dollar to other G7 currencies, and is piling up huge commodity inventories for growth. Putting the growth of Chinese economy and other developing nations' economies on one side of the equation and the strength of US dollar on the other, dollar monopoly will likely come to an end if the other economies gain enough power to support the loss of our current vehicle currency.
But this has been discussed for so long and everyone is aware of the weakening dollar these days. I think dollar depreciation will take a bit more time to take place at a rate and scale as dramatic as described above.... if I happened to be a fx trader betting on spots/forwards/options or anything related to US dollar, I wouldn't short US dollars, at least for now.
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