Oh, there’s no question that the whole thing is coming undone. But, what you’re proposing is another variety of the “decoupling” that was supposed to insulate the rest of the world from US woes. As it turns out, much of the world is in as bad, or worse, shape.
In a world economy where debt had become money, money has been and is being destroyed, as rapidly as the various central banks are replacing it. Money supply in the US has actually contracted.
Where is this “other” reserve currency going to arise? The Euro? Not likely. Yen, Yuan, Peso? Ruble?
None of this seems at all plausible. Some were proposing that commodities had become the new reserve. We see how that worked out.
Yes, other nations, world wide, are hurting more or less as much as the United States. I am not predicting they do well while we don't. If you read what I wrote, I predicted a catastrophic collapse of foreign manufacturing of goods to be sold in America, for example.
I am simply agreeing with Eric Janszen of iTulip that a boat load of dollars are going to be shipped back here, likely within the coming year. There will be a massive decline of foreign held financial paper denominated in dollars. Treasuries will be sold, causing short term Treasury rates to reverse sharply upward. Dollars will be exchanged for other currencies, more regional or closer to the user. Foreigners will projectile vomit their dollars back at us. The foreign currency exchange rate of the dollar will collapse.
That increase in domestically residing dollars, in and of itself, is the very definition of what EJ means by inflation -- an increase in the available supply of currency.