consequences of a falling us$

The argument I get from bears is that US debt and sick economy will cause a decline in the US$ and subsequent increase in inflation and interest rates. Some gold bears would replace the word decline with collapse.

I think decline and collapse are both possible but with dramatically different outcomes. Any collapse in the US$ would be a disaster, IMO, wiping out world economies.

If on the other hand, the US$ was to decline within acceptable limits, if could boost the US economy no end. I think the Us could handle an increase in inflation and rates just to make their companies more competitive. Add to this lower oil prices and the US could quickly drag inself out of it's slump.

Of course it's trading partners wouldn't like it, especially the Japanese. Debtees will especially not like it try to dump US$ which could cause the collapse I pointed to earlier.

If a collapse could be avoided, the power house would grow at the expense of the leeches that feed off her. Sounds exactly the policy a right wing republican party would follow.

Any informed comments?