What isn't getting considered is that this is only possible here because U.S. currency is the world's reserve currency. Other countries may try this to some degree but risk hyperinflation. The U.S. actually won't get inflation because many countries use the dollar for debt, so cash is king.
I can't believe I'm saying this, but I'm worried the day the U.S. dollar will no longer be the world's reserve currency might happen in my lifetime (in the next 80 years). This was unthinkable to me just a month ago.
It's not just the fact that the Fed is buying crap. To me, that's old news. I don't think there's any currency in the world that can rival the dollar of a united U.S. Ultimately, the dollar is backed by the faith of the U.S. government to honor its debts, and nobody else comes close.
But...news that the Federal government is pitting states against each other, between public and private parties, and between state and federal government in its response to this national emergency I think is something we haven't seen. It's like chained Black Swan events. I don't think state governors will let this debacle go unanswered if they have any real authority.
If it threatens the Union, if people in Massachusetts or New York or California ask each other whether the people in Oklahoma or Georgia or Mississippi will stand by them during hard times and if the Union still makes sense, then investors might start asking whether the country will exist to service its debt in the future. A tipover event like that would immediately put on a stopper on debt renewal and the gravy train, at an absolute minimum.
That's a spiders-on-eyeballs hades-says-hi level of scary, but I wouldn't discount the significance of socio-economic or political effects on economic and financial stability, given how this biological risk wasn't priced into our economic or financial grand strategy.
The second reserve currency is the EUR, the EU is already actually starting to break up with the departure of the UK, and is way more likely to continue to break up than the US.
As for CNY, China is a known currency manipulator with no free exchange mechanisms, no central bank independence, and no rule of law.
No individual currency, greater regionalization of each currency.
As regards the EUR, I wouldn't say the UK leaving is sufficient to claim "the EU is already actually starting to break up." I don't think there's serious existential threat to the EUR long term, and there are plans to move away from the dollar.
Those factors don't matter much for CNY if China can exert sufficient political pressure on its economic dependents, which it will likely attempt given the long term geopolitical payoff.
I see those as the 2 main regionalizing forces, although as they wean their populations off the dollar, other smaller currencies may follow as it loses benefits of being global reserve.
Agree that the EU will more likely break up than the US, there aren't state-level checkpoints banning interstate travel on a governor-by-governor basis. If Germany and Austria are squabbling over medical supplies now, it likely won't be EUR.
I doubt CNY given past history, but if the worst comes to pass, I don't think China would pass up a long-shot opportunity to become the next reserve currency. I think it depends on how desperate people are, and how good China's execution is. USD took off post-WWII and USA's execution was top-notch.
I would also say not having a global reserve currency is another option, especially if globalization shrinks massively and international trade becomes highly discrete and easily manageable at a national level by govt. I think there are some trade deals that are barter-like (Australia // Taiwan with the alcohol for masks trade). No need for USD there.
Let's hope the USD is here to stay, and the country stays strong. I just hate being surprised.
Check out this amazing interview about this may unfold: https://youtu.be/_hA3TV1bGsg