Right now inflation is relatively contained because everyone piles into USD as a safe haven asset, which allows the US to purchase a lot of imports since the dollar is strengthening when that happens.
First off, lots of other currencies are valuable without being reserve currencies. Swiss franc, Japanese yen, etc. Being a reserve currency probably boosts USD a bit but it's not the only pillar holding the thing up that people imply. If you disagree show your model: You have to believe that value for the euro, GBP, JPY, Swiss Franc is determined by thing X, USA does not have thing X and instead depends on being a reserve currency.
Second, what's the alternative reserve currency? Bitcoin? Don't make me laugh. RMB? Even more ridiculous. Euro? Probably the most realistic contender but seems to have major governance problems. As with democracy, the USD is the worst reserve currency, except for all the alternatives.
When people move their money out of monetary unions, there are only a few places and assets to purchase in large amounts. Everything has already been stretched to insane valuations, so USD is it.
I think your pragmatic look is refreshing, but too willing to reject a notion just because its popular, you’re right on the money just incorporate the demand drivers instead of excluding them.
That doesn't mean it's going to happen, but if it did happen, it wouldn't be nothing.
Americans with mortgages and other debts are happy to take US dollars they can use to clear their debts and foreign buyers are happy to get US exports for their declining dollar holdings, so the foreign dollars would end up in the domestic market and cause hyperinflation.
To the second point, yes for most countries there's no plausible alternative to USD. However, there's no law of nature that says the world has to have a single reserve currency. AIUI rather than the entire world switching away from the dollar the real risk is of fragmentation. Yes, most countries aren't going to suddenly stop using USD as their reserve currency. But Russia has had its USD central bank assets frozen. Their reserve currency is the currency of its biggest geopolitical opponent, who have demonstrated they are willing to use that fact as a weapon. Against that, RMB isn't necessarily so bad an option. That could be the beginning of establishing RMB as a global alternative reserve currency.
Edited to add: Firstly, AFAIK this picture of RMB becoming an alternative reserve currency isn't seen as all that likely, just a possibility, and secondly I'm the exact opposite of an expert on this stuff - just disagreeing with specific points based on what I've read.
Another edit: I also agree that the idea of bitcoin as a reserve currency is completely ridiculous and insane. Everything about bitcoin is ridiculous and insane, though.
Russia just doesn’t have enough power to move global markets. Its economy is smaller than Texas’, and is rapidly shrinking.
How likely is that to happen this decade?