The euro??? The euro has a much, much better chance of ceasing to exist than it does of replacing the dollar as the reserve currency. Countries like Spain and Italy that are near depression will have huge incentives to leave the euro so they can conduct their own monetary policy. If Eastern Europe is not bailed out before it goes bust, then more Western European banks will go bankrupt - and many countries in Europe are too small to bail out their banks. There will be immense pressure on the eurozone countries to leave the monetary union.

In the land of the blind, the one-eyed man is king. The dollar does not look good, but compared to the euro or the yen, it looks great. We don't have to worry about losing reserve currency status anytime soon. We just need to figure out what to do with insolvent banks.

Oh, they'll switch. I don't know if it'll be to the Euro, but they'll switch. Right now our policymakers are throwing the kitchen sink at stopping asset price deflation. Employing inflationary policies to counter both moderates the severity, and delays the turn. But since we're in crisis mode, we're not doing any planning around how we're going to remove the inflationary policies when the time comes.

Combine that with massive fiscal deficit, and you have a recipe for inflation and dollar devaluation. It's played out exactly this way many times in many parts of the world throughout history.