Collapse-able dollar?

For last few months people have been getting on the soap box and pontificating about a new global currency (a gold backed one, at that which the dollar stopped @ 1972). All of a sudden. Out of seemingly nowhere, every economist was talking about a dollar-weakened future (well, not everyone).

This struck me as odd. What exactly was fueling their worries? How was this tied into the recession? And why a lot of learned business gurus were relating about how the US would take more than 10 years to get out of this recession/mess.

Mess? Yup. Mess.

So, I did some digging and here is what I found.

The (US) Mint has been busy. Real busy.
Its been minting. More than normal. Way more. To put things in perspective.
In the last 1 year, it has expanded the monetary base from the, then, 900-ish billion to approx. 1,700-billion-ish (and its still printing (hint: look at the far right) ...). That's right. In less than 1 year, Bernanke has tried to attack the recession by:
1. Printing his way out, and
2. Make firms and banks take money (remember TARP) and refuse to let them pay it back (a nice way to say, I own you!)

So, where is the money? When people are complaining about unemployment and housing slumps, etc..

Its with the banks. The banks are storing those reserves at 0% interest rates with the Fed in, what are known as excess reserves of Depository Institutions. Fancy ways of saying the money is being spread between the fed, banks, and the TARP-stained companies.

The Fed through the IOER rate (interest on excess reserves), will try to control monetary policy. Make sure that reserves deposited by the banks don't make it into the system. Buy time, until a solution can be found.

That is why Bernanke has gone on record to say that the interest rates are likely to be in the 0-0.25% range for "some time".

Just imagine the inflationary pressure, if a tenth of those funds make their way into the market. The question is how long before the dam breaks?

The CBO has projected

... that the federal debt as a share of the economy will double over the next decade, from about 41% last year to 82% by 2019.

(this debt is the by-product of the various stimulus packages)

This begs the question, why the analysts on CNBC go around talking about US coming out of the recession by the end of this year?

Do they not realize what is really happening or are they more PR and analysts less?
Is the dollar really safe or is it headed the way of the Zimbabwean dollar.