Despite all of the pain caused by the Great Recession, there is no sign that the world is forsaking the greenback. Investors remain willing to finance the US at rock bottom interest rates, and the nominal trade weighted index of the dollar has not collapsed.

Domestically oriented macroeconomists look at the situation roughly like this at some point in the future, foreign central banks will become less willing to continue buying massive amounts of dollar denominated securities in order to prop up the greenback. When they cease their large scale dollar purchase programs, the value of the dollar will fall and it will fall hard.