"I can understand that but I would imagine that the other nations are beginning to wake up to this tactic and will try to do something to change the status quo-BRICS for example."
Exactly. That's why the plan will ultimately fail. Once enough of the world decides it doesn't want to play this game (which is rigged such that real lenders and dollar-holders lose wealth), the game is over. (And over the past year or so there have been a lot of signs of dollar hegemony unraveling -- different countries not using US dollars for activities that used to be done exclusively in US dollars.)
It's amazing how long they can keep the game going though. And you see all kinds of interactions happen that are hard to predict ahead of time. For example, the high demand for US debt when the real return is negative (and not much better than cash, sometimes even worse!) and the US is massively indebted already might seem very perplexing. That is, until you consider that people don't keep large amounts of cash in their mattresses but in banks, and the banks are insolvent. So people are using US debt as a more reliable bank, because if the bank doesn't have the money (think MF Global) you might lose everything, but if the US government doesn't have the money, it just prints more via the Fed (stealing wealth from everyone else so it can "make good" on its debt to you).
The way the US has been using its military in the MENA region (and forcing "liberated" countries to sell their oil in US dollars) likely has something to do with keeping this game going as well.
A big part of the problem is that banks are all too happy to play the game. They don't care if the principle loses value, because they create money from nothing. They basically buy US debt with money from nowhere, and when the bond matures they can send the (nominal) principle back to the nowhere it came from, and pocket the interest (which is a lot of money when you buy billions of dollars worth of bonds using money that doesn't exist). The net result is that you and I become more and more indebted to (enslaved by) the banks as long as they can keep the game going.
I see the banks as a big part of why the failure mode is so unpredictable. Increased leverage always makes markets more unstable (as it introduces positive feed-backs), and the banks constantly making money and promises to "pay it back" (extinguish it) has created lots of leverage in the system. And the Federal Reserve seems intent on ensuring the amount of leverage in the system never decreases, which only ensures it will fail spectacularly at some point.
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