I don’t think the USD will collapse completely as there is nothing to replace it. I just think the Fed will be forced to continually monetise endless quantities of treasury debt until we cross the rubicon in their balance sheet. The fact that they are adding junk bonds to their portfolio now is hastening this day of reckoning. Every municipal bond and corporate bond that they buy is degrading their balance sheet.
Now, the central planners will say they don’t need to mark to market and they don’t need capital. They object the thesis that high debt causes low growth which leads to a feedback loop that destroys the credit system. But to me, socialism is always wrong and Von Mises and Hayek showed this convincingly. Unfortunately socialism is the cancer that never dies until it destroys everything and you are queuing up for rotten fruit and mouldy bread. But I digress…to me the Fed is just a giant hedge fund with 100-1 leverage. Once this loss of confidence in the happens, there is no way to restore it without letting interest rates go up which will initiate a gigantic credit default.
Eventually the market will stage a run on the Federal Reserve but I don’t know exactly when this will happen. My guess is it will happen in the next few years though.