You make some good points.

As I wrote that post I also wondered if the dollar collapsed what currency we could go to. I think the more likely possibility is that we would do something like Mexico did and re-issue new currency. We traveled in Mexico before and directly after their currency devaluation. They simply lopped off three zero's and called it the New Peso. Old currency was still usable for a couple years but a 2,000 peso bill was re-numerated to 2 new pesos. I still carry a 1,000 peso bill in my billfold. They were pretty rare and that was the only one I ever got hold of. Most anything that "small" was coinage. Common bills at that time were 2,000 5,000 10,000 20,000 50,000 and 100,000 Peso. If I recall right the 1,000 Peso bill I carry was worth 16 cents at the time I received it. The coinage was devalued so bad that at one point US scrap dealers were trucking in dump truck loads of the old coins and melting them for their metal content till the government made illegal. The newer coins looked like they were made of some aluminum looking pot metal. For several years after the re-valuation touist shops sold the old coins for souvenirs. The old coins were really pretty with nice engraving. I recall seeing a chart of the USD devaluation and currently the dollar is worth something like 13 cents compared to what it would buy about a hundred years ago.

As I recall Zimbabwe did not borrow. Can't remember what I read for sure but either the IMF would not loan them money or they refused it on the terms presented. The author I was reading actually thought that was a good thing and was one of the reasons the economy turned around so well. The problem with IMF loans (according to this author) is they tend to protect the banking creditors. So in exchange for the IMF Loan the country has to agree to restructured previous obligations with a long term payout. This repayment keeps the government resources depressed and this overhead holds back recovery for a long time. What Zimbabwe did, as I recall, was just simply default. The currency got where no one would take it and it became so worthless it just ceased to be used. The foreign banks that had loaned them money (in other currencies so they could not pay it off in local currency) were told to "go fish". Everything collapsed, people went completely to using black market money (other currencies) which was illegal for trade but upon the total collapse of the local currency the government gave up on enforcing it. Suddenly with no one owing money (even if you did it was no problem to scoop up a wheel barrel of worthless paper and pay it off), stabilized currency (dollar and something else, can't remember) that the government could not devalue, and a toothless government that could not spend because no one would take the paper, the country went back to something resembling normal internal trade and started to rebuild. Capitalism and traditional barter had no government suppressing it. From what I hear they are doing pretty well now, considering. During the hyper-inflation all goods were hoarded, bought immediately off the shelves of stores, because people wanted to turn the rapidly depreciating currency into a hard asset that retained value. After the collapse goods started showing up on store shelves again.

If you want to read some really scary stuff read some of the history of the dollar and the things that went on behind closed doors in the past. Most average citizens had no clue how close the US government has came to defaulting more than once in the past and the shenanigans pulled to keep things going. This is not the first crisis we have had, but it may be the biggest and with today's communications with the internet, blogs and such it is not hidden as well. I would say though that probably 90% of the population today, watching main stream media, have no clue what is going on or what is about to be done to them. I was a teenager when we went off the gold standard. I recall Dad talking about it with Mom a little and a few of the old geezers (like me now I guess) complaining but I saw no real problems. The dollar was devalued overnight by 35% (most people didn't know that though), we had inflation following out the wazoo, and everybody just learned to live with it. Being a teenager I just grew up with inflation and didn't think much about the dollar buying a little less every year. That was back when my Dad would make the nickel candy bar comparison. I think they were probably a quarter when I was a kid and Dad said they were bigger when they were a kid and only a nickel. Now they are a Dollar. I suppose in a few years a candy will be two dollars.

We just learn to live with the hidden tax of inflation. The only thing is, if it gets out of hand, then the masses will start to notice and then is when the crap will hit the fan. 

John