China and the Dollar's Global Reserve Currency Status

The Chinese and Australian move to oust the U.S. dollar as the world's reserve currency gained full steam over the weekend with Australian officials agreeing to start making direct currency exchanges with China. 

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As the dollar loses the protection provided by its global reserve currency status and countries are no longer required to stockpile dollars for oil trades, the dollar will rise or fall in value based on the strength of the U.S. economy.  So will interests rates and inflation.  Unfortunately, with deficit spending looming for as far as the eye can see and our debt burden growing more ominous every day, that doesn't bode well for the dollar's ability to compete on an even playing field.