Instant response...having not thought it through, but to offer alternate analysis:
Question: Wouldn't a devalued dollar - especially significant reduction - trigger massive purchases by companies and consumers in other countries? Wouldn't we be flooded with tourists? Both these would create employment -not eliminate it. (Purchasers of Chinese goods would switch their purchase orders to any U.S. manufacturer who could produce.)
Central banks and investors holding dollar based assets would initially buy up dollars to prevent just the catastrophe you describe.
The Oil Reserves stored in Louisiana would be released to initially offset the adjustment to the Euro.
The Federal Reserve would withdraw trillions of U.S. currency from circulation.
U.S. Government would release certificates to all individuals to use for obtaining food/necessities.
Illegal immigrants would all pack up and go home - where their own money was worth more. :o)
Just random thoughts. I DID take Economics in college. But as I recall it was Fall Semester thus football season.So I cut Friday classes and was hung over on Monday. Keep this in mind as you evaluate my expertise. Also, I DID stay in a Holiday Day Inn Express last night! :o)
Oh, one more thing: That gold bracelet you gave your wife for her birthday? You could live off the proceeds from the sale of it for a year!
Maybe, but think of this:
How do countries invest? They buy bonds in other governments, right?
Many countries invest in the US, right? They have corporate headquarters here, right? Foreign owned, but located here, right?
All that money they invested in AMERICAN dollars just went down the drain. If the value of the dollar went down, then the return on their investments goes down.
What happens when a stock goes down in price? People sell, right?
Those govt bonds that other countries invested in just lost 50% of their value, do you think they will keep them or sell when they can?
How will we pay of BILLIONS of dollars in govt bonds? They will print money.
How do you pay for money you print? You cant. It is a false float.
Also, when foreign goods raise in price, our own buying power drops. It will mean a slow return to the US of some jobs that already left overseas, but, too many companies sent their machines overseas to make goods, not just ideas.
Also, the buying up of dollars that are rapidly plummeting in value is a lose/lose situation. It would be like buying up Confederate dollars in 1864...