1-6 months, natural disasters or economic collapse
That's an incorrect assessment, actually.Secondly, if you owe me a dollar and it's value depletes based on inflation rate, then you still owe me the equivalent of that dollar, even if it's$1,000 now and so many countries owe the US.
As our dollar devalues, we still only owe the same number of dollars, not the same value that those dollars used to represent.
A country experiencing inflation and a devaluation of their own dollar actually benefits, in a sense, where their debt is concerned.
Inflation is a tool used by governments to decrease their debt burden. It's more palatable to citizens and politicians than the alternative methods, even if it's a net loss for the country.
Here's an example I pulled from an article on the topic:
If a country continues into an inflationary spiral, other countries are less inclined to purchase that country's debt, knowing the dollars they get back at the end of the bond period won't be as valuable as they were when the debt was first purchased.How Does Inflation Reduce Debt?
With inflation, the losers are the people and institutions that own the debt, because the currency shrinks in value. For example, say you loan the government money by buying a $1000 U.S. government bond that matures in ten years. At the time you buy it, you could buy a fully loaded laptop or a round trip ticket to London for $1000.
Now, let’s say the U.S. inflates its currency at a 7% rate for the next ten years, which would be about twice the “normal” inflation rate of 3.3% for the past 80 years. At the end of that time the bond matures and you get your $1000 back. You go to buy a laptop; they now sell for $2000. That trip to London costs $2000, too. Many people in this situation will think that the prices of laptops and airline tickets have gone up.
Actually, in real dollars (which are dollars adjusted for inflation), the cost of these items hasn’t gone up a dime. It’s the value of the dollar that’s gone down, in this case, by 50% over ten years. The big winner here is the U.S. government, because its multi trillion-dollar debt has been chopped in half (again in real dollar terms) in ten short years. They accomplished this without raising taxes or cutting spending, which is intoxicatingly appealing to politicians.
(source: Rick Kahler: Inflation a Tool to Reduce National Debt | Kahler Financial)
This can cause a lowering of USD as a reserve currency, and it can incentivize other countries to look for alternative means to purchase oil without needing to convert or keep USD.
Currency is literally a supply/demand issue. The less demand there is for your currency, while maintaining or increasing the supply, the lower the value drops.
Whether it's fiat or not, this rule remains the same. You don't invest in junk for the sake of holding the junk. You invest in the things you think will increase in value, which requires an increase in demand or a drop in supply.
The USD has been falling out of demand for a while, and we don't know how much farther it can fall before it's no longer preferred.
I'm not trying to claim it's "likely". But we need to be aware that it's entirely plausible, and be ready for that eventuality.