[jmherbener]

Two breakdowns of world reserve currencies have occurred in the twentieth century. The pound in the interwar period and the dollar after the collapse of Bretton-Woods. Neither resulted in a hyperinflation.

Inflationary repercussion of the repatriation of dollars is possible in the wake of another collapse of the dollar as a world reserve currency. But, it’s not a foregone conclusion. The Fed could manage the problem. For example, it could require banks to hold increasing amounts of currency as reserve and exchange account balances that banks hold at the Fed for currency as the repatriation proceeds.

Of course, the possibility of hyperinflation or deflation remains since the Fed may prove to be unwilling or unable to manage the problems that its monetary inflation and credit expansion create.