The uncomfortability with the dollar right now seems to be a combination of a short memory and political sentiment.

The Euro has been strong over the majority of the past decade. Yes, less than 10 years time. Remember that from 1999 to 2002, the Euro was falling with decent consistency.

The US Dollar has been a stable currency for a lot longer and the US economy has done well for a long time.

People are worried about debt, but it might not be that much of a risk. If the banks pay back the money that was lent to them, the treasury can take that money and destroy it and there's no expansion of the money supply beyond a short stop-gap. Likewise, if they pay back the money with interest (and there's little chance this won't be the case), the US government can gain funds as well as not expanding the money supply.

The perception has changed a little, but not drastically with those devoid of political intent. Sure, part of it is that the Bush administration played loose with the currency and, in fact, sometimes argued for a weaker dollar and the current wars make the US look less of a good investment, but part of it is definitely political. I mean, if you're China you sure want to create the perception that the US won't be the continuing standard. If nothing else, it's like having two parts suppliers even if you don't consider one of them to be a serious option - you can always use them as a negotiating chip with the supplier you do consider a serious option even if it's a hollow threat. Likewise, many European politicians would like to consider their power rising; Iranian officials love to blast the US; people opposed to the wars want to play the debt card; etc. And some of it is legitimate, but some of it is FUD. I mean, if I came on here and said, "Linux just doesn't do graphics" there's a bit of truth there in that graphics card drivers might not come out as quickly or be as optimized, but it's not like you can't have a nice GUI or use the GIMP or whatnot, but I can say "truthful" things that are completely misleading because I want to advance an anti-Linux agenda. And the same is true here, one can say that the treasury (doubled|tripled|whatnot) the debt and not talk about how most of that is being repaid and it doesn't look like there's much of a chance it won't be repaid. It's the "truth", but it's still misleading. And if you have an agenda, those truths are your friend. Again, not to say that there aren't problems, just to say that some people might be pushing those problems out of proportion to advance an untrue agenda.

Oh, and one thing is important to note: government debt doesn't need to be financed. It does in the long-run, but not in the short term. A government with its own currency has the option to print money. When a government just prints money, it can cause inflation since if each dollar is a fraction of the economy as a whole and there are now more dollars, each dollar is a smaller fraction of the economy. Now, I say "can" there, because there isn't some automatic mechanism - it's based on people's perceptions. In fact, inflation can happen even without an expansion of the money supply simply based on people's fear that inflation should be happening.

And it looks like the "exploding debt" will only be short term as many of the banks have already repaid their loans.

You can try betting on hoarding food or whatnot, but you're most likely going to turn out wrong. It's not that other nations are "tied" to us so much as the US is still a very good economy. Plus, US debt isn't so bad. As of 2008, it was at ~38% of GDP. Compare that with Japan at ~172% of GDP and you can see that many countries do live with a lot more debt (Italy 105%; Greece 97%; Egypt 86%; Israel 76%; Canada 63%; France 68%; Germany 66%. . .). And as long as all the TARP money comes back to the government, there hasn't been any real expansion of the debt - it was a short term loan that looks like it'll be repaid quickly if it hasn't been repaid already.

Now, there are challenges. Rising healthcare and third level education costs in the US don't look good for long-term competitiveness, but one of those looks to be on the docket at present and it's easy to forget many of the problems that European countries have when one isn't resident there. But the US economy is far from a tale of doom. Challenges will be ever present - what matters is whether you address them or not and whether you do so consistently. And the US has faced up to challenges over a long period of time.

//That said, bonds are a terrible investment as you can usually get better rates in a CD from a bank.