Things are never simple, they are all interrelated.
If we have inflation and cause the Chinese to loose a chunk of their Dollar holdings, they’ll be mad at us and thus will be less likely to cooperate where we need them (Korea, Afghanistan, Iran, etc..) They will need to make it up somehow even if they need to go against us (a big loss in the value of their Dollar holdings will cause them to think that we are not trustworthy and that we screwed them).
Same with the oil producing countries. They have large dollar holdings and they won’t be happy. They may then start trading their oil in Euros, Yens and Yuans. That will be a problem for us because that will reduce our ability to pay for oil in depreciating dollars.
Why are we in the Middle East? To assert our influence/relevance so that oil producing countries have confidence in our ability to shape events and continue the petrodollar regime.
Remember, we have it really good because of the dollar being the reserve currency. That is we pay with our own currency so we don’t have to “work” to earn foreign reserves. Foreigner sell us goods and we give them paper dollars. Those same dollars are then re-invested in our economy generating growth for us. Our standard of living is high because we can exchange paper dollars for all the stuff we fill our homes with.
Economists are talking about the beginning of “decoupling” that is Europe and Asia’s ability to sustain growth without America. America is still the biggest buyer of everything but “decoupling” will happen sooner of later — just like globalization cannot be stopped.
However we manage our economy we have to be mindful of how our lenders perceive us. Confidence in the US Dollar is critical to our national security. Remember, once you get bad credit you pay more for everything.