I think you get the picture when I say that converting to a world currency with the visions of Chirac, Chavez, Putin and Soros seems like an idea from outer space.

But I've got this feeling in the pit of my stomach that the powers-that-be will keep pushing for this egalitarian world view. They want a situation where wealthy nations subsidize poorer, hugely corrupt countries without accountability for their actions. It would be like America dragging around a huge bag of rocks — a permanent drag on our economy.

Still, the possibility of a single global currency along with the prospect of inflation spiking a year or two out because of the skyrocketing debt and explosion in the money supply creates a good reason for the dollar to lose considerable value.

With the devaluation of the dollar inevitable in the short term, investors are hedging now against the threat of inflation — by investing in crude oil.

Oil, Not Gold, Is the Best Hedge Against Inflation

Many would argue that gold is a better inflation hedge than crude oil, and it may well be up to a point. But gold is much less important in its application to how the world functions.

We can do without most of the gold production in the world. In fact, most of the gold that has ever been mined since the beginning of time is still here in some form today, whereas oil is burned up as a daily necessity to fuel the global economy. (Learn more: 5 Reasons NOT to Invest in Gold)

Just think about it. Crude oil is a depleting asset in a world that consumes over a million barrels per day. Most of the oil deposits in the world are in geopolitical hotbeds where serious events there can destabilize world trading overnight. Emerging markets are industrializing and pushing up net demand, and oil is seen as an excellent hedge against inflation.

Considering these trends, more emphasis is being placed on crude oil every day by currency traders. Crude oil far outweighs all other commodities in terms of priority as to what currency traders view as a viable alternative asset to own that will protect against devaluation. Because of this, crude oil is already our world currency.

In fact, the leaders of most industrialized nations are in a race to see who can devalue their currency the fastest so as to hopefully jump-start exports. And when the U.S. dollar, the Japanese yen, the euro, the Chinese yuan, the Aussie dollar, the Russian ruble, the Brazilian real and the English pound sterling are all trending lower, oil is the contra-play on crumbling currencies.

This is why I believe oil prices are trading firmly above $50 per barrel in the face of historically high inventory levels.

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