Dollar Devaluation Backfired - Or Does It?

I am now convinced that Bernanke's attempt to devalue the dollar out of depression has failed. He will not be able to do it. This article from Bloomberg says it all. The reason to devalue the dollar is to close the trade deficit and stop money from leaving the country. However, due to the increase in oil and a large drop in exports, this strategy has backfired. Mortgage rates have also continued their rise.

So, what's the strategy for this insight? Probably some combination of long dollar/short other currency, short oil, long Treasuries (maybe), and short equities (especially stocks reliant on consumer spending with high input costs).

On the other hand, we could use perverse logic to argue that Bernanke will think he hasn't devalued the dollar enough to drive up exports and decrease imports. Which is it?

Using the perverse logic, we would expect oil to continue higher, although it may be bearish for stocks.

In order to determine which one is more likely, let's do a thought experiment to see which, if any of these options, is a self-defeating or self-reinforcing process.

In the first scenario, dollar devaluation stops due to the side effect of rising rates and a stop in money printing. The dollar strengthens and oil drops. The fall in oil would then give Bernanke room to further devalue the dollar if the economy stayed weak.

In the second, Bernanke prints more money. Treasury rates increase, further killing the economy. So, Bernanke prints more money.

It all depends on Bernanke. If I use a "watch what he does, not what he says" rule, I'd predict more printing. However, I cannot be sure about that. I'm going to think about this more. However, there seems to be a nice long trend of money printing and dollar devaluation. I don't have enough info to do anything now, except be a little more confident in my equity shorts.