This game can continue forever if banks increase cards' earning rates to 1.5 or 2 miles per dollar and keep increasing it in step with award chart inflation.
In a way this already happens with some cards such as Hilton HHonors. The Amex card earns 6x points per $1 for gas, restaurants, and groceries and 12x booked directly with Hilton. Credit Card companies will have to increase or add new multipliers to keep up with changing award charts to keep people wanting these types of rewards over cash back.
If an airline mile devalues to 1c, do you want 10,000 miles or $100 cash back? Obviously, the cash back is a much better value at that point unless you're the earning potential is great enough.