> It’s backed by the fact that the United States, in conventional warfare, could hold its own against most of the planet for a long time
This is some of the most ridiculous, armchair-general bluster I've seen. Use the military to defend a debt? Truly one of the takes of all time.
Americans couldn't even stomach a proxy war in Vietnam or Afghanistan. Their shenanigans with the Mujahideen and the Taliban in the 1980s and '90s directly led to several thousand souls losing their lives on 11 September 2001.
In five months flat Canadians have gone from saying' Americans are my brothers' to 'boycott America'; Europeans are not far behind. The Chinese already don't care, and they hold significant leverage over the US, having bought trillions in foreign currency.
In the highly unlikely scenario that the US chooses to declare war—no, sorry, it's now a 'special military operation'—on a respectable Western country for wanting to collect debt, that is when the money backing the US will instantly evaporate, and therefore the money to fund that war will go with it.
Germany is already uncomfortable with its gold reserves sitting in the US, and is looking to repatriate. Is this a genuine casus belli, in your world?
Yes, it does. Let me indulge your fantasy scenario. What makes you think that in a real hot war between the US and its former allies, the US will continue to maintain its economic sovereignty and continue unscathed?
Let's talk military first. Have you considered the effects of a direct total-war attack on the population centres of the Eastern sea board? A dirty bomb? What about mines and covert unmanned marine drone attacks on your aircraft carriers? They're not invulnerable; a decent amount of conventional explosive can blow a big enough hole in any ship to scuttle it.
Let's talk economics. Under such a war, what makes you think every other country will continue to respect US IP laws? The proprietary source code of many large US tech firms are in non-US servers. US hardware and industrial design blueprints are in the hands of non-US companies, who respect a gentlemen's agreement. What makes you think developers using and maintaining these servers wouldn't be asked to go rogue and publish all this IP?
It's easy to say 'we'll go to war over debt'. It's a lot harder to actually tie up your boots, pick up your rifle, get in a plane, parachute down, and start shooting other people... Who would shoot back.
I'm saying if other countries want to debt-collect in case of a default, there are other levers they can tweak besides just showing up at the US' door and saying 'give us our money back'. There are trade levers like tariffs, bonds, foreign currency reserves, gold reserves, and more. And I daresay in a concerted effort the US wouldn't be able to do much, unless it dares to risk enraging the entire world. In which case it would be able to do less still.
Funnily enough, it has already got halfway there, which was precisely my point. And sufficient damage was done to the markets that it managed to erase 4 years' worth of growth in one week flat, with a rather muted recovery afterwards.
This is completely incorrect. Even if you believe the premise, you cannot expect others to lend money to you when you obviously refuse to pay back previous creditors and then the premise becomes incorrect because the debt will not be a safe bet.
Though it would never come to it, the U.S. will always be able to pay back creditors because it could, in theory, simply take whatever was needed to settle. Uncomfortable to reconcile but ultimately true at present.
What is with this pervasive assumption that the US owing other countries in USD somehow implies that the US might somehow end up wedged trying to pay back debts denominated in USD? These are not household finances - the US is monetarily sovereign. The US can always pay any USD-denominated debt by conjuring new money, meaning politics is the only thing that can actually cause a default.
Your top level comment is basically a huge red herring. The dynamic is not one of the US starting a war to take others' lootable assets to pay off debt denominated in USD. Rather, benefiting from US military hegemony in the future is what other countries are buying into when they choose to store their wealth in USD. They accept the demurrage from holding continually-inflating USD as the cost of moving bulk wealth forward in time, and our spending much of the proceeds of that arrangement on maintaining our global hard and soft power made perfect sense.
Trump's policies have directly made the US an unreliable ally, and therefore made USD less attractive. Monetary inflation has always been acceptable (there isn't a better game in town). But after our allies have trusted buying shares in our economic empire, leaving them high and dry or overtly extorting them for even more is breaking the arrangement.
All of these points about "cutting spending" and "making other countries pay their share" are essentially quack narratives covering for actions aimed at directly undermining the United States and the Dollar. It's even more blatant when you see things like spending is not actually being cut. Presumably if he (they?) succeed at the goal, the plan is to blame the results on purported inevitability when the reality will be that they blew it up.
>the U.S. national debt doesn’t matter they way it does for other nations. No matter how frustrated the rest of the world gets, American debt will still be a safe bet even if issued seemingly endlessly.
Ah, yes, the old "this time is different" argument. That one worked so well for the British Pound-Sterling nearly a century ago.
The thesis begs the question of by assuming a static economic environment. The point is that the tenuousness of the stability of the dollar, makes people want to hold it less, which makes it more likely for people to find other reserves. It would certainly take some time to unwind, but not that much time.
Unless you can name another currency with even a moderate likelihood of stability owing to the issuers ability to underwrite it with something like, say, having the Navy that keeps shipping lanes unimpeded across the entire planet… the thesis stands.
I have no idea why you think military might will force people to buy debt.
Other nations have armies. Other nations have nuclear arsenals. The denomination of the debt has little to do with whether or not shipping lanes stay open, and a lot more to do with the nation being able to demonstrate that they can return a greater value of capital to the lender.
You don’t see a connection between military power and stability?
You really don’t see how a single country guaranteeing freedom of navigation worldwide for the 80% of global trade that happens by sea might have something to do with other countries having a vested interest in the stability of that currency? Or how that same Navy being the one that sits where the resources that drive the global economy flow like the Persian Gulf might mean it’s not comparable to… the nations that can’t do that (see: any)
The leadership of some parts of the military is being decimated, and further cuts are being threatened by the defense secretary. This will shake the confidence and raise questions amongst the rest of the military such that it's performance will suffer - the extent of this won't be known until it's tested though.
Deploying US military might towards a previous ally or even just non-traditional enemy state might get sideways glances from those who have to get their boots on the ground.
If any group have questions about their leadership they will under perform their potential. Military training 'breeds out' such independent thought, but it can't do it completely due to the human factor.
The bad orange man has 3 years left tops. U.S. military power and the ability to project it anywhere, rapidly, and practically Indefinitely will not go from being comically ahead of everyone else to anywhere approaching touchable in that time.
No, it's not the United States's military dominance that makes American debt a safe bet. It's that the Dollar is the worlds reserve currency. Other countries need to transact regularly in dollars even if the United States is not involved in the transaction. And the only way for other countries to get those dollars is through 1. A trade surplus with the US, or 2. Buying US bonds.
