The US position as the top superpower is what allows it to print its way out of recessions without being crushed by inflation, since all those extra dollars get stashed away in foreign reserves. If the dollar loses that status, the chicken that is the federal debt will finally come home to roost. At least that's my understanding. If the US loses its edge, inflation will go up as growth slows, resulting in something like Japan's lost decade. Not to mention the preferential treatment it gets by having the biggest stick.
First, the vast majority of our debt is owed to ourselves, not to foreigners.
Second, what makes our dollars so valuable, is not our status as a super-power, but our willingness to pay it back. Think of it this way, the big ticket items in the US government budget are the military, Medicare/SS, and debt service. Now we hear all the time talk about cuts to the military or medicare/ss. But no one even CONSIDERS talk about cutting debt service. THAT is what makes dollars so valuable. (It's also why the vast majority of them are eaten up by us and not foreigners.)
So I'm not convinced at all that our dollars are valuable because we are a super-power. Russia was a super-power, and no one was stockpiling rubles. Likewise, Switzerland is not a super-power, but everyone should have some swiss francs.
Yes, but what makes it possible to service such debt at such scale is that US can strongarm the whole world into submission. It is not the only thing that matters (relevant to the USSR example) but it is the major one.
Correlated to that US would also lose its huge influence in financial institutions world wide. Right now US influnce is preventing World Bank funds from being used to pay for One Belt projects. Few countries want to pay off loans for One belt project using Western loans. If China had been sole superpower, it would have bulldozed even more on projects similar to One Belt project than it is currently doing now.
This is true, but the interesting thing is that USA is quite favourable to Bitcoin, which I believe will be the next reserve currency. For now it looks like Chinese government is missing out on the most important technical innovation.
