Military Strength and the Maintenance of the US Dollar's Strength

At its core, US military dominance, bolstered by a defense budget exceeding $900 billion annually and over 750 overseas bases, creates a network of alliances (e.g., NATO, bilateral pacts with Japan and South Korea) where countries hold dollar-denominated assets to signal alignment and secure protection. This alignment lowers the perceived risk of asset freezes during crises, as seen in the 2022 Russian sanctions, where non-allied nations like Russia lost access to $300 billion in reserves, while allies like NATO members retained full liquidity. Empirical evidence from US Treasury data (2011–2021) shows that allies under mutual defense pacts hold 50–60% of safe dollar assets (e.g., Treasuries), rising to 75% when including looser military cooperators like Saudi Arabia and India; this share has remained stable even post-sanctions, underscoring military ties as a stabilizing force. Without such strength, emerging markets might accelerate shifts to RMB reserves, potentially eroding the dollar's share by 10–17% in a multipolar scenario, as modeled using trade invoicing elasticities and non-Western export data.

Historically, this linkage dates to the Bretton Woods era, where post–WWII US military commitments (e.g., Marshall Plan security umbrellas) locked in dollar hegemony; today, it enables "exorbitant privilege," funding military spending via seigniorage and low-interest debt. A 2025 arXiv study further correlates global foreign exchange reserves with military spending, finding a strong positive link: nations with higher relative military power attract more reserves in their currency, as security assurances enhance investor confidence vis-à-vis alternatives. Thus, military strength is not just supportive but necessary; its erosion (e.g., via overextension in Ukraine or Taiwan) could trigger a self-reinforcing decline in dollar demand, amplifying fiscal vulnerabilities like the Heritage Foundation's "zero" rating for US fiscal health, ironically shared with North Korea due to unchecked deficits, yet mitigated by dollar privileges that military power sustains.

The BRICS Scheme as a Threat to the US Dollar

The BRICS bloc (Brazil, Russia, India, China, South Africa, expanded to include Egypt, Ethiopia, Iran, UAE, and Saudi Arabia by 2025) poses a credible but limited threat to dollar hegemony, primarily through de-dollarization efforts rather than a unified alternative currency. Initiatives like the New Development Bank (NDB, $100 billion capitalization) and Contingent Reserve Arrangement (CRA, $100 billion) aim to fund infrastructure and provide liquidity without IMF strings, reducing dollar reliance in trade settlements, e.g., China–Russia bilateral trade hit 90% non-dollar in 2024. A 2025 SSRN paper argues this challenge stems from post-2008 crises eroding trust in US-led systems, fostering BRICS as a "revisionist alliance" that repositions the Global South via multilateral institutions, potentially shifting 10–20% of emerging market reserves to RMB or gold-backed units if intra-BRICS trade (now 20% of members' total) grows.

However, the threat is constrained: internal divisions (e.g., India–US alignment vs. China's dominance), lack of RMB convertibility, and shallow BRICS financial markets limit scalability. A ResearchGate analysis (2024) estimates de-dollarization could shave 5–8% off dollar reserves by 2030 if BRICS expands payment systems like China's CIPS, but geopolitical fissures (e.g., Saudi hesitance on full de-dollarization) temper this. Scholarly consensus, including a 2024 Sage Journals piece, views BRICS as accelerating multipolarity but not dethroning the dollar soon, given its 88% share in FX transactions. Ultimately, without US military retrenchment, BRICS remains a slow-burn challenge, more disruptive to sanctions efficacy than reserve status.

English as the De Facto Language of Trade and US Superiority

Beyond reserve status, English's role as the global lingua franca, used in 80% of international business and 1.5 billion speakers, amplifies US economic superiority by slashing transaction costs and embedding American norms in global commerce. This "language dividend" lowers barriers in negotiations, contracts, and knowledge transfer, boosting US exports by facilitating access to non-English markets without translation overheads.

A FDIC working paper (2015, updated analyses) quantifies this: a 1-point TOEFL proficiency rise correlates with 6–13% higher per capita GDP via productivity gains in export-oriented sectors, with English's premium over other languages enhancing net exports by 0.8–1.9% of GDP through reduced trade frictions. For the US, as the largest native English economy ($28 trillion GDP), this yields asymmetric gains: firms like Apple or Boeing negotiate seamlessly in global supply chains, while rivals invest billions in English training (e.g., China's $10 billion annual outlay). Gravity models confirm shared English doubles bilateral trade flows versus other common languages, reinforcing US dominance in services (30% of exports) and tech standards. A 2025 International Economics study echoes this, finding English proficiency adds 15–20% to long-term trade volumes by enabling market access and innovation diffusion, indirectly sustaining dollar invoicing in English-dominated contracts. Thus, English entrenches US soft power, compounding reserve perks to deter rivals and sustain hegemony.

Maintaining a Militarily Strong Israel and US Economic Hegemony

US support for Israel's military, $3.8 billion annually through 2028, plus $17.9 billion in supplemental aid since October 2023, yields outsized economic returns that bolster hegemony, functioning as a "boomerang aid" where 74% of funds must buy US weapons, supporting 20,000+ American jobs across 40 states and recycling dollars into the economy. This industrial base sustains defense firms like Lockheed Martin, enhancing US export competitiveness ($50 billion bilateral trade via 1985 FTA) and innovation spillovers, e.g., joint Iron Dome development has generated $10 billion in US sales.

Strategically, a strong Israel secures economic lifelines: it counters Iran, protecting Red Sea/Suez trade routes (12% of global trade) and Eastern Mediterranean gas fields, stabilizing energy prices and enabling US-led corridors like IMEC for Asia–Europe flows. The Heritage Foundation's 2025 report details how this partnership, via Abraham Accords and I2U2, creates a pro-US economic bloc, integrating Israel's $58,000 GDP/capita dynamism with Gulf markets, countering China's Belt and Road while advancing US tech leadership in AI and cybersecurity through $1 billion+ in binational R&D. By deterring threats without direct US boots (saving trillions vs. Iraq/Afghanistan), Israel amplifies hegemony cost-effectively, freeing resources for Pacific pivots and ensuring regional stability that underpins dollar-backed trade.