I personally never believed in EUR replacing USD. That is old way thinking that one thing is replaced with another, but the overall structure remains the same. Instead I think the world is structurally changing. Russia is now the number one oil producer (as well as producer of a lot of other things) and they too tend to favor a barter like system. Ditto for China. Additionally, China is using a basket of currencies for RMB. And both of these are strong trends in the world. In fact, even EUR can be considered a "basket of former European currencies" in that it is dependent on an aggregate of EU economies.
Anyway, the issue with USD is not that it will somehow fall off the face of the earth. It is that it will lose its monopoly. This loss of monopoly combined with the relentless printing and budget deficit that we have, does not bode well for USD. Yes, due to some miracle it may not be as bad as some people think it will be, but I don't see why anyone should take that chance. And to a great extent the market agrees with me. You may have noticed the rise of gold prices, and there is really only one reason for gold to rise and that is lack of confidence in fiat currency.
You did however bring an interesting point that I had not discussed, and that is the role of military. Most people do not know this, but with nearly 80% of the world's arms market, US has a practical monopoly on the arms trade. I will leave the politics of this aside, even though I am not happy about US as the main merchant of death. The fact remains that arms trade does bring in a lot of cash into US. And unlike other industries, it is not typically outsourced. But unless the world enters WWIII, I don't think we will sell enough arms to save the dollar.
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