[JumpCrisscross]

> not because it uses its much larger military to dominate territorial, resource, and strategic control of the globe?

The U.S. dollar was in global use preceding WWII. Going back to 1915, the Federal Reserve was pioneering electronic money transmission [1]. After World War II, the United States being the only developed country not bombed to the Stone Age helped it set the terms of the peace. But the Bretton Woods system catalysed an existing trend; it did not create it.

> All a country needs to do to boost its currency and economy is to start consuming more!

Yup. This was a foundational motivation for the creation of the Eurozone. It's also why we're seeing offshore renminbi financial markets. If you sell to a consumer in Europe or China, you'll tend to end up with Euros and renminbi. You can swap it into your own currency and lose the spread. Or you can invest it in assets in that currency. The latter drives down capital costs, which makes those currencies more attractive for fundraising. That, in turn, creates financial centers. As long as one has relative price stability, it's a relatively-difficult feedback loop to screw up.

TL; DR The petrodollar hypothesis has bad predictive value.

[1] https://en.wikipedia.org/wiki/Fedwire

[ilaksh]

I believe there is a physical limit to how far you can stretch that because it takes actual resources to make things for people to consume. We only have a certain amount of oil supply and reserves, minerals, etc. Which is why its not feasible for every country to just consume as much as they want, because some percentage of the money is tied to real things in a finite world.

Countries with more resource control may be able to take that concept pretty far. But it doesn't come from them just deciding they want more stuff.

[JumpCrisscross]

> it takes actual resources to make things for people to consume

Value is subjective. Energy intensity of global GDP has been falling for decades [1]. Where I've seen estimates, it looks like material intensity has been doing the same.

Broadly speaking, most countries won't have a reserve currency. Neither their demographics nor economy can support it. But some countries punch above their weight. Canada, Switzerland and Japan have outsized influence for (a) being trading economies with lots of buying power (i.e. lots of overseas vendors end up with their currency) with (b) limited or no history of currency controls (i.e. people aren't in a rush to swap out of the currency, for fear of it getting trapped), and (c) stable governments and central banks.

Given (b) requires free capital flow, which through the impossible trinity [2] means giving up a fixed exchange rate or monetary sovereignty, reserve currencies aren't something most countries may even want. Using dollars tends to be fine. Having alternatives in Europe and China is probably for the best, for everyone, in the long run.

[1] https://yearbook.enerdata.net/total-energy/world-energy-inte...

[2] https://en.wikipedia.org/wiki/Impossible_trinity

[ilaksh]

The energy/material intensity of global GDP has probably been falling because most of the GDP actually is generated by way of massive unaccounted debt piling up.

[JumpCrisscross]

> energy/material intensity of global GDP has probably been falling because most of the GDP actually is generated by way of massive unaccounted debt piling up

Real energy intensity is falling. This is because of both increasing efficiency and [1] a greater fraction of demand being explained by immaterial factors [2].

In any case, leveraging an economy doesn't directly change its energy intensity. If it costs X kcal to produce $1 of goods, it doesn't matter if those goods were paid for with cash or credit.

[1] https://mpra.ub.uni-muenchen.de/13149/1/MPRA_paper_13149.pdf

[2] https://www.sciencedirect.com/science/article/pii/0140988382...