There is a lot of news out there saying that the United States is a dying empire and that the dominance of the American dollar is coming to an end. There is some truth to all of those statements, but it's much more complicated than they are making it out to be.
It's safe to say there is too much slop out there, with AI-generated articles and the news nothing but prophets of doom due to financial initiatives.
Also, it's part of American political and social culture to think the end is nigh; it's that self-reflective outlook and outwardness, with diverse perspectives, that enable the United States to be dynamic and capable of making change.
The United States has become a global reserve currency due to the strength of its political and legal systems, which make the US a good place to do business. There is also the fact that America has a strong entrepreneurial culture, which makes it the place to do business.
In the USA, that mindset does come at a price with homelessness, no socialised health or education system, which makes the United States a great place to live if you have money, but not if you do not.
Furthermore, in the USA, places such as Skid Row in Los Angeles are allowed to exist due to the American culture of self-reliance, but would never exist in Scandinavian nations of Northern Europe.
The United States is one of the wealthiest nations on Earth and among the most dynamic, but that comes at a price, as the USA is a hyper capitalist, independent society. I do not say that it's good or bad; it's just the choice each nation makes on its own path of political and economic development.
Why the US Greenback is on the decline
To understand why the American Greenback is on the decline, it is first important to have some historical perspective on the world's last great global reserve currency, which was the United Kingdom's sterling, and the reason why that currency fell out of favour and was replaced.
For starters, the UK's currency was underpinned by Great Britain's technical and military successes, similar to those of the United States. The British navy guarded the world's shipping lanes and made sure trade would flow around the world.
Also, the United Kingdom was the birthplace of the Industrial Revolution, which has given the British massive economic advantages over all other nations on earth. Also, the United Kingdom's political and legal stability at home makes the UK the safest and best bet for a global reserve currency.
As for why the UK Sterling went into decline, it started in 1914, with the outbreak of World War I.
Before the war in 1913, the British currency was 60% of the global reserve currency. The pound lost its power during that war because the British financed the War with loans and also provided financial support to its allies.
Those loans could be secured by Britain's role as the world's reserve currency, which is why the United States today has a national debt of over $39 trillion, 133% of its GDP and the reason why investors and other nations keep buying American debt is due to the confidence in the USA.
As well as the belief that the United States will pay off those loans, the American capitalist culture, the American navy guarding the world's oceans, and the fact that the United States has a population of over 300 million.
Those are massive geopolitical advantages, as well as the advantage of the USA having its own domestic market, which can sell products and services, unlike most other developed nations, whose populations are on a path of decline and need to sell outside their own markets to survive.
Japan is a great example of this: its population loses 500,000 people per year, and it is contracting rather than expanding. For the USA, immigration has kept its population high, as Americans have not had a stable birth rate since the 2007 mortgage crisis.
With the United States in North America, even in a multipolar world, it would still be one of the great powers of Earth, unlike the British, who are a small island nation, whose advantages would only decay over the passage of decades and centuries.
That was due to the rise of nationalism, which destabilised its empire; the rise of other mid-tier nations in Europe in the 19th century, which further weakened the British advantages; and the outbreak of World War I.
The debt incurred to fight the War meant the only future for Britain was one of managed decline to a position consistent with a nation of its size.
However, the UK is an island nation, which gives it geopolitical advantages, so the military needs to focus on developing its sea, air, and space power, unlike continental nations, which, by their nature, need much larger land armies.
Today, the British pound's share of global reserves is just below 5%, though that is not bad, as China, the world's second-largest economy, has a global reserve currency share of just 2%.
The reason for this is that Britain still has a reputation for good government, a good legal system and has political continuity going back to the 13th century, which makes the place a safe bet, unlike China, which has a bad legal system, is undemocratic, and has massive internal issues and even the Chinese themselves don't want to own their own currency.
As for why the American Greenback is on the decline, it's simply because the world changed in 1999: the creation of the Euro saw the American Dollar's share of global reserves fall from 71% to 57% today.
The Euro accounts for 20.33% of the Global Reserve Currency, according to the International Monetary Fund (IMF).
As for why the American dollar has not yet been replaced, the reason is simply that, at the moment, no one else can be trusted, has the strength, or has the entrepreneurial culture to replace the US and its Greenback.