Actually I thought I asked several questions.
I wasn’t asking about military intervention. I am sure that will not happen, for the same reasons you outline (and others too). What I was trying to ask is that as the dollar being the preeminent reserve country is such a good thing for the US, will the powers that be use political and or economic pressure to maintain it as such, against competition from the Euro (and indeed other currencies).
I take what you are saying about Gold but think that you miss the point. I understand Gold is a rather arbitary standard for measuring wealth but the fact is: it was an established and perfectly valid one at the time when dollars were being sold back. So why did the US not honor that debt?
I hadn’t thought of the difference between private individuals and nations. I think its quite a dangerous precedent to set though. Granted your creditors aren’t going to sieze the statue of liberty or whatever in part repayment, but if the balance of payments deficit continues to grow, then they might lose confidence in the US and its currency. That would be very bad. As you say in your very thorough answer (thank you) the whole point of the dollar is that it is the least likely currency to lose value and is issued by the country most likely to honor its debts. But what happens if that is no longer true? The value of the dollar has plummeted recently - I know, I export to the US and its become very difficult to do.
My understanding of the economic pressure the US is able to put on other countries is less an issue of currency and more one of pure economic weight. The US is and has been the largest market for a very long time. US banks are part of almost any large transaction and anyone who has serious money to invest cannot avoid the US markets. This is a large part because the US institutions are the strongest and the regulations are the most trustworthy (de-regualtion in banking is NOT a good think. Banks need to be properly regulated because their business models are by definition fragile - they lend more money have assuming that the people who own the money won’t all come for it once. Of course over-regulation is bad too).
Thus, economic weight is less a consequence of the US dollar being the reserve currency than the US economy being the largest and, for that matter, a very large importer of goods. Just like the Fed is seen as a “lender of last resort” the US has always been an “importer of last resort”. Korea, Japan, China and many of the other Asian Tigers can thank the US consumer for their extremely rapid rates of growth. The US was able to leverage market access in exchange for political pressure (remember if those countries stopped growing, their populations would revolt so there was huge political pressure).
Europe is just learning to have similar weight, but since European countries rely on exports - especially Germany - and they lack the unity on foreign policy of the US, their weight is a lot less.
I honestly don’t see that currency play such a major role in using economic pressure. As China becomes the country to which the smaller nations export, the dynamic will inevitably change.
By the way, do not worry about Koreans buying the Chrysler building or Belgians buying Anheuser-Busch. This is a good thing and the American businessmen who will sell their assets will get a lot more than they are worth and put the capital to much better use. Besides, the Beligans make really good beer.