Of course military power consists of a lot more than nuclear weapons and a lot has changed since the Cold War.
Where do things now stand? While I’m no military expert, I get to speak to some who have led me to believe that,
while the US remains the strongest military power overall, it is not dominant in all parts of the world in all ways,
and military challenges to it are rising. I’m told that there is a significant chance that the US would lose wars
against China and Russia in their geographic areas of strength—or at least would be unacceptably harmed—and
would also be unacceptably harmed by some second-tier powers. This is not the good ol’ days early after the
beginning of the post-1945 world order in which the US was clearly the sole dominant military power that could
not be threatened by others. While there are a number of high-risk scenarios, the most worrying one is a forceful
move by China to bring Taiwan under its control.
What would the next military conflict look like? It seems clear that new war technologies would be deployed so
the war of the future will be very different from the last war in the same ways more recent wars were fought with
different technologies than the ones before them. Classically the country that wins wars outspends, out-invests, and
outlasts the opposition. Because spending on the military takes government money away from spending on
social programs, and because military technologies go hand in hand with private sector technologies, the
biggest risk for the leading powers is that they lose the economic and technology races over time.
The Post-War Monetary and Economic Systems
Money and transactions between countries were and still are very different from money and transactions within
countries. That is because within countries governments get to control the key aspects of money and
transactions (such as what money is used, how much of it there is, what it costs, who handles it and how, etc.),
whereas in transactions between countries the key aspects of money and transactions have to be mutually
agreed-on. For example, within a country the government can mandate that only the paper money that it
prints is acceptable, whereas between countries only the money that those who are transacting agree is
acceptable will be acceptable. That is why gold and reserve currencies have been so important in
transactions between countries while people within countries typically exchange this paper with others in
the country, oblivious to the fact that that money is not much valued outside the country.
Within countries individuals were not allowed to own or transact in gold 2 because governments wanted to
be able to control the supply and value of people’s money and the distributions of people’s wealth. People’s
abilities to own gold could threaten the system because gold is an alternative money that is not controlled by the
government that people could use instead of the government’s money. So (to simplify a bit) within countries
people or companies would use the government-controlled paper money and when they wanted to buy something
from another country they would typically exchange their own paper currency for the sellers’ paper currency with
the help of their central bank and the central bank would settle up with the other central bank in gold. Or, if they
were American, they would typically pay in dollars and the seller would turn that money in to its country’s central
bank for its local currency and that central bank would turn its surplus of dollars in for gold, so gold would leave
the US central bank reserve account and go into the other central bank account. As a result, a central bank’s gold
reserve savings would go down if a country spent more than it earned and would go up if a country earned more
than it spent.