If Defence Spending Remains High...
A. It all depends on, how quickly the Chinese and Indian economies actually over-take US, Gross Domestic Product. Without reaching this point, the US
should always be capable of "out-competing" them militarily. If only because it already has a pre-existing, industrial defence complex (well used to
servicing the needs, of what (would have been) the worlds greatest military, for decades. The US complex also employs many scientists & technicians.
Many with decades of experience, (and of usually of being the "best" in their particular fields, of warfare knowledge).
B. Once a country gains the ability to out-perform US military expenditure, it's going to take a while for them to exercise it, without seriously
aggravating US interests.
C. When it does, I don't think the US is going to be "war shy". Ever since the Cold War ended, history has shown President's of the United States
wishing to keep his military, in good, working order. They need to, because they're under political lobbying (from variety of directions) to justify
their expenditure on such a large Military Industrial Complex.
If Defence Spending Falls...
1. The US could meet much of its (coming) debt repayments by substantially cutting its military expenditure. It would create loads of unemployed, and
(potentially) upset a lot of powerful people. However it may save upsetting almost all elites people from experiencing, national bankruptcy.
2. US might become a more "functional" democracy (at least for the duration of a recession, because history shows the flames of political revolution
are always particularly high). It might listen to it's own citizens. They will tell, where exactly, more government money, could create be spent on
creating, useful, National, Employment.
3. Or it continues increasing the money supply to e.g. meet debt "repayments". Eventually this is going
to leed to national bankruptcy.
Unlike the 1980's other countries have already made their moves to run from the dollar, rather than continue backing it up, to indefinitely.
Interesting 2009 article about subject: www.independent.co.uk...
Good 2007 article:
If the US did go bankrupt, defence spending would obviously need to be cut. US has debts so huge, and owed too so many different nations, that the
only logical decision, would be default on all
debt repayments, permanently
. It simply doesn't make sense to even begin,
repaying such a vast debt.
The only way I see the US surviving this, is if, when it does e.g. default on national debt; it does so, simultaneously with e.g. a few other major,
western nations. This way a new currency could hold some immediate, weight.