Jamie Dimon warns dollar dominance depends on the military: ‘If we’re not the strongest military in 25 years…we won’t be the reserve currency either’

Jamie Dimon, CEO of JPMorgan Chase, has warned that the dollar's dominance in the global financial system may be at risk if the United States cannot maintain its position as the world's strongest military and economy in the future. In an interview with PBS, Dimon stated, "If we’re not the strongest military in 25 years and the strongest economy, we won’t be the reserve currency either."

According to Daniel McDowell, associate director at Syracuse's Moynihan Institute of Global Affairs, military and economic power are "tied up inextricably together with the dollar." McDowell explained that a weak military weakens the economy, and by extension, the dollar. Economic strength is the primary indicator of the dollar's strength, but a weakened military could still lead to a decline in dollar dominance due to concerns among international allies.

For example, if allies believe the U.S. is vulnerable to attack, they may worry about their dollar-denominated assets. Additionally, if the U.S. were to become entangled in a decisive conflict with a rival like China or Russia and lose, the world could view the country as diminished, which might negatively affect the dollar's reputation.

While economic dynamism, such as innovation and resource allocation, also influences the dollar's strength, senior fellow Eswar Prasad from the Brookings Institution emphasized that these factors are less important than economic size and military power. Nonetheless, a weakening of U.S. economic, military, and domestic institutional power could still have a negative impact on the dollar's dominance.