The economic benefits of military dominance are generally denied. First-rate weapons systems are said to be expensive and the costs of coercion, including the backlash against military oppression, are often seen as outweighing benefits.

Once a technological advantage and a system of allies and bases have been achieved, however, the costs of maintaining and preserving a military edge will start to decline, and will at any rate represent a small fraction of a leading economy. The bigger challenge soon becomes how to force people to do something that they do not wish to do over the long term, but, as I will show, there are other, more subtle, ways in which military power can produce tangible economic benefits. Displays of force, and the occasional use of force, can, for instance, be used to claim control of an area and lock out competitors. Military power can also be used to secure investments domestically and abroad, producing a security premium at home and a reduction in foreign risk premiums. Lastly, extending a deterrent umbrella over other countries creates a web of allies with an interest in keeping American hegemony alive.

With these ways in which security functions can produce economic benefits in mind, I make four distinct claims about how military power is connected to American economic might. First, military means were used to keep European Great Powers out of the western hemisphere, which, by extending the domain of dollar use, allowed the United States to gather a size advantage and eventually become the key currency country.