Yeah but the US can destroy you diplomatically, militarily, and economically if you try anything funny.

Of course! That's why it's so important for the US to encourage the use of the USD on a global basis, and also spend billions on the US Navy.

> The Federal Reserve issues US dollars (print money) => US Treasury borrows money from The Federal Reserve, Japan, China and the UK against its assets or uses the asset/coins to invest in others => win with thin air!

Win with the largest military in the world and all tangible assets and influence the US has.

This is actually... extremely apt. It is commonly referred to technically as the dollars exhorbitant privilege. It would seem FTX managed to exploit this phenomenon on a micro scale. Until it didn't of course lol

Ultimately the fiscal operations of the U.S. government are backed by the total assets of the U.S. (public and private), which are far larger.