Since the U.S. dollar is the world's reserve currency, most international transactions pass through New York. The U.S. uses this monopoly on the world's financial system to step in between the two parties and impose its own orders - sovereignty be damned.
Argentina has found itself in the cross hairs of the extraterritorial application of U.S. laws in its ongoing dispute with "vulture funds" who purchased that nation's debt. In 2002, Argentina exercised its sovereign right to default on its debt and rebuilt its economy in record time, pulling residents out of the mire of inflation and insecurity back to reasonably comfortable standards of living, only to now see it all potentially come unraveling before their eyes.
Last month, the U.S. Supreme Court declined to hear Argentina's appeal of a lower court ruling that the debt must be paid back. The "vulture funds" - who swept in to buy bonds for pennies on the dollar in the hope of letting Uncle Sam use his muscle to push around pesky little countries like Argentina - show no sign of backing down. A capitulation by Argentina would set a disastrous precedent for poor countries who use default as an alternative to the misery of austerity.
"Sovereigns have to be able to default," Karen Hooper told Bloomberg Business Week. "They have defaulted continuously since money was invented."
A world where the U.S. can no longer inflict tremendous financial damage on other countries simply because it doesn't believe in the principles of sovereignty and democracy would be a welcome relief for the billions of people outside of U.S. borders.