When we say FU who will collect? It’s an act of war I know, but who will collect when we can’t pay?
I think they just may give it a shot. I doubt if Obama, Kerry, Hagel, etc will put up much of an objection.
Hey maybe Obama could sell China our nukes instead of just destroying them.
Exactly! Who is the collection agency in this case? The Chinese People’s Liberation Army (PLA)? How are they going to get here? Pack them 60 to a conex on a container ship? Half of them would die on the voyage. Then what? Japanese Fleet Admiral Yamamoto is said to have once stated “You cannot invade mainland United States. There would be a rifle behind each blade of grass.” Truer now than the 1940’s. Maybe we could sell them California or New York City.
Let's review the collapse step by step. By the end of it we will know who the winners are.
Let's say, on day X China does some magic trick and the US Dollar ceases to be an international trade instrument. This is a very crude approximation, of course, just for sake of triggering the collapse.
Next, China holds US obligations for billions of dollars. They are not due yet, and the USA can easily repay them just with more computer-generated money. The obligations are essentially worthless at this point.
But China - and the rest of the world - suddenly declare that they won't sell anything new to the USA, except for gold. The USA has some gold, but not as much as to finance all our external purchases. You can be sure that the gold will not be used to buy frying pans in China, so that you can then buy them at Wal-Mart for your worthless USD. Probably you will never see the US gold; in best case it will be used to buy strategic supplies; in worst case it will be stolen by simply being paid to fake foreign creditors. Nobody would ever know the truth and live to tell about it.
This results in collapse of the US society. We cannot exist without oil - it drives tractors at farms, it fuels coal and natural gas mining. This collapses production of energy. The whole society briefly struggles, but then collapses. The government falls apart, with most bureaucrats leaving the country.
China and other major international players are observing the collapse. As the USA is no longer a decisive force in the international politics, new power blocs are quickly formed. They are already sketched and tacked together, by the way. They can be converted into supra-national governments after just one summit and a few signatures. Thus, the world becomes reshaped overnight, and the USA has nothing to say here. This is already a HUGE win for China, for example. What do you think will happen to Taiwan? IMO, it will surrender immediately - it has no chance. Every other country will also do what they need, and nobody will be objecting.
While all that fun is happening in the world, the USA experiences mass hunger and localized armed conflicts between smaller groups of survivors. However the country still posesses the nuclear weapons. How will the new world government(s) see that? As a threat, of course. Since there is nobody in the US territory to secure those weapons, they will be secured by adequate forces of foreign multinational troops. If those limit ourselves to the bases with nukes, nobody in the USA will even know. If a few people do learn, what can they do about a well equipped army that is holding a small territory? Not much; they don't have too much ammo, and they don't have weapons that can attack the invaders from a distance, or high in the air. With nukes secured, the USA is effectively dismantled as a world power. That is yet another gain to other members of the nuclear club.
In the next phase foreign governments start providing humanitarian assistance to the US population that remains by then. Such assistance is always coming with strings attached. The alternative is to essentially die out. Only a few farmers know how to live off the land and can convert to using animals instead of machines. Cities will not survive for long without food, water, and sanitation. So the help will be accepted - and beggars are not choosers.
So, let's summarize. For example, China worked for ten years for free, making plastic toys for the US market and being paid with worthless things. But that labor is in the past, it's water under the bridge. (Besides, China has diversified its investments; the USD is exactly where China wants it to be in their balance.) Anyway, at the zeroth second of the post-American age we have a strong and healthy China that has most of Earth's industry, lots of skilled workers, no particular liabilities, and is self-sufficient. China is also on good terms with mostly everyone. If Chinese investments into USD disappear overnight, it will only affect future profits - that will never materialize. But today nothing will change for China, except that it loses 20% of its industrial output that today goes to the USA. Since it was not paid for, this loss is actually a gain.
What will it get in return? It will become the most developed industry of the world. Not conditionally, as it is today - but unconditionally. China has workers and factories; India has workers and programmers; Russia has territory and raw materials... there is a lot of potential between those major players, if only they don't wage a war against each other. And they won't.
At the same time the USA ceases to be a force, and becomes just a remote, undeveloped territory that is up for grabs in a decade or two, when the survivors of the civil war die out. How exactly will it be shared is not so important. The remnants of the population, who may be as large as 10 or 20 million, will not be a factor in those calculations. The world will be permanently changed. Who wins from all that? Just about everyone, except perhaps Israel - but today Israel doesn't tie its future to the future of the USA. It will be OK.
Why the rest of the world will be better off? Just because the USA borrows too much wealth of the world without repaying for it. These days the USA doesn't even return what we borrow because the mass printing of the dollar devalues the existing mass of money. With the USA cut off, the world will have to invest into something else, into something that actually has positive ROI, instead of feeding tens and hundreds of millions of people on social security who do not work, do not want to work, and who cannot work even if they wanted. A formal default of a bad debtor will be not such a bad scenario.
I remember this same hysteria when Japan was buying up all the real estate in Los Angeles and New York.