China's been buying up our debt, meaning we "owe" them that money when they cash in a bond. If they were to "cash in" all of the chips, the casino (America) goes broke real quick. We can't pay the Chinese for the debt they own, so dumping our bonds would mean we're deleveraged and likely plunged into a recession, or worse, in a matter of a few hours.
This was known for a long time and is a big reason Obama plays paddy-cake with the Chicoms. If they dump the majority of the bonds they own, the market will crash with it. We could be in for a rough ride here very soon.
“China’s been buying up our debt, meaning we “owe” them that money when they cash in a bond.”....
That is NOT how it works. The U.S. owes the holder of the bond the principle AT MATURITY. If it is a 30 year bond purchased 5 years ago we still have 25 years to pay the exact same interest payment and then the principle to the current holder, whoever that happens to be.
The value of that bond is inverse to interest rates; as rates go higher the value of the bond is less (except it rises to what will be paid back when it gets closer to maturity).
IF we were smart and had the money (two things I am not counting on, mind you) when our interest rates are higher in about 5 years we could start buying back these low interest bonds at pennies on the dollar.