"To accomplish that, they could simply quit extending credit to us, and maybe sell some of the debt on the open market. This would tend to drive the dollar down and interest rates up - it would, therefore, damage the U.S. economy."
??? so they sell the debt on the open market - dosen't that presume that they would find a willing buyer ?
... and the dollar going down hurts their own, as it it tied to the dollar - If they cut loose from the dollar and it sinks, their products become more expensive for us. Their VCR factories become idle, and no more green pieces of paper for them - unless they come back here and buy something we produce, they simply have green pieces of paper.
Discount it enough, and you'll find a willing buyer. Some years ago, there was an ongoing market in Czarist bonds...that's right, bonds issued by by pre-Soviet Russia.
... and the dollar going down hurts their own, as it it tied to the dollar - If they cut loose from the dollar and it sinks, their products become more expensive for us. Their VCR factories become idle, and no more green pieces of paper for them - unless they come back here and buy something we produce, they simply have green pieces of paper.
Their primary goal isn't making money. Ours is, and we filter our perceptions through our value system.
What if all this money is merely a means to an end for them? Right now, their currency is undervalued with respect to the dollar and they keep it there to accomplish their ends. They are subordinating profit to a different goal.
Don't be blinded by thinking everyone values the current quarter's sales above all else.