You didn't answer the question. Aren't they idiots for accepting our dollars if we make nothing they would buy?
On the contrary, I did. It appears my expectations for your understanding were too high. I will, therefore, be careful to spell out my answer.
The Chinese are aiming for a long-term strategy. The decline in the dollar does injure them. However, they are willing to accept this loss to gain a long-term advantage.
Please note that this leads to my earlier answer: First they build their manufacturing base. Then, after we've disposed of our manufacturing infrastructure, they have an easy, effective way to control us. Or, to defeat us.
Further, they can use their collected dollar assets to buy resources; for example, the Wall Street Journal reports that China National Offshore Oil is considering a takeover of Unocal Corp., the ninth-largest oil company in the U.S.
No, the Chinese are not idiots. The free traitors, on the other hand, are.