[Guht]

What worries me the most is that if China does decide to move decisively against the ROC then they will also know that we will in some way retaliate. Simple causality. However, the question then becomes what happens if they decide to unload around 600 billion in US Treasuries? It could theoretically bring our country to an economic standstill by completely devaluing our currency.

[Rembrandt_fan]

Any head-to-head shooting war with a major power like China has major economic ramifications, particularly since our opponents understand that economic warfare is simply another extension of the struggle. We'll suffer, sure, but previous generations have seen worse. It's then, while our people are suffering a major, nationwide economic blow, that our leadership makes itself felt--or doesn't. Whatever you might think of his domestic policies, Roosevelt's gifts as a war leader were unparalleled in terms of the fighting spirit with which he instilled the people--not just those putting on a uniform and picking up a rifle. He helped folks understand the issues at stake, which were higher than the cost of bread or gasoline.

As for me, I have faith that our people can take whatever the enemy can dish out. For their part, the Chinese think that since our military has been ingrained with the fear of a land war in Asia, thanks to Field Marshal Montgomery and the Vietnam experience, that we'll politely refrain from taking the fight to them, that we'll confine the battle to the Taiwan Strait. While no military strategist, I think they're mistaken. I think they'll lose, and badly.

[Centurion2000]

then becomes what happens if they decide to unload around 600 billion in US Treasuries?

Declare their treasuries worthless and default on them for picking a fight with us.

[skybolt]

I think your worries there are a concern at the same time (unfounded?) $600 Bill in US debt would quickly be snapped up at low prices. I would by as much as I could.

On the other hand say the downside happened, then our economy would be thrown into a true wartime economy, once again US prevails.

Hey if US needs some cannon fodder, this old 2/1 cav guy will take an M16 against the chicoms.

[Paul_Denton]

What worries me the most is that if China does decide to move decisively against the ROC then they will also know that we will in some way retaliate. Simple causality. However, the question then becomes what happens if they decide to unload around 600 billion in US Treasuries? It could theoretically bring our country to an economic standstill by completely devaluing our currency.

Our economy is the least of our worries when dealing with China.

[carl in alaska]

They can't unload 600 billion in US Treasuries, because they would collapse the market for those bonds and China would take huge financial losses on their sale. If they try to sell a fraction of that amount quickly to drive up interest rates and send us into recession, our Federal Reserve bank can always buy the bonds that China is selling and hold down interest rates. That would amount to monetizing some of China's debt, which is inflationary and would weaken the dollar, but our economy would keep going and China's attempt to slow down our economy would fail.

A lot of economic pundits forget that money is just numbers in bankers' computers. If the Fed needs to create money to buy up Chinese bond holdings, they can create all the money they need in seconds and stop any financial panic. This can be inflationary, but the key concept is that it's not so easy to collapse any financial market and generate panic when the US Fed can create money at will to buy into any market and stop a selling panic.

[quantfive]

"What worries me the most is that if China does decide to move decisively against the ROC then they will also know that we will in some way retaliate. Simple causality. However, the question then becomes what happens if they decide to unload around 600 billion in US Treasuries? It could theoretically bring our country to an economic standstill by completely devaluing our currency."

Exactly. If/when they do this, we will see a depression here and will not be able to support our massive military. We may be able to protect ourselves in America but we certainly won't be able to prevent China from running amock in say, Kuwait or Saudi Arabia where we get our oil from.

[self_evident]

It could theoretically bring our country to an economic standstill by completely devaluing our currency.

It could also bring China to an economic standstill by devaluing it's primary investment and disrupting it's primary source of income.

Most of the economic implications have symmetry. We "fund" them by buying their products. They "fund" us by buying t-bills and selling us inexpensive products.

[Willie Green]

However, the question then becomes what happens if they decide to unload around 600 billion in US Treasuries? It could theoretically bring our country to an economic standstill by completely devaluing our currency.

Alternatively, they could simply stop shipping us clothing and shoes.