[Aussiebabe]

True, under a war scenario. But there is nothing stopping the Chinese from selling all of those securities tomorrow. If the USA tries to make those securities null and void it would destroy the dollar and the USA would not be able to buy anything (like oil) outside the USA. It would call a worldwide depression overnight.

This is just as much a problem for the USA as China. This is one reason why the stock markets worlwide have so terrible this week.

[AmericaUnited]

But there is nothing stopping the Chinese from selling all of those securities tomorrow

Not really! If they did that, they would flat out destroy their own economy and they know it.

[PugetSoundSoldier]

But there is nothing stopping the Chinese from selling all of those securities tomorrow.

Yes there is. The Market. There isn't a market for trillions of dollars of US T-bills. If they started to sell a fraction of what they held the interest rate of the bills would plummet - they'd be discounting the sales to move them, bringing the interest rates paid on all T-bills down. Meaning the effect on us is greatly minimized (we have to pay less interest over time), and they lose even more money.

The old maxim always holds true: if you owe the bank $100,000 the bank owns you. If you owe the bank $100,000,000 you own the bank.