If China reneges on its financial obligations, why couldn’t the US renege on its obligations? This wouldn’t only lead to a trade war, but a break down in trade all around the world. So much for the “just in time inventory” if that happens.
Good question... I'm not sure what will happen if China walks away... it probably will cause a financial crisis of some sort... the current market rally is being built on hopes and dreams and was created out of thin air...
On the other hand... what USA is going to do with their debt is inflate it away... because believe it or not... anyone who buys government bonds knows that in order for the government to pay them back... they have to seize the money of its citizens...
Here's the real truth about US bonds... it will never, EVER be paid off... eventually, we are going to have to default on it.
I think we should do it now and fix our economy... sure nobody will ever buy our bonds again... this fact alone will keep our government honest...