Not quite true. While China does own something on the order of $800 billion of our debt, they've actually started whittling it down (as our debt has skyrocketed). Similar for other foreigners, as they have little extra money to invest in anything lately. Notably, the largest single owner of US Treasury debt is the Federal Reserve, with something like 37% more than the Chinese. Banks own the Fed, but the federal government (i.e. us, our kids and grandkids) has been bailing them out like crazy for the better part of the last 3 years...so guess who owns that debt - you, me and everyone else. Oh, and a lot is held by US-based insurance companies and pension funds - again, US.
The Fed (us) owns so much because they're already monetizing the debt - that's what QE2 was all about. Inflation caused by monetization of the debt seems like an easy way out, but it is really an unlegislated tax on every single saver. Unlike a severe recession or depression, which is very painful but leaves a lot of people and businesses with the funds to buy assets cheaply and make lots of money when the economy recovers, inflation destroys all accumulated wealth (except certain commodities). If you like inflation, take a gander at what it did to Weimar Germany or Zimbabwe - they're economies were utterly destroyed, leading to despotic rulers. Sometimes, I think that this is exactly the plan - it is all about power. $8 gas or anything close to it will destroy the economy, as it is impossible for people or businesses to adjust quickly enough to survive economically. People who are laid off because their companies aren't making sales (since their customers are spending so much more on gas) don't pay taxes, don't buy much from other businesses and actually suck up (now non-existent) government money for food stamps, unemployment, etc. They also don't make mortgage or rent payments, nor do out-of-business companies, leading to further pressure on the (already bankrupt) banking system. In short, an economic meltdown, of which we got a small glimps 2 1/2 years ago. It'll be worse this time, both because of higher gas prices and because all of society is loaded down with even more debt than we had then.
I wonder how much food our petroleum-dependent farm industry will produce if gas (and, presumably, diesel) more than double from here. I wonder how the trucking companies will be able to afford to ship it across the country, and how the stores will pay to keep all of the lights and refrigeration units on. See what I mean about it being worse than last time, about it being a meltdown.
If food production gets creamed by high input costs like this, you'll have food riots here - and then I wouldn't give $0.02 for the life of any politician who has ever voiced an opinion or voted to shut down oil, natural gas, coal and nuclear production. I'm not advocating such, mind you, but when people are completely pissed off because they can't feed themselves, those in power usually suffer (just ask Louis XVI and Czar Nicolas II - oh, wait, you can't - they were executed by some of those pissed off people.
Most of your post speaks to why I bought an entire finger of a plateau in central KY two weeks before Urkel was elected. it’s only ~13 acres, but it’s 80’ above the valley, has a natural well and we could be completely self sufficient there.
And I invest in junk silver.