[Principled]

Why is it not good?

Some folks believe that, in a fit of anger, China would dump all its bonds into the secondary market... pummeling the value of our bonds instantly.

We, or someone else, would have to buy them up promptly.

[staytrue]

If they dumped them all, it would be less than the US treasury sells in a single year. Now if china, japan, hong kong and britain dumped them all together, it might collapse the market, but even then, I'm not sure if it would or would not. A bigger threat is the US banks and hedge funds dumping treasuries via derivatives leveraged at 20-1 or more. The hedge funds could mount a concerted 10 trillion dollar attack on virtually any market via derivatives, but even they can be punished by the market if they are wrong.

[Thane_Banquo]

China could do that, but then they'd just be screwing people who own treasuries,no the U.S. government (it has to pay back face value either way), and the price of treasuries would probably rise back to normal levels after the sale, because the sale was not based on economic fundamentals.