Suppose the Chinese sold a lot of their U.S. government bonds?

The Chinese hold a lot of U.S. government bonds.   Suppose they tried to use these holdings as an economic weapon against the U.S.?

Kash spins out a scenario over at Angry Bear: "China's Real Weapon?".

And take a look at his novelistic treatment about the conditions under which China might use this weapon: "China's New Weapon".

Comments

[Axel Kassel]

The bonds are already issued, so I don't care if the Chinese sell them to a Belgian sugar-beet cartel, the MG-Rover pension fund, or to anyone else. In fact, it would be jolly if the the Chinese conspired with other foreign-state holders to dump their US Treasury bonds simultaneously. The price would collapse, the Treasury could buy them back for a song, and erase a huge debt-service burden from the federal budget. Of course, you'd need to hand out vast quantities of Quaaludes for a few days...