Ikari supposes that China cannot possibly win, that the US merely has to print more money.
Well first of all, printing money merely brings inflation and a much higher rate than that which we currently enjoy.
It also means that the value of the US $ decreases lower than which it already is, which means that imports will be that much more costlier.
Now I suppose that under normal circumstances this would not matter as if one is unwilling to purchase imported products one would perforce be compelled to purchase US manufactured products.
Something wrong with that argument?, Shucks the US no longer manufactures those products, we exported a lot of our manufacturing jobs.
China will in all probability continue to purchase US Company's, this is already happening, doubtless it will increase as the US becomes poorer and poorer.
Eventually there will come a tipping point whereby China will own outright more US Company's in the US than those which are owned by Americans.
Someone said that Reagan suggested that the Capitalist system will win out in the end, IMO he was correct, however what he failed to say was that that Capitalist system will be governed under a Communist regime.
The US is already a Socialist State, has been for more than 60 plus years, the distance from Socialism to Communism is oh so short courtesy of the likes of Kennedy/ Obama/Clinton.
The reason China continues to invest in the US even though its economy is obiusly in serious trouble is that there is no other currency big enough for china to invest in. Yen not invested is lost yen, they need the investment market, even though they run the risk of losing it all in a dollar collapse, better than letting it sit around...
"If your opponent is of choleric temperament, seek to irritate him." - Sun Tzu
The Suez Crisis
As someone else pointed out, it would simply be a case of the one country asking the other to jump as high as it liked. That too was the changing of just who was a world "superpower."
America ignores history at its own peril if it lets foreign debt get too large.
They can go ahead and off load our debt to whomever they want, it will have no affect on us. Those are loans already made, we already have that money. The important thing about that debt is the other way around, it's the guarantee that America will pay it back that people now find valuable. It's based in part on the strength of American consumerism. Usually a good bet. But facts remain, our debt is written in our dollar, we can make our dollar. Now we're not going to just print off the debt of course, but the point is that our debt is written in a fiat currency that we control. We already use inflation to our advantage on this already (inflation is good to debtors). No one can control us by holding our debt, they can't call it it. First off, we can manipulate it to be advantageous to us. Secondly, how would the force us? And WTF would happen to someone like China if we said "no"? They'd be screwed. Big debtors hold power over lenders because the lender has to get that money back.
You know the time is right to take control, we gotta take offense against the status quo
Originally Posted by A. de Tocqueville
This is why if China dumps its currency shares onto the market, supply of U.S. currency shares will skyrocket and the value will plummet. Sure, people would probably buy it back over time, but trillions of dollars in currency shares won't be bought up over night. And what would be the incentive if the value of those dollars was now worthless?
At any rate, there will be no war with China... if there were, the U.S. would be shooting itself in the foot.