Any alternative for preventing collapse?

Question

I heard that China can do a lot of damage to the US economy by devaluing the dollar. How can US avoid this catastrophe?

Answer 1

China has been a major buyer of US Treasury bonds. Those are the securities that provide spending money for the US economy.  If lots of people want to buy the bonds, the US only has to offer a small interest rate on them.  If no one invests, the US government has to raise interest rates to attract new deposits.  Right now the worry is that China is reconsidering their huge investment in US Treasury bonds.  If they stop buying , interest rates will have to jump.  That will cause pain. Anyone who wants to buy a car will pay more; anyone who has a credit card will pay more.  All bad news.

It may be out of our control to avoid.   Many economists say that we can avoid catastrophe by balancing our budget so we are not "net borrowers".  Congress is struggling with that right now.

Answer 2

Stay friendly with China, like we have been, despite their record of human rights violations. They've got us by the economic short hairs.

Answer 3

What I would be worried about is if china all of a sudden wanted to cash US bonds And T-Bills  in...

who would pay for them ?

they are guaranteed by the US government

but when you are in the hole, you cant write cheques.

whats America going to do?

Sell Alaska?

The US had a taste of what happens about a year ago, China sold 500 billion in bills , the US currency dropped 15% overnight, but dont look to your news for that information

you have to get it from international sources

Answer 4

They can do nothing .