[anigbrowl]

Even if this happened (which I very much doubt it will because Japan, China etc. don't want to write off 40% of their holdings or get into a vicious economic war with the US), that's a long way from hyperinflation and general fiscal Armageddon.

US business would love the dollar to fall by 30%, our exports would soar and those companies that depend heavily on manufacturing in China could probably use other hard currency like the Euro. It would crimp our military operations overseas, but when you get down to it a lot of countries still want to be under the American nuclear umbrella and we paid for the nukes a long time ago.

[stuffthatmatter]

True....to a degree. Our agriculture exports would soar. But alot of other things we produce are complex/advanced products, which depends on cheap parts/oil from....other countries.

As for the military, well, China will pick a good time to crash the dollar (when they've liquidated most of their dollar reserves). Then they'll be able to bring US to its knees without firing a single bullet. Why shouldn't they? it's their turn to be the empire.

[kevbin]

China's is an command, export-based economy. Eviscerating its trading partners wouldn't be wise: high-interest rates and weak dollars in the US hurt the Chinese economy--like it or not, our fortunes are intertwined.

Empires are founded on more than just manufacturing capacity. Lacking a dynamic, principled base for its society, when the Chinese economy collapses it will not recover. The Chinese bubble will burst: http://www.foreignpolicy.com/articles/2009/07/23/the_china_b...

Upshot: don't finance your customers, or China 2009 == Lucent 1999