Thursday, April 28, 2016

Treasury holdings as a political weapon?

Imagine the following scene in the not too distant future:

The US Navy confronts the PLAN (People's Liberation Army Navy) in the South China Sea. Someone miscalculates and shooting starts and the situation escalates wildly. Eventually, there are three American carrier task forces, accompanied by submarines, along with the fleets of Asian allies like the Philippines, Japan, Australia and so on, in the area.

Just as PLAN forces are outnumbered and the Chinese tactical situation look hopeless, the PBoC picks up the phone to New York, "I have $1 trillion in Treasury assets to sell - now." The theory is, some Americans may be patriotic willing to die for their country, but how many would be willing to lose their homes for their country? How about losing their jobs for their country?

Is this the plot for a twisted Tom Clancy novel? Bearish Apocalyptic fantasy? How plausible is this scenario?

The full post can be found at our new site here.

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