If the Treasuries are sold off or not renewed when they expire, then the interest rates on Treasuries will go higher. What else? Where will all those dollars go? The export countries won’t convert them into their own currencies. They could buy other currencies or gold or hard assets. oil is sold in dollars, so they could buy lots of it. Unless of course they think the price will come down, or they lack a large storage facility.

Imagine the worse problem when we actually pay down our debt, and there aren’t enough treasuries to absorb all the dollars. Then the FCBs have to buy ever more MBS and equities, and create bigger and bigger bubble! Now, isn’t that a conundrum? Paying down the national debt creates asset bubbles!

My brother thinks that China has a long term plan to attain all the US manufacturing and high tech industry knowledge, so they can learn it and copy it. Once they have what they want, they’ll discard their dollars and use their money to buy natural resources.