"No trade with China. Works for me."
I guess as long as you're happy we can all be happy?
If US China relations fall t a point where China divests itself of US T notes the US is screwed. The only option in a global slowdown, decreasing savings environment would be to monetize the US T debt. That works really well until it doesn't and then the SHTF in a big way. The US budget if forced to borrow 70% or 80% of what in now borrows will not function well. SS will be raided first, then poverty social nets and finally death to all pork. No way anyone gets reelected at any level in an austerity US.
Additionally what happens if US T rates rise substantially higher than FFR and comparable WW rates and still no buyers? Does US T debt get downgraded first or after that event?
Yeah, only the most shortsighted, naive and foolish person can really believe the US does not NEED China. Chinese people can and will accept and muddle through way, way more pain than the US population could even come close to. US folks can't even stand loosing their cable TV for an hour or two.