Treasury Bonds: Why China's 'Nuclear Option' Isn't So Scary

The title of this post and the article here couldn't be further from the truth. The writer just does not understand the issue. The issue is not if China were to use the nuclear option of selling all of their treasurys. Most commentators seem to miss the obvious point that China doesn't need to sell their treasurys to rid themselves of them because eventually they will mature and can be exchanged for USDs. The real issue which would cause harm to the U.S. is if China were to just STOP buying treasurys. You see if China stops buying then this would cause a funding crisis and that is the real issue. The very act of no more purchases by China would cause either interest rates to rise or the USD to fall because the Fed would have to monetize the debt.