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Originally Posted by Etarip
Interesting articles, I'll have to read through them when I have some time. As I see it open war with China goes something like this:
Step 1: U.S. Attacks China.
Step 2: China calls in all the U.S. debt the're holding.
Step 3: U.S. Defaults on our debt.
Step 4: Value of the dollar plummets, U.S. can't buy oil.
Step 5: U.S. armed forces and ecomony grind to a halt for lack of oil.
Result: Win the battle, Lose the war.
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If the US attacks China, do you think it matters one bit if they'd demand the debt to be paid back? Nobody in their right mind would expect that the US would pay billions to it's enemy. Hence, step 3 is logical, but would only apply to that part which was borrowed from China. I do expect the dollar to drop in value a bit, but that'll be because of the international uncertainty about such a war, and what it'll mean to the world economy. I don't believe that the US will be unable to buy oil at all, unless there's some sort of international embargo, which is pretty unlikely.
All in all, a war with China would be bad, but I very much doubt that the US would lose in the economic arena; China isn't that big yet. And most of the economic impact would depend WHO starts the war.