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Path Dependency in the EU and U.S. Economies

James V,
Your argument is total nonsense. I will liken it to: just because a baby is sucking on his mommy's *** it will never want to eat something else or suck on someone else's. So you argue that just because the Treasury prints so much bonds to finance fiscal irresponsibility, only it has the capability to accomodate the cash that oil sales generate. Really wise argument.

China does not care about the value of its reserves. If it did it will not keep it in currency that is being debased at 18% yoy. It wants to promote employment and increase urabnization which at 40% is about 2x lower than in the industrialized world. To achieve that it has to sell much more stuff to the U.S. and for that it can only receive worthless paper. If it changes its policy, then the U.S. dollar will be doomed and if it is not repriced on the terms of the creditor guess what: there will be no more sales on credit and that will lead to painfull due to the lack of productive resources in the U.S. change where all paperwork 'workers' will have to move to the fields and deal with agriculture as they have no skills to work on production lines.