This is no joke. They could hurt us if they wanted to. Of course they’d hurt themselves too, but given how much ill will we have against us around the world and how pissed people are at our monetary policy anyway…don’t count this out as a viable option for the asian juggernaut.

From the Telegraph:

The Chinese government has begun a concerted campaign of economic threats against the United States, hinting that it may liquidate its vast holding of US treasuries if Washington imposes trade sanctions to force a yuan revaluation.

Two officials at leading Communist Party bodies have given interviews in recent days warning – for the first time – that Beijing may use its $1.33 trillion (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress. Shifts in Chinese policy are often announced through key think tanks and academies.

Described as China’s “nuclear option” in the state media, such action could trigger a dollar crash at a time when the US currency is already breaking down through historic support levels.

And oddly enough, this is something Ron Paul has been talking about quite frequently in his criticism for the Iraq war, since we have to borrow untold billions from China to conduct our “War on Terrorism.” If they actually do screw the dollar over, then Paul’s star could rise on the national scene. But it would have to happen soon.

Money guys are not happy…

Simon Derrick, a currency strategist at the Bank of New York Mellon, said the comments were a message to the US Senate as Capitol Hill prepares legislation for the Autumn session.

“The words are alarming and unambiguous. This carries a clear political threat and could have very serious consequences at a time when the credit markets are already afraid of contagion from the subprime troubles,” he said.

Listen, foreign interests carry 44% of our debt. That’s too much if we care about maintaining some sembelance of control over our economy. We spend much, much more than we make and we’ve gotta get our house in order, not just with China but in general.

Here’s what the Dems had to say in their debate last night…

Yes, but what does “take them to the mat” mean? Out-manuever them on the global market? How?

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