Egg Drop Economics
So the Chinese are threatening an economic 'nuclear option' against the US? Well, so be it.
If the Chinese want to sell of their US Treasury holdings, the Federal Reserve can buy back our dollars at bargain basement prices. The Chinese can then base the yuan on the artificially inflated Euro.
All the while, we could keep the dollar low and thus our exports would expand and increase. That in turn would spark economic development in capital expenditures and in job creation.
Is there a down side to this? Yes, there is.
What is now a $6.00 cup of coffee in Paris will cost $8.00 and a $7.00 hamburger in Marseilles will cost $9.00. On the other hand, expect hordes of Speedo wearing Europeans to flock to bargain basement (to them) American beach holidays. Even sessions with the renowned Dr Sanity and Shrinkwrapped will be a positive bargain to the unbalanced insane Euro lefties (which is only a partial benefit. Chances are both Dr Sanity and Shrinkwrapped would be able to help their new patients and the Europathologies they bear).
On the other hand, if the Chinese were to 'drop the bomb,' we could ban their food exports (and let the Europeans reap the prize of tainted seafood at discount prices) and invest in our own aquaculture projects and industry.
Egg Drop economics.