In other words, we’re all but dependent on Chinese investments. Beyond this fund, China holds half a trillion dollars in US Treasury bonds. For that reason economist Navarro says they have us over a barrel. If they don’t like our behavior, he says all, they have to do is dump all their U.S. investments. It’s known as the financial nuclear option.
"What would that do? That will cause interest rates to spike. Mortgage rates to spike. Inflation to spike. The dollar to go through the floor. The stock market to go into chaos," Navarro said. "We would be in deep, deep, deep trouble."
"The nuclear option, financial nuclear option is China’s pulling all its money out of U.S. treasuries," Stahl said to Gao.