Fear not. America will not go bust. At least not in the sense of being unable to cover all of the IOUs it has peddled to China and other investors. After all, hidden in some Washington and Fort Worth, Texas basements are the printing presses that turn out dollar bills on command. So if America â s creditors turn nervous or nasty, the Treasury can always crank up the presses, produce new bits of paper adorned with pictures of American presidents, and redeem its outstanding notes and bonds.

Which isn â t much comfort to those holding our IOUs, since the flood of dollars would have a lot less purchasing power than those the creditors lent to America. That â s why the Chinese and other countries have begun the search for ways to avoid piling up more Treasury bonds. Not easy to do: China runs a large trade surplus with the United States, and so has more dollars flowing into its vaults than it would like, and to earn something on those dollars uses them to buy Treasury IOUs. Of course, China could allow its renminbi to appreciate, making its products more expensive in the US, but that would throw out of work millions of workers who might begin to wonder whether the freedom they have been sacrificing in return for export-led prosperity and good jobs is any longer a good trade-off. The last thing the regime wants is for already-simmering unrest to boil over into full-scale rebellion.