There has been a lot of talk recently in the press about the significant amount of debt that the US government holds. There has however been relatively little discussion about who the money is owed to. This is probably not surprising when it appears that much of the debt is owed to China.
There is also hardly any discussion about what would happen if China started to call in its debt. Another way of putting this is how would the United States of America respond if China instructed the US to immediately repay the debt? This is a very interesting discussion point due to both the interdependencies of the two super-powers in respect of trading and due to the fact that they are indeed two super-powers. This discussion is explored further in two great books on China and the United States of America: Empire of Debt and China: The Balance Sheet.
A comparison has been made to the relationship between Great Britain and the United States of America in the post Second World War period. The British Empire had saddled itself with significant US debt. During the height of the controversial Suez Canal conflict it is alleged that the United States threatened the British that the debt would be called in, unless there was an immediate withdrawal of troops. There was a subsequent withdrawal of British troops and this is widely quoted as the moment at which the British Empire started to collapse. It could also be viewed as the moment at which the United States of America became one of the dominant global super-powers.
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