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Could China Crush America With This One Move?

By Matt Koppenheffer and David Hanson – Feb 15, 2014 at 12:15PM

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It's true, China holds a significant amount of U.S. debt. Here's why the "China coming to collect would ruin America" idea doesn't hold water.

China is the largest foreign holder of U.S. debt. But does that put America at risk of China coming to collect and breaking the bank?

In this video from Thursday's edition of Where the Money Is, Motley Fool financial analysts Matt Koppenheffer and David Hanson look at Chinese-held U.S. debt, and explain why this works differently from debt on an individual level.

They also look at who the real holders of the bulk of U.S. debt are, cite some work from Morgan Housel, and explain why China selling off its U.S. Treasuries en masse would have far more downside for Beijing than upside.

David Hanson has no position in any stocks mentioned. Matt Koppenheffer has no position in any stocks mentioned. The Motley Fool recommends Google. The Motley Fool owns shares of Google. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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