Ivars wrote:I do not think China or anyone else then FED will be directly affected.
I meant, the USA will not default on Chinas owned debt directly. By defaulting on FED in late 2012 , about 2-3 trillion, the USD may devaluate in the range up to 10-15%, and that of course will affect China. Indirectly, and as a result of one time action ( which may be repeated and become regular again if FED continues to lend to the USA government after that-why not?)
Every time, once a year, e.g 10-15% of USD value is destroyed.