So I have been reading lately about a possible currency war between the US and China. The US claims China is keeping the value of the yuan artificially low, and has been pressuring China to “fix it,” whatever that means.
In turn, I have read rumblings of China dumping their $900 billion + in US Treasury bonds on the market, which will supposedly further diminish the value of the dollar.
So-- CAN the US Gov’t just cancel the bonds held by the Chinese? What if the Fed says “Those bonds are worthless and we will not redeem them.” Is this legal?