gold and selected government bonds (but not those of the US) look more attractive to China from a risk assessment standpoint, because China rightly fears its dollar-denominated holdings will almost certainly be inflated away over time by the US policy of issuing huge new sums of dollar-denominated debt in the form of Treasuries.

Virtually every economist on the planet calls this situation one that has the real potential for seriously and permanently damaging the dollar by inflating away too much of its remaining value not very far down the road.

minus the environment of extreme risk aversion that still plagues the markets, the US is caught between multiple contradictory interests. On the one hand, it wants to keep yields low so as to attract buyers such as China to purchase significantly more Treasuries. On the other hand, it needs higher yields to attract many new buyers because the big buyers are becoming much less able to keep up their purchases, let alone increase them.

What I am describing here is a bursting of the Treasuries bubble. It would most likely be disorderly and chaotic.