What happens if all countries outside the U.S. stopped investing in the U.S. and stopped using the U.S. dollar as a reserve currency?
Suppose the extreme case occurs where all countries outside the U.S. decide to rapidly move away from using the U.S. dollar as a reserve currency. Also, suppose that investors outside the U.S. wanted to sell their U.S. Treasury bills and bonds as soon as they mature and not buy new ones. Would there be any way to avoid a catastrophe in the U.S.? Alan Greenspan famously said that the U.S. can always pay its debt by printing money. Given the massive size of the debt (> 40 trillion), is it likely that a fire sale on U.S. treasuries, coupled with an end to the U.S. reserve currency, would cause hyperinflation in the U.S.?