Some day -- maybe even soon -- China will turn pessimistic on the U.S. dollar.



That means lethal troubles for the future U.S. economy.



When a disorderly run against the dollar occurs, I believe a truly global financial panic is to be feared. China, Japan and Korea now hold dollars not because they think dollars will stay safe.



Why then?.....





The given in this equation is that the amounts of Treasuries coming on to the market in the years ahead is enormous.



Growing supply, and the likelihood that U. S. Treasury debt will get downgraded, means that the risk premium for owning longer dated treasuries is likely to rise and rise sharply.





These are sobering words from renowned economist Paul Samuelson.The threat that China and others countries might divest the dollar is starting to cause jitters in the Treasury market. If the countries Samuelson mentioned held on to their dollar assets --but cut back on their purchases of U.S. Treasuries-- interest rates higher immediately.