the usa's debt dwarfs china's debt ..., page-7

In my opinion it is not possible for the USA to default on its US dollar denominated debts. The Federal Reserve just prints more dollars and gives these Federal Reserve Bank paper notes to the US Government in return for interest denominated US bonds.

However the more US Federal Reserve Bank paper that is printed, the more it devalues and loses its purchasing power. That is what China is concerned about and why China is buying hard assets - commodities and gold with its US paper.