You are in for a big surprise if you think being in international waters will protect you from enemy fire during a shooting war.
You obviously have no idea what you are talking about. Firstly, treasury bonds are traded freely by everyone. The US might know which bonds they issued to who, but they will have no idea who holds which bonds a few years down the line.
Secondly, your mortgage example completely ignores the impact such a move will have on the US. To follow your example, if China is a bank and the US is the mortgage holder, even if the US was able to somehow identify the bonds China holds and cancel them, do you think any other banks is ever going to trust you enough to lend you a mortgage?
Everyone else's treasury bonds might not be cancelled, but they are all going to be worried what would happen if the US suddenly decides to cancel their bonds. So they are all going to sell, and the value of ALL US treasure bonds will become effectively worthless.
Go read an economics book if you want to begin to appreciate how badly that will hit America's economy.
Will such a move hurt China? Of course it will, but it will hurt the US a hell of a lot more.
all the bond can be trade via stock or other method. if its legal transaction with huge amount of t-bond(t-bond trading between nations are often large amount). IT HAS RECORDS, that records indicate how much t-bond sold to japan/europe from china for example. its same when you do a transaction through bank, there is always a record. In the event of a war. US can effectively default those debt, which make china liquify/transaction those debt to other countries impossible. transaction between small amount of t-bond through private party is not recorded as detail as those between nations due to too many transaction daily.
ask some foreign finance expert on this if you don't belief it, because i ask a friend of mine who happen work in this area. anytime there is huge amount of t-bond trading between nations, its recorded. read up on ISIN,CUSIP, NSIN numbers. small amount hold by private party are difficult to track, but in the event of a war. china need to trade large amount of t-bill, bonds etc $1.3 trillion. so if china want to get rid of those 1.3 trillion, first china has to trade those bond for gold, resource, or other europe/asia bond WITH other countries. its gonna be hard to sold all those t-bill simultaneously when most country won't even buy it. its like going to a store pay your purchase with cash, but the store deny your purchase, because they don't want to make a transaction WITH YOU, not because your cash is fake. China can't sell those $1.3 trillion in an instant, some small private party might want take risk and buy some t-bill from china(but those are small amount millions, certainly not trillions) but nations such as japan/europe etc won't buy it. because large amount of t-bill transaction between nation are recorded, and its easy for US to found out. even if its not, investors/those nations won't take the chance. furthermore once nations trade t-bill, its not that often they sold it right away(private party are opposite), so when china purchase t-bond from US, most t-bill will stay in china for some time. in the end is about how china can get rid of $1.3T bonds instanly via trade with other nations. No private party can afford that much t-bonds. So which nations is dumb enough to buy US t-bill from chinese when US specifically said due to war, the debt is default. what kind of investor would risk it by buying US t-bond from china. we are talking about trillion t-bonds, not small transaction daily between private party.
and as i SAID BEFORE because of WAR US can effictively default their debt to china. do you think US will still pay their debt to china WHEN there is a conflict going on between them, when hundreds US sailor is killed?? its like while i'm punching you, not only you are not getting mad, but paying me with cash. how well do you think US public will feel when US stilll paying chinese debt during a WAR due to south china sea. US still gonna pay japan/europe back because they are ally, and because US is not at war with them.
as for attack US ship in international water, sure china can do it. but do they willing to do it if US CVBG is in that area. South china sea is not a Chinese core interest. if china don't have to worry about US, taiwan and south china sea is probably already under chinese control. if US decide to put CVBG directly between china task force and phillipine/other countries or particular area chinese are interest in. what would china do? its same situation as taiwan 1996, US basically just put their CVBG there, and wait for chinese response. so would china attack US or back down or negotiate? because its very likely US will get invovle in south china sea conflict, and thats the situation china might face one day.
