You just mentioned that Chinese can print USD, call it Chinese yuan and make it circulated within China. Why can they do the same with existing USD in their hands, save the printing effort?
So what if China print USD, does that mean the fed will recognize those USD with those Arbitrary serial number that being Print?
On the other hand, USD in China hand have no value unless the Fed back it, otherwise it would be worth the paper it was printed on (probably 1c) then $1, $5, $10, $20, $100. The USD value was set by US Federal Bank, not Chinese Central bank, and it only worth the denomination, wherever it is, as long as Federal Bank Guarantee that value. Just because you print it, it does not make it that value you printed on.
And you are saying US federal bank can Guarantee whatever value they want. So, my question is, what if Federal Reserve bank announce whatever USD the Chinese is holding, those USD now worth the grand total of $1? What do you think China will do? When you already paid $100000000 or whatever amount it is for goods and services? In exchange of those currency?
You are conflating that value of US currency with its exchange value as if it is only type of value.
I am not, I am simply following what you said.
You said the Fed can assign whatever value on any USD they printed, right? What about the one that Chinese own? They can still assign value on it, they have all the serial number and all.
What if they assign an arbitrary value to the amount of USD China is holding? You can't stop it because as you said, there are nothing to back it, right?