There are two problems with this analysis.
First the Chinese have a couple trillion dollars of US debt.
If they collapse the dollar, their reserves are worthless.
The second problem with this analysis is that the US will become energy independent in less than a decade. This fact has already reverberated across the world. This fact, has already put a floor under the dollar.
This has enormous financial implications. The chief consequence is that the dollar will return to being a hard currency. Why? There are no oil exporting countries with soft currency.
Those people who have bought gold will find that gold will go into decline.
There may be one more blow off top in gold but that’s it. We’re at or just below a long term secular top. If you don’t believe me, look at all the barkers on TV telling you to buy gold.
You should know what that means.
On the other hand China purchases massive amounts of US Treasury Notes not out of the goodness of it's heat. China buys it's massive amounts of US Treasury Notes to to keep the value of the Dollar high and keep the value of the Yuan from rising above it's already vastly and artificially low value relative to the currencies of it's major trade partners.
This currency manipulation by the Chinese to keep their currency at ridiculously low levels allows China to keep it's export product prices at rock bottom lows.
The vastly artificially low value of China's currency allows China to keep it's economy growing but it is bankrupting the overseas competition in any country that has not imposed import quotas or punitive import tariffs on Chinese goods.
China's predatory currency manipulation effectively allows China to effectively achieve the economic goals of Export Dumping on ALL Chinese manufactured goods across the board because they are not selling individual products below cost, but because they are selling all Chinese made goods collectively at artificially favorable currency exchange rates far below the real value of the Yuan due to China's massive currency manipulation.
The minute China stops buying T-Bills the value of the Yuan will soar relative to the Dollar, the Yen, the Pound and the Euro which will effectively kill off about 30% of China's manufacturing output over night.
China's economy would collapse as the cost of importing raw goods into China would soar and the price of Chinese goods on the world market would increase to the point that China would no longer have a competitive price advantage on most goods.
Domestically, prices for food and consumer goods inside China would also skyrocket fueling an already inflationary economy at a time when income growth would be negative and unemployment would be high.
In reality , if it comes to economic brinkmanship the US still has the upper hand in our symbiotic economic relationship with China, but China's hand is getting stronger every day and one fine day in the future China will be stung enough to get the upper hand with us.
US debt is absolutely tremendous and the new oil/NG won't kick in that quickly.
Even with oil/NG in place the Government can devalue the currency (by deficit spending on Socialism) far faster than fracking can harden it.
Remember: Governments that have their sticky fingers on oil aren't under pressure to cut spending - nor to govern wisely. See: Saudi Arabia, Russia, Iran, etc