Everyone occasionally has spit-take moments over the morning news. For some people, the New York Times story, "China Losing Taste for Debt From U.S.," is one of them. But for many more, that headline probably didn't even register. It is, after all, kind of dull on its face.

But you should care, and the reason is pretty simple: the U.S. government can't get by without borrowing money. And the Chinese have been one of the major lenders.

The U.S. government is facing trillion-dollar deficits over the next several years as it tries to stave off a depression. Every time the government runs a deficit, it borrows the money to cover the difference (when you buy a Treasury bond, you're loaning money to the government). And while deficit spending is a habit in Washington, the government is counting on it more than ever in the next couple years, because there's no other realistic way to pay for the stimulus package that nearly everyone agrees is needed to goose the economy.

This system works, more or less, because Treasury bonds have always been seen as one of the safest investments going. Therefore people (and banks, and governments) have always been willing to buy bonds and lend the U.S. money. In fact, in the last few months, Treasury bonds have been snapped up avidly because they've been one of the few stable investments in the global financial crisis. In the current worldwide credit freeze, the U.S. government is one of the few organizations that hasn't had trouble borrowing money.

Should that ever change, however, should the world ever stop wanting Treasury bonds, we'd be in trouble. At a minimum, the U.S. would have to offer higher interest rates, which would cost the government more money and potentially raise the rate on your mortgage or car loan as well.

At worst, it would put the federal government in a cash crunch, which would be extremely unpleasant. Raising taxes or cutting expenses in a panic can in turn create a cascading loss of confidence. This past fall, we had a nasty preview of what this kind of loss of confidence can do. If the government can’t sell Treasury bonds, not even the government will be able to bail us out.

China is the largest foreign holder of U.S. debt,, and those bonds gave it a safe place to park its money as its economy boomed. But now China's feeling the pain of the global crisis, just like every other country, and it needs to spend more on stimulating their own economy. You can't blame them for that, but it means they're shifting money away from American bonds and back to Chinese domestic priorities.

There's an up side to this, if you're worried about the political implications of foreign countries holding U.S. debt. The less debt China holds, the less leverage it might have over the U.S. The other piece of good news is that neither China nor anyone else really wants to knock the financial props from under the U.S. right now.

The whole world needs the federal government to put out this economic fire. We're still the world's largest economy, and when we sink others do, too, including China. So whatever the Chinese government does, it'll probably do it in ways to minimize the impact. In other words, we're not in trouble on this one yet.

But this just underscores the fact that the U.S. government cannot rely on borrowing forever. Our national debt has already passed $10 trillion, and there are enormous liabilities ahead for Medicare and Social Security. We need to deal with entitlements, we need to get the government's finances in order, and we need to do it before investors start to wonder whether Treasury bonds may not be the best deal out there. That may be the crisis that's waiting for us after we fight our way through the global credit crunch. And it could be even worse.