TOKYO (AP) - The idea that Japan would ever dump its $900 billion holdings of U.S. Treasurys, the second largest foreign ownership after China, has long been just that - an idea never seriously entertained.
The long-standing argument paints a horrific picture of the consequences: The dollar would crash, world markets would be sent into a tailspin and the post-World War II military and political alliance between the U.S. and Japan would be shaken.
But after Washington's credit rating was downgraded for the first time ever earlier this month - from AAA to AA+ by Standard & Poor's - some daring advocates are voicing that taboo idea: Why not sell Treasurys?
Those playing devil's advocate aren't Japan's mainstream policymakers by any means. But they aren't totally fringe either.
"The holdings translate to 1 million yen ($13,000) per Japanese taking this risk in shouldering U.S. debt, all without their fully being aware of it," said Kenji Nakanishi, a lawmaker in a new opposition party that made significant gains in the last election.
Nakanishi told The Associated Press that Japan shouldn't sell all its holdings at once, but should reduce them by about 10 trillion yen ($130 billion) each year, and earmark some of that money for recovery spending in northeastern Japan, which was devastated by the March 11 earthquake and tsunami.
A simple explanation to Washington that the move won't change the U.S.-Japan political and defense alliance should be enough, according to Nakanishi. It alarms Nakanishi that the government is trying to raise taxes to fix its deficit and finance the earthquake recovery, a move he fears would further squeeze the Japanese economy.
Views like Nakanishi's may be winning some acceptance. No one expects them to be acted upon immediately.
The Japanese government and ruling party officials have repeatedly said Japan won't sell U.S. bonds, and instead will keep buying them.
The common wisdom is that a weak dollar would prove devastating to the Japanese economy by making it more difficult for Toyota Motor Corp., Sony Corp. and other pillars of corporate Japan to sell their goods overseas.
Peter Schiff, chief executive of Euro Pacific Capital, a New York-based investment company, said the current accumulation of debt by the U.S. government is unsustainable.
"The more money the world lends to America today, the more money they're going to have to lend tomorrow," he said in a telephone interview. "It's a giant Ponzi scheme. Nobody is ever going to get their money back."
Japan would be venturing into untested territory if it decided to reduce Treasury holdings.
In 1997, mere musing by then Prime Minister Ryutaro Hashimoto about selling Treasurys set off a Wall Street plunge until Japanese officials quickly jumped in for damage control and promised Japan had no such plans.
But Naoto Amaki, a writer and former government bureaucrat, thinks the time is ripe to start thinking the unthinkable.
Amaki has long advocated reducing Treasury holdings, but is only recently growing optimistic that others may finally see how his view may be good for Japan.
Japan, with its towering public debt, is in no position to help finance America's deficit, especially after the March 11 earthquake and tsunami, he said in a recent blog.
"Japan's finances were already in serious trouble. Now, we are literally being backed into a crisis of no return," Amaki said.