"When the grocery store cuts off extending you credit, you and your family will go hungry. When the store calls in the notes you have given and demands payment, you will find yourself out on the street with your loving, hungry--and by now angry- family."

No one said the grocery store is extending credit. The grocery is taking cash. That is what we are doing in regards to China and that is what is meant by a trade deficit. If the Chinese valued our cash less, then that means that chinese products would result in them costing more.
What you are worried about is what the Chinese do with their America money. Or what a grocery would do with his profits from selling stuff. And the grocer is investing mutual funds and the worry is he will stop buying mutual funds or sell all his mutual funds.
The simple fact is that US bonds are good investments.