The largest holders of U.S. treasuries are the Social Security system and the Federal Reserve. If government bonds are suddenly devalued, Social Security could find itself unable to pay retirees, and the assets that back the value of the dollar would evaporate. The third and fourth largest bond holders are the Chinese and Japanese governments. If their assets suddenly contract in value, the contagion would spread from the world's largest economy to the second- and third-largest. Many institutions are barred from trading in bonds issued by an entity in default, which means that pension funds, money market funds, bond funds and other investment funds would be required to dump their U.S. debt, causing its value to spiral downward even more.