Maybe it’s pedantic, but the Treasury doesn’t really buy them back. A Treasury bond is basically “the Treasury will give the holder of this bond X dollars at Y date”.
Nothing forces the Treasury to buy bonds from the market, but they are bound to pay the specified amount on the specified date.
The problem is, in a bond market collapse, inflation is going to skyrocket, and the bond holder has no option other than to take that hit because the payout is fixed.
They can flood the open market with cheap bonds, meaning that when the US auctions off freshly minted bonds, they’re worth significantly less and therefore yields are significantly higher, which can lead to a death spiral of either: 1) the US has to continuously issue bonds at higher and higher yields just to pay off the previous round of bonds, 2) the Fed prints money to buy the bonds and the dollar collapses, or 3) the US just doesn’t pay, and then we’re basically back to 1 moving forward.
So yes, bond dumping can definitely fuck up the economy.