I just want to put down a few thoughts here.
Sticking to basics (WikI) let me post two theories of deterrence
http://en.wikipedia.org/wiki/Deterrence_theory
1) Deterrence is a strategy by which governments threaten an immense retaliation if attacked, such that aggressors are deterred if they do not wish to suffer great damage as a result of an aggressive action. Weapons of mass destruction (WMDs), conventional weapons strength, economic sanctions, or any combination of these can be used as deterrents. Mutually Assured Destruction (MAD) is a form of this strategy, which came to prominence during the Cold War when it was used by the US to characterize relations between the United States and Soviet Union. Both nations were prepared to fight a full scale nuclear and conventional war, but were not willing to risk the carnage of a full scale nuclear war.
2)Deterrence by denial is a strategy whereby a government builds up or maintains defense and intelligence systems with the purported aim of neutralizing or mitigating attacks. Aggressors are deterred if they choose not to act, perceiving the cost of their action to be too high in relation to its likelihood of success.
As per these definitions. "Mutually Assured Destruction" forms one subset of means of deterrence. Unfortunately for the "lay public" (us) MAD is the most well known method and the only method that gets mentioned. The excuse I have heard about "MAD" is that it worked, but what is forgotten is that deterrence has been made to work even in the absence of MAD - eg US-China. The recent US confirmation of intent to reduce its arsenal to 1500 weapons indicates a further erosion of belief in the utility of "Mutually Assured destruction"
Clearly deterrence cannot occur without the threat of some kind of pain to an attacker. But if you look at the subject carefully you can build an analogy. imagine a man with a gun in a crowd holding people hostage. Imagine that he is surrounded by police who can blow his brain out, but either way the crowd of people is in danger. Whether the armed man carries out his threat or whether the police shoot first innocent people are likely to get hurt. In such a circumstance the "cheapest" method of disarming the man would be to get him to do it himself. The armed man will naturally want to know what's in it for him and so we have paradoxical situation in which the armed man, whose brain was to be blown out is actually given some sweeteners and promises (perhaps of fair treatment and redressing of grievances).
Now apply this scenario to the story of nuclear armed nations from 1945 onwards.
In the beginning it was the US and its allies versus the USSR. The tactic that was followed was MAD
Then China joined the game, and later India entered.
At this stage it was suddenly realised that every nation with nuclear arms could not be nuked out of existence without damaging life as we know it on earth. So MAD turned out to be a poor strategy once the number of players increased.
This led to a change of strategy where nations who were at greatest risk of being wiped out by others nuclear weapons were all convinced of the need to give up all nuclear ambition (CTBT) in exchange for certain nuclear sweeteners. What this treaty did was to eliminate any possibility of multiple MAD scenarios being developed by multiple nations, but left the P5 to sort out their own strategies.
But this was not good enough. The CTBT did not address the concerns of some very significant countries - notably India. And in any case in a world where the US (especially) and USSR acted as if they were the only two nations on earth, the CTBT and NPT were applied so loosely that a whole lot of nations acquired nuclear weapons from the P5.
This led to a situation in which multiple nations have nuclear weapons and technology. Already MAD was recognised as a situation that imperilled everyone, the nuclear antagonists and uninvolved parties. And MAD developing between two nations other than the US and someone else is as much of a risk to the US if the US were involved. What I am trying to say here is that nuclear war affects everyone on earth, not just the two parties involved.
Stemming from this statement are two further conclusions:
1) Any nation preparing for nuclear war is preparing to affect/damage the interests of every country on earth.
2) Threatening such a country with nukes will probably not make a difference because they are preparing for nuclear war anyway.
What this means is that if India is preparing for nuclear war with Pakistan, the threat that India may be destroyed by Chinese or American nukes will not deter India because it is set to lose either way, and if it is going to lose the best thing is to take someone down with you. Besides a Chinese or American attack on India will put the whole world at risk - which is the exact opposite of what is hoped to be achieved.
Similarly, if Pakistan is preparing for nuclear war with India and threat of combined US and Indian nukes will not deter Pakistan because it is set to lose either way, and the world loses either way.
This leads to the paradoxical situation that the world faces today:
1) Preparing for nuclear war puts the whole world at risk - not just the two nations who are fighting
2) But this power makes the development of nukes a powerful bargaining tool by which any nation with nukes can blackmail the entire world.
That means that the advantage that nations such as the US and Russia have gained with nuclear weapons is effectively neutralized by the smallest and latest nuclear armed nation. Any nation with nuclear arms can "upset the balance". Neither Pakistan nor NoKo are the least bit bothered about any nuclear threats they may face. Either they survive and have their way, or the entire world gets affected.
Interestingly I can include India along with NoKo and Pakistan in that sentence, but the reason I have not included India is that India was probably the first nation on earth to realise the paradox of possessing nuclear weapons. The actions of Pakistan (and to a lesser extent NoKo) are perfect examples of "
You meet our needs or we take the world down with you"
The US's nuclear arsenal is powerless here, leave alone China's or India's arsenal. So what the hell can the world do about this situation?
Will write more thoughts later.