The Debts of the Lenders: America's Pacific Allies Continue Buying Treasuries

A lot of attention has been focused on China's saber rattling in recent weeks over dollar diplomacy.

However, the USA retains willing allies in its struggle to continue debasing the dollar [edit: short dollar trade has been getting a bit crowded - happens when everyone and his mom starts hawking gold on tv]. I speak of course, about her Cold War allies that have managed to re-invent fears of Soviet aggression into fears of Chinese aggression.

The following countries can be relied upon to continue speculating in future US tax receipts:

South Korea, Japan, Taiwan (obviously), and Singapore.

These 4 nations fear the possible "Finlandization" of their geo-political roles before a resurgent China. Finlandization is a term used to describe the Cold War era politics of Finland in regards to its foreign policy w/the USSR. Although nominally independent, Finland was politically and economically subverted to its larger neighbor's convenience.

Historically, China has been THE dominant power in East Asia. However, that role was subverted during the 19th and 20th centuries during a series of foreign occupation, civil wars, famines, plagues, and all manner of unpleasantness. During this time, China's neighbors went through their own struggles but managed to also eventually develop their own sense of political, military, and economic identities that were NOT dependent on appeasing Beijing. Instead, many leaders looked West, to America or Europe. (The ones who looked East towards the USSR have either hastily backpedaled their way into America's orbit -e.g. Vietnam - or stubbornly continued their proletarian existence in the shadow of Greater China - e.g. Myanmar, North Korea, and Mongolia).

So, look for these 4 nations to continue being large, indirect bidders of US treasuries in the future. While numerically smaller compared to China's vast size, they represent a potent influence and "check" on the ambitions of a resurgent, regional power. Economics as well as politics will continue to motivate their behavior well into the early 21st century.