The Economist reads my blog.
In essence, Asian governments are buying American Treasury bonds in order to ensure that Americans can afford to keep spending money on Asian goods. This cannot go on forever. Despite their mercantilist instincts, sooner or later Asia's central banks will have to face the fact that they are holding far too many risky, low-yielding dollars. If they stop buying, it could trigger a sharp fall in the dollar and a jump in bond yields. Delaying the natural adjustment in the dollar and bond yields is likely to mean that, when the inevitable correction comes, it will be much more painful.Asia seems to be willing to take promises for future payment in return for their goods. Remember, anything that can't go on forever, eventually ends.
Extra for conspiracy fans! Can the sudden recklessness of recent US federal spending have something to do with keeping this game going? If there was no new flood of nice, safe US treasury notes for the Asian central banks to buy, would some of them start selling, resulting in a crash in the US dollar? Is it possible that the crazed frenzy of spending in Washington is actually keeping the dollar afloat -- at least until the election?
I really don't know enough to say, but it seems like an interesting line of thought to this amateur economist.