I really think Irwin Stelzer should know better. The Weekly Standard economics writer usually leans toward the “engagement” crowd when it comes to the Chinese Communist Party, but he always managed to steer clear of the Kool-Aid.

This time, though, he falls for a different myth, the debt myth.

China can easily turn that feeble recovery into a downturn by cutting back on purchases of U.S. treasury IOUs, driving interest rates up.

Leaving aside the fact that the Fed has told anyone who will listen that they will vacuum up as many T-bills as is required to keep interest rates near zero, Stelzer should know – as Gordon Chang does – that paper power is really a paper tiger.

No, the real problem with the CCP buying so much of our debt is that they can’t stop, meaning the traditional incentives to get serious about deficit reduction (the fear creditors will stop lending) doesn’t apply. Instead of firm warnings from Wall Street or the City (London), we have a regime desperate to keep lending us money in order to maintain their cheap currency and export sectors.

Thus, our day if reckoning will be delayed, but hurt that much harder when it finally comes.

Cross-posted to Virginia Virtucon and the right-wing liberal