| Many investors worry about China weaponizing its US Treasury holdings, but they might be looking in the wrong direction. Taiwan holds nearly as much US debt as China—roughly $800 billion. But here’s what makes Taiwan’s position uniquely dangerous: private insurance companies own most of these Treasuries, not the government. These insurers hedge their holdings and face strict liquidation requirements. In this conversation, I sit down with Lyric Hughes Hale, Editor in Chief at EconVue, and Eric Huang, a Taiwan-based geopolitical analyst and former deputy representative to the US for Taiwan’s KMT Party. Together, they’ve uncovered a systemic risk hiding in plain sight. As Eric explains, even a credible rumor of Chinese aggression could trigger mass redemption requests from Taiwanese policyholders. And Lyric argues the G7 needs to establish emergency coordination protocols now, before a crisis hits. Learn more about Lyric Hughes Hale here: https://plus.econvue.com/p/lyric-hughes-hale Learn more about Eric Huan here: https://plus.econvue.com/p/eric-huang Sign up for Ed D’Agostino’s free newsletter here: https://www.mauldineconomics.com/global-macro-update?utm_source=MEC&utm_medium=YT&utm_campaign=jm-563&utm_term=lyric-hughes-hale-eric-huang&utm_content=JM563YT40083 Follow Ed D’Agostino on LinkedIn: https://www.linkedin.com/in/ed-d-agostino-415475296/ Follow Ed D’Agostino on X (Twitter): https://www.x.com/EdDAgostino Timestamps: 00:00 – Introduction 01:46 – Taiwan’s role in the US bond market 02:23 – Has Venezuela changed the Taiwan narrative? 5:00 – Why Taiwan holds so many US bonds 7:30 – The role of Taiwanese insurers 11:40 – What would force a sale? 17:46 – The financial cost of a Chinese invasion 28:01 – Concentrated risk 32:50 – War games 37:13 – US-China comms 41:15 – Grey-zone warfare 44:40 – Legacy of Japanese trade war |
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