Correct, in exchange for selling their stuff to us, trade counterparties gain a claim on the US, either a claim on the government, or a claim on US companies. As Friedman says, there is little else they can do with the flood of Dollars the US throws at them, so, of course, the payments mostly balance. But there are practical limits to what they can buy, other than Treasuries. Most of us here probably remember the resentment toward Japanese interests, in the 80s, when they were buying up real estate and US companies.
We are seeing the same resentment now, with some states outlawing property purchases by Chinese.
If trade counterparties buy Treasuries, they avoid laws like Florida’s, and general resentment. Treasuries are also more liquid than real estate. But, if the government does not run a massive deficit, there may be a “shortage” of Treasuries. As I said, there is a linkage between trade deficits, and government deficits.
Steve