I know this sounds contrarian, but I think that exposing the boogieman of a "debt default" (i.e., not borrowing more money without spending cuts) would actually strengthen the dollar as investors realize that this would actually be a step towards financial resonsibility. The greatest fear the Democrats have is that they will be called out on their doomsday political threats. If the GOP hangs tough, the Dems will cave in and try to claim they were being responsible statesmen to save America. Alternatively, if the Dems try some budgetary trickery to authorize more borrowing, they will lose all credibility about their claims of reducing the U.S. debt and deficits.
What do you think will happen to the dollar if the debt ceiling is not immediately raised?
What do you think will happen to the dollar if the debt ceiling is not immediately raised?