When Currencies Collapse | Foreign Affairs

When Currencies Collapse | Foreign Affairs: Consider first the dollar. Faith in its reliability was seriously undermined last summer when the debt-ceiling imbroglio in the United States revealed a seemingly unbridgeable gap between the political parties and raised concerns about the capacity of U.S. policymakers to put the country's financial house in order. Foreign investors, who hold slightly less than half of all marketable U.S. Treasury debt, saw the crisis as proof that members of Congress would rather let the country default on its obligations than compromise on their own partisan objectives. And foreign governments were spooked. As the debate reached a peak, Chinese officials lectured Washington on the need to act responsibly, China's state-run news agency disparaged the negotiations as a "madcap farce of brinkmanship," and Russian Prime Minister Vladimir Putin characterized Americans as "living like parasites off the global economy and their monopoly of the dollar."