Two years after August 2011, US debt reached its limit - a new law has to be passed.

Treasury's Lew: Congress Needs to Pass Debt Limit

Two years ago in July 2011, this was the hot topic of US professors (many of them Fil Ams) regarding the debt limit.  A new law has to be passed to allow the US treasury to borrow more to pay:  wages of Fed employees, social welfare checks,  the food stamps, and interest on T Notes and other borrowings.  Without the new authority to borrow, US would default and the US debt would be downgraded and borrowing costs would shoot up sending the US/Treasury into a vicious upward spiral of spiking costs.

The stalemate and the last minute passage of the law was completed just in time when US had no money its treasury  (Apple had 80 billion dollars at that time and some were suggesting to borrow from Apple).  It cost US a downgrade.

Of course, China and the rest of the world finances the US deficit.

What is interesting in the world trade is the flow of capital.   US would continue to attract more capital inflows to finance its debt because the world continues to see US as safe haven for investment and as center for entrepreneurship -  of innovation and new products.  No country comes close.  That is why even with predictions of coming hyper inflation due to large dollars in the financial market, the forthcoming dumping of US dollars in world trade, US dollar is still the currency of choice in world trade and as reserve of Central Banks. Would Euro be the better currency?

How about the undervalued Chinese yuan?  (There are fears that China may bring hyperinflation and/or deflation to the world.   Right now, the Chinese economy is sputtering and may come to a halt

What is the alternative currency?

But many Chinese I talked to believe, despite their country's huge exposure in US T notes/currency,  believe US cant rise from its current sinkhole.

Can US or cant it?  What do you think?