The U.S. government is facing a shutdown after congressional Republicans failed to approve a spending bill backed by President-elect Donald Trump that would have suspended the debt limit for two years. The frequency of partisan showdowns over the United States’ debt has raised the specter of a U.S. default—a crisis that economists have warned could tip the domestic and global economy into a recession.
Even as challenges such as rising debt and political polarization have chipped away at confidence in the U.S. economy, the U.S. dollar has only grown more dominant amid global economic and geopolitical turmoil, writes the economist Eswar Prasad in a recent essay. “The story of the dollar is, ultimately, less about the United States’ strength than about the rest of the world’s weaknesses,” he argues. “Until that disparity changes, and seemingly no matter how badly the United States plays its cards, don’t expect the dollar to decline.”
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