What If Congress Doesn't Raise the U.S. Debt Ceiling? Will USD Collapses ?

"Fundamentally"-based arguments about the dollar's future can be very misleading

A great question:-

"Doesn't the U.S. Treasury's looming extension of the U.S. debt limit even higher than it is today mean more pressure on the dollar?"

The question refers to a hot political issue: whether to raise the U.S. debt ceiling to yet another record high (over $14 trillion). That's a staggering figure, hence the question: Won't foreign creditors see that much debt as detrimental to the U.S. economy, and thus to the value of the dollar?

At first glance this "fundamentally"-based argument sounds legitimate... that is, until you do some research and realize that the U.S. debt ceiling has been raised 11 times since 1996 -- that's 11 out of the past 15 years. The U.S. dollar did not crash in the process; against the euro (its main competitor), it stands today about where it was in 2007.
 
You could say: True, the debt ceiling has been rising, but now it's getting too high! To which someone could reply: What's "too high"? Why was raising the debt above $12 trillion in 2009 acceptable, but the push over $14 trillion this year "too high"? Who's to say?

And just to show how "flexible" the "fundamentally"-based arguments can be, you could just as easily argue that it will damage the dollar NOT to raise the debt ceiling, and here's why: the Federal government will shut down, the U.S. cannot legally borrow any more money, which is a de-facto default -- and bad news for the buck.

Damned if you do, damned if you don't.