If you raise the debt ceiling, you lose your credit rating. If you do so and cut spending in a ten year time frame, you lose your credit rating. If you cut spending immediately and do not raise taxes short term, you keep your credit rating.
A default is not a collapse, but a large part of why not is status of being a reserve currency. That could change real quickly. Inflation could bank our currency out of existence.
Re-Live this fantastic existance that others have had when they did not have the reserve currency of the world in this .PDF document: When money dies.
The only reason the dollar is still holding is because every other currency in the world is in worse shape, but if they see no return on investment from the US, they move their trading power in other ways.
Do not say it can never happen here.
07/26/11 – Lack of Executive leadership is the author of this crises. He signed the checks for two years and only now wants to confront the 24% increase in our budget he made. He just had two years of an entrenched House and Senate to do so. Most people do not comprehend how this works, and why it is not supposed to happen.
08/31/11 – And this crises caused by this graft.