Debt Ceiling Drama; End of the Road for the Empire? http://hamsayeh.net/articles/670-debt-ceiling-drama-end-of-the-road-for-the-empire.html

Sometime in mid-May, the United States will hit the debt ceiling ($14.3 trillion) which is the legal limit that the country can borrow without congressional approval. That means that there's a real chance that the US could default on its debt.But, guess what, it really doesn't matter, because by the time congress agrees to a deal, the damage will have already been done, which is why Wall Street is in such a furor. Foreign banks, financial institutions, and investors don't base their investment decisions on what actually happens, but what they "think" will happen. 

So, if the political stalemate continues, investors will get nervous and move their money out of US Treasuries and into something else. And, that WILL happen because, every day that goes by, the uncertainty builds and investors grow more apprehensive. Also, if something unexpected were to happen, like if Tea Party congressmen suddenly decided to nix the budget compromise altogether --then there would be some major ructions in the bond market that would send stocks into freefall.

Okay, so investors move from US Treasuries to some other "risk free" financial asset; why does that matter?It matters because the bond market supports the dollar, and the dollar is the foundation upon which the empire is built. When UST's lose their special role as the benchmark for pricing financial assets, the whole unipolar system will begin to teeter. In other words, attracting foreign capital to UST's is a lot more important to the maintenance of the US imperium, than winning wars in Iraq or Afghanistan. A flight from UST's will accelerate America's decline and constrain its ability to project power around the world.