Grudge match of the heavyweight economists. Kenneth Rogoff and Carmen Reinhart, two of the most respected academics in the field, now red-faced when a new review of their work exposed basic excel errors in their paper about excessive debt being detrimental to economic growth that has been widely cited by deficit hawks and the pro-austerity camps. You can almost picture Paul Krugman and other liberal economists in the corner giggling with delight like schoolgirls at seeing their counterparts go in full-on damage control mode.
All kidding aside though, this doesn't change the fact that over-leveraged economies, particularly those with large amounts of (foreign) short-term debt and current account deficits, have time and again been subjected to coordinated speculative attacks against their currencies that almost left them bankrupt and in many cases, crippled for years to come.
Economic and monetary fundamentals dictate that the U.S should have suffered the same fate as the Latin American countries in the 1980s and the East-Asian Tiger economies in the 1990s by now, precisely why the likes of Ron Paul and Peter Schiff can't stop blowing their doomsday horns. The U.S dollar, however, still remains the world's dominant reserve currency (and that too, by a significant margin). The sterling and the yen combined
barely make up 10% of the total market share in the last two decades. And with signs of the Euro already reeling under pressure from bailouts and internal strife, the dollar's primary reserve currency status will remain unchallenged, allowing the U.S to run massive debts and deficits without having to worry about the consequences in the short term.