Precursor to the dollar milkshake theory

The current state of our global economy could be a precursor for the dollar milkshake theory. The U.S. dollar hit a one month high on February 6 while other currencies like the yen, the franc and the pound fell. On February 7, 2023, Federal Reserve Chair Jerome Powell announced that the U.S. had hit its statutory debt limit last month – the total amount of money that the U.S. can borrow to meet its existing legal obligations like medicare benefits, interest on national debt, tax refunds and other payments. Lawmakers have avoided raising the debt limit to push for spending cuts, but failure to raise the debt limit could be catastrophic. The U.S. could default on its debt for the first time in history.