"One point i don't understand is, why the US would want to increase rates if the Us$ fell .. let it fall! .. SLOWLY! Surely US could handle an increase in debt via lowering $."
A falling currency will result in increased debt when that debt is in foreign currencies which applies to Australia and most economies.
I believe the US debt would be in US $ rather than in euros or other currency. (The RBA holds substantial $US reserves that being debt on the US side of the ledger.)
Smaller economies need the US $ as the major medium of exchange but why would the US need to hold our $ or any other currency ?
If I am correct a declining US $ will have limited effect on the existing debt level but a reluctance of other countries to hold US $ would force interest rate increases
