...US companies have not been borrowing heavily in foreign currencies.That is true as far as it goes. The Asian currencies fell and fell quickly relative to the USD and other holdings. That meant people suddenly found that their money only could purchase about half of what they could buy before the crisis hit.
I shouldn’t have to explain this. There have been many, many papers trying to assess the possibility of an Asian or Argentine-style currency crisis for the United States; all of them run up against the simple fact that large foreign-currency indebtedness was central to these crises, and we just don’t have that problem.
Why do I bring up this point? Note that Krugman has been calling for the Fed to print money, which would weaken the USD and "make our exports more competitive." From a macro sense, there is some truth to that point, but from the vantage point of individual Americans, that is a disaster. It seems to me that Krugman both is welcoming the demise of the dollar and, at the same time, claiming that our currency and our fates are immune from the economic disasters caused by inflation.
When the crisis hit in places like Indonesia, people rioted (and killed Ethnic Chinese, whom they blamed for all their ills), and millions were plunged into poverty. This was not a happy time.
Yet, if one logically and consistently follows Krugman's policy prescriptions, you see that he wants us to go down the same road. Now, I believe that our policies so far are going to expose Americans in ways they cannot imagine. The dollar IS overvalued, Americans have been financing their consumption by borrowing from the Asians, and this gravy train is going to come to a halt.