CNBC's Jim Cramer said investors will know that things are "really bad" if regulators give money market funds the leeway to avoid letting their share prices fall below $1, known as "breaking the buck."
"Watch for the regulators coming out and saying the money market funds will not break the buck. That's going to be a sign that things are out of control," he said Wednesday on "Squawk Box."
Cramer went on to say that "you're going to have to break the buck if they own short-term paper ... and if the regulators give them an excuse by saying, 'Hey guys it's over. We're defaulting.' "
While markets are rallying on hopes of a debt deal, some investors are still concerned about what will happen if the U.S. defaults on its debt.
If lawmakers fail to reach a deal by Thursday, the government will by law not be able to add to the national debt and will have to depend on incoming revenue and about $30 billion in cash to meet obligations.
—By CNBC's Karma Allen.