Soros: The Country Could Actually Absorb More Debt

Bloomberg Television's Sara Eisen and Michael McKee spoke to billionaire investor George Soros today at the Bretton Woods conference in New Hampshire. Soros called the ECB interest rate "inappropriate" and criticized U.S. efforts to cut debt during a recession. Soros also addressed the risk of wage inflation in China and how some developing countries, like Brazil, are imitating China's efforts to curtail capital inflows. On stimulus vs. austerity and whether U.S. debt impacts the world, Mr. Soros said, "If you have a growing economy, you can tolerate a higher level of debt. And if you have too much debt and you have a recession, you get into what they called debt check. This is the big issue. " He added, “There is very a strong push to tighten the budget as a way to reduce government spending. It's a resistance to any kind of tax increase and tightening, particularly the budget of the states. The [U.S.] states cannot issue their own currency. They are in a similar situation to Spain and Portugal. There is a danger that by pushing this too far, you could abort the very fragile economic recovery that you are currently enjoying and push the economy once again into a slowdown or a recession." He concluded by saying, "I rather fear these political forces will push it into a recession. In my opinion, the country could actually absorb some more debt in order to get the economy going.”