Famed investor George Soros spoke to Bloomberg Television about the U.S. economy yesterday, specifically the debate over cuts versus government spending. Soros argues that the U.S. should take on more debt and spend it on infrastructure.
- 0:20 It is a really open question; How much debt is too much and when should you tighten? We’re in the midst of a difficult, delicate, two-speed manoeuvre.
- 1:15 If you have a growing economy, you can tolerate a high level of debt. If you have an economy in recession, and too much debt, you get into what’s called a debt trap.
- 1:50 This argument is overshadowed by political considerations. In Europe, you have debate of eurozone members and their debt.
- 2:25 We can issue our own currency in the U.S., and the dollar is quite strong.
- 3:20 There is a danger than, by pushing budget cuts too far, you can endanger it. I fear political forces are going to force the economy back into recession.
- 3:50 The U.S. economy could absorb some more debt to get the economy going. If you use it to reinforce consumption, you get no benefit from it. Building infrastructure or improving productivity is where it should be used.
- 5:30 The U.S. dollar is considered to be riskless, but it’s a question as to the degree of future inflation. One way to decrease the future weight of debt is to have inflation.