Congressman: Foreign Free Money May Dry Up
Friday, November 25th, 2011 -- 9:04 AM
The era of "free money" from countries like China is about to end, according to Rep. Ron Kind (D-La Crosse)."Right now, a lot of institutional and foreign countries are investing in our bond market because they view it as a safe-haven," Kind explains, "and they're virtually giving us money for free, that use to pay our deficits."
But, Kind says that will change if China faces a financial crisis like the one facing Europe.
"That's going to end and we'll be left holding the bag," Kind warns. "We're going to get caught holding the bag. Interest rates will spike and we'll have to make some draconian cuts that are going to be very painful and detrimental to economic growth."
That makes cutting the federal deficit extremely important.
"Time is of the essence."
China is currently the largest holder of U-S debt.
[i]Report courtesy of the Wisconsin Radio Network.[/i]
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