Elon Musk, the CEO of Tesla and Space X, recently took the FED to task once more on Twitter for the dangers they posed for a recession. According to Musk, the recession will be significantly exacerbated if the Fed raises rates once more the following week. This is only a short time after Elon made news by pleading with the Fed to lower interest rates.
Elon’s words drew a lot of responses, with some Twitter users asserting that there is nothing we can do because, according to many economists, we are rapidly reaching a physical cliff.
Musk is not a fan of the FED rates
Elon Musk’s recession worries lead back to his earlier suggestion that the Federal Reserve should stop battling inflation and switch its focus to deflation, sometimes known as falling prices. After warning earlier in September that “a significant Fed rate rise threatens deflation,” the CEO of Tesla called on the central bank to decrease interest rates by 0.25 percentage points or “drop 0.25.”
In reaction to tweets from Cathie Wood, the Chief operating officer of Ark Invest, Musk suggested 0.25%. Wood highlighted that during the previous six months, prices of numerous important commodities, including copper, gasoline, and timber, had fallen significantly from their early 2022 levels.
Musk’s call is a sharp contrast in light of the present economic climate. According to inflation figures released Tuesday, prices increased 8.3% from January through August. Despite a small drop from July, the annual inflation rate is still above the experts’ predicted 8.1% increase and among the strongest year-over-year growth rates since the 1980s.
Keeping inflation at bay may prove harder than expected.
Elon, who made headlines with his recent firing of staff from his newly acquired Twitter, believes inflation will be more difficult to control than previously thought. The cost of food, shelter, and other utilities continues to rise faster than normal, even though fuel costs have drastically decreased and impacted total inflation. There are few indications that a significant deflationary crisis is imminent in the US. This development could see the unemployment rates increase more than anticipated to counter inflation.
The CEO of Tesla also disagrees with the Fed’s most anticipated rate decision. When policymakers convene on September 21, markets and economists anticipate a three-quarter percentage point increase in interest rates, the third such increase in a row. In remarks on August 26, Fed Chair Jerome Powell hinted that the central bank is still working on raising rates and that it “must stick at it till the job is done.”