Musk believes a recession is on the horizon and that the Federal Reserve’s efforts to curb inflation would only make things worse. The CEO of Tesla and owner of Twitter issued a tweet early on Wednesday morning urging the Fed to “lower interest rates soon” or else “amplify the chance of a devastating recession.” These comments were made during a lively group discussion involving Tasmanian co-founder Vincent Yu.
Trend is concerning. Fed needs to cut interest rates immediately. They are massively amplifying the probability of a severe recession.
— Elon Musk (@elonmusk) November 30, 2022
The Fed “stayed too easy for too long totally misreading inflation and now they’ve tightened aggressively into the highest debt construct even without accounting for the lag effects of these rate hikes risking they’ll be again late to realize the damage done,” as NorthmanTrader founder Sven Henrich puts it later in the thread. Musk agreed, saying, “Exactly.”
The Fed stayed too easy for too long totally misreading inflation and now they've tightened aggressively into the highest debt construct ever without accounting for the lag effects of these rate hikes risking they'll be again late to realize the damage done.
— Sven Henrich (@NorthmanTrader) November 30, 2022
In fact, this isn’t the first time Musk has predicted economic collapse. On October 24th, in a similar conversation, the world’s richest man speculated that a worldwide recession could extend “till the spring ’24.” The chief executive officers of other major corporations, such as Amazon’s Jeff Bezos, JPMorgan Chase’s Jamie Dimon, and Goldman Sachs’ David Solomon, have also recently issued dire economic forecasts.
The Federal Reserve looks to be winding down a rate-hiking campaign intended to combat inflation that is near its highest level in more than 40 years. The overnight borrowing rate has been increased by the central bank six times this year, to a target range of 3.75%-4%, and further increases are anticipated.
Officials from the Federal Reserve have been saying that they anticipate lesser hikes than the four consecutive 0.75 percentage point increases, the most recent of which was in early November. On Wednesday at 2:00 PM, Federal Reserve Chairman Jerome Powell will give a public speech at the Brookings Institution.
It is Musk’s opinion that the Federal Reserve’s efforts to reduce inflation will only lead to a worsening of the economy and a subsequent recession. CEO of Tesla and Twitter owner Elon Musk tweeted at the Federal Reserve early Wednesday, pleading with it to “lower interest rates soon” and reduce the “chance of a devastating recession.” During a lively group discussion, Vincent Yu, a co-founder from Tasmania, made these remarks.
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