The American consumer has been hit by the most rapid inflation seen in decades.
Even though the Federal Reserve is attempting to rein in the Consumer Price Index, nothing seems to be working.
And now Elon Musk is sounding the alarm on major indicators of an impending financial collapse.
Musk is pushing back on economic experts who believe America might get lucky and miss a recession
Economic experts are claiming that the American economy might narrowly miss falling into a recession. Elon Musk, on the other hand, believes that the country has already entered a recession and is more concerned about whether the economic health will get even worse.
Musk is not alone in his worry. One of his closest colleagues and tech investors, David Sacks, seems to have a similar perspective and they are both challenging the expert consensus.
While they are concerned about the Fed’s move to tighten the money supply through rate hikes, other business-minded individuals like Lawrence Summers believe the rate hikes are necessary.
If the @federalreserve doesn't raise rates in June, I think they have to be open to the possibility they may have to raise rates by 50 basis points in July, if economy continues to stay way hot & if inflation figures are robust.
— Lawrence H. Summers (@LHSummers) June 2, 2023
But Musk believes these rate hikes are more likely to increase economic damage.
The “trend is concerning” and the Federal Reserve might make things worse if they don’t cut rates
The Fed’s monetary policy shows that they believe the best way to subdue inflation is by raising the interest rates and restricting the flow of institutional dollars. Musk, however, is worried about the rate hikes.
The central bank has been continuing to raise rates for nearly a year. They are looking to increase the costs of working with creditors and to drive consumption down. They said that reduced consumption will lead to lower prices and slower development in private industries.
Musk said that the “trend is concerning. Fed needs to cut interest rates immediately. They are massively amplifying the probability of a severe recession.” He was responding to a crypto influencer who said that people should “prepare for any macro storm ahead of us.”
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
Now Musk is warning that the real estate industry will take a major hit in the coming months.
The housing market is destined to crash “as interest rates make homes less affordable”
Musk engaged with a user on Twitter this week who said that “House 🏡 prices are declining almost everywhere.” The post included a table that showed negative prices in over two dozen countries around the world, including major superpowers.
House 🏡 prices are declining almost everywhere 📉
— Science Is Strategic (@scienceisstrat1) June 4, 2023
The table was titled “on the retreat” and led with the fact that “two-thirds of the economies for which the [Organization for Economic Cooperation and Development] tracks housing prices saw declines for their most recent quarter of available data.” This included China, the United States, Germany, and France.
This will accelerate, as high interest rates make homes less affordable
— Elon Musk (@elonmusk) June 5, 2023
Musk warned that “this will accelerate, as high interest rates make homes less affordable.” Musk has said previously that this will all lead to a “severe recession” and people should be preparing for the economic fallout. He argued that the “Fed data has too much latency” and believes the economy is already in recession.
Patriot Political will keep you up-to-date on any developments to this ongoing story.