Elon Musk Issues a Dreadful Economic Forecast

The Billionaire feels a Fed decision could be more damaging than inflation.

Goods and services costs are at their highest level in 40 years, affecting consumer purchasing power.
Federal Reserve (Fed) aggressively raised interest rates to help consumers. Economists worry that this monetary policy, also followed by the European Central Bank (ECB), risks triggering a "hard landing" for the U.S. economy. If the Fed keeps tightening, it risks producing a recession.

CEO Sundar Pichai remarked at the 2022 Code Conference in Los Angeles on Sept. 6: "The more we attempt to comprehend the macroeconomy, the more unsure we feel." "Ad spend, consumer spending, etc. affect macroeconomic performance."

Despite warnings, the Fed will fight inflation. Fed Chairman Jerome Powell argued for a third successive 75 basis point rate hike in his last public remarks before September 21.
Powell said on September 8 that "we must act now, forthrightly, and strongly as we have been" "The Fed owns price stability."

Fed could trigger deflation

Elon Musk, the world's richest man, believes a big Fed rate hike will bring deflation. Most goods and services will be cheap.
Tesla's CEO tweeted on September 9 that a Fed rate hike risks deflation.

Deflation opposes inflation. Continuous price declines characterise it. It can induce households to postpone purchasing decisions while hoping for additional price drops, analysts say.

Deflation, Musk

Regular price drops can be catastrophic for the economy because they encourage households to delay purchase decisions. This can reduce overall consumption and boost the stocks of companies that can't sell their items. They cut production and investments.
Productivity or demand might create deflation.

Rich countries rarely experience deflation. The 1930s deflation, which hit the US and Europe, and the 1990s deflation in Japan are the sole examples.
Musk has forecast cheaper pricing before. In April, the billionaire forecasted a "world of abundance" where most products will be free. This deflation would not be due to a monetary decision, but to advances in AI and robotics that will be utilised in our daily lives.

"It's an abundant planet. Whoever wants them can have anything. Goods and services will be ridiculously inexpensive "April 17 conversation with Ted Talks' Chris Anderson
Moreover, "We'll have plenty. Future scarcity will be human-made."

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