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Elon Musk predicts a new economic problem for the United States if inflation continues to fall

Elon Musk predicts a new economic problem for the United States if inflation continues to fall

Elon Musk, the billionaire who leads Tesla and Twitter, has always been controversial and scandalous in his statements. Now he spoke as soon as the US Federal Reserve announced that it would not raise interest rates this time, which would be counterproductive for the businessman.

Analysts and economists have already predicted what was expected to happen at the meeting of the Federal Reserve on June 14: they predicted that after several months of continuous interest rate increases, they would not do on this occasion.

And it has been achieved, it is the first time since March 2022 that the Federal Reserve, led by Jerome Powell, has left its key rates unchanged. This means that the target for the federal funds rate remains at 5% – 5.25%. However, this does not mean that interest rates will not rise anymore, Powell himself warned in the press conference after the meeting that the entire Fed team is in favor of continuing to raise rates as a measure in order to fend off high inflation as much as possible.

For Elon Musk, that means everything This will cause shrinkagea context in which there is an excess of supply, which can cause a general decline in prices or a transition directly to an economic recession.

And Musk warned that “deflation is coming.”

“It’s not a mystery. Now that M2 money supply growth is negative, inflation will quickly subside. The new risk could be deflation,” explained Geviev Roch Doctor, CFA, GivE.

M2 is a measure that allows the evaluation of everything that is converted into cash, including money in circulation, deposits, and others, such as checking accounts.

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For several months an economic recession was expected to hit the United States. And in fact, the Fed has already agreed that this could happen by the end of 2023, and that although it will take about two years to recover, It won’t have much effect. Something that did not leave investors alone.

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