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Twitter now a platform-vent for Elon Musk, its new owner and CEO of Tesla and SpaceX. Musk makes noise again, this time with a direct attack against Dr. Fauci, the White House virologist chosen by former President Donald Trump to deal with the Covid-19 pandemic that exploded in 2020, director of the Department’s National Institute of Allergy and Infectious Diseases of Health in the United States, responsible for studying infectious diseases and allergies. Symbol in the United States of the fight against Covid-19, Fauci is preparing to resign from the position of number one medical adviser in the administration of Joe Biden. Elon’s tweet went viral. Without restraint, the new Twitter number one wrote a tweet asking to put Fauci under investigation: “My pronouns are: Pursue / Fauci”, tweeted Musk, referring to the issue of gender identity, therefore to those who use pronouns she/her/hers, he/him/his. Subsequently, Musk also posted a meme depicting Fauci addressing US President Joe Biden, telling him: “Just one more lockdown, my king…”, or “Just one more lockdown, my king”, rekindling the criticism against the policy management of the immunologist.
Elon Musk is worried about the economy. For several months now, the richest man in the world has been sounding the alarm that the economy risks a deep recession if the central bank’s monetary policy remains unchanged.
The Federal Reserve will hold its last monetary meeting of the year in the coming days and in the meantime, the famous businessman has just made a new forecast. And like his previous predictions, this one is also very alarming.
The Federal Reserve has raised interest rates sharply in recent months, taking the key rate from near zero during the pandemic to somewhere between 3.75% and 4%, in an effort to fight inflation, which is to the highest level in the last 40 years. But many economists argue that this aggressive monetary policy will plunge the economy into a recession.
Musk’s alarm
The central bank will hold a two-day meeting on December 13 and 14. Policy makers are expected to raise rates by 50 basis points, following four consecutive hikes of 75 basis points. Additionally, the Fed will release its first quarterly forecasts since September. This will provide clues as to how the central bank views the US economy in the coming years.
Musk believes that if the Fed does announce a rate hike as expected, it would be a huge mistake. The decision would plunge the economy into an even more severe recession than already forecast. “If the Fed hikes rates again next week, the recession will be greatly amplified,” the billionaire said on Dec. 9 on Twitter. Tesla’s CEO agrees with investor Cathie Wood, who continues to assert that a continued hike in rates will cause deflation, a risk already indicated by Musk last September.
“The bond market appears to be signaling that the Fed is making a serious mistake,” Wood wrote on Dec. 7. “At -80 basis points (measured by 10-year versus 2-year Treasury yields), the yield curve is more inverted now than at any time since the early 1980s, when double-digit inflation was rooted”. He added: “Typically, an inverted yield curve indicates a recession and/or lower-than-expected inflation. In our view, deflation is a much bigger risk than inflation. Raw material prices and massive retail discounts confirm this point of view”. Musk replied, “Absolutely,” on Dec. 9.
But economist Peter Schiff disagrees with the two influencer entrepreneurs. “The yield curve actually reflects investors’ expectations that the #Fed will be able to bring #inflation down to 2%,” Schiff commented on Musk’s post. “Investors are wrong. The only thing the Fed will do is make the #recession worse, which will crush the dollar and send consumer prices soaring. The gap between 3-month and 10-year bonds is around 80 basis points, the highest since 2001 and a worrying harbinger of a recession. A sustained yield curve inversion has preceded all nine recessions the US economy has experienced since 1955, making it an extremely accurate barometer of financial market sentiment, according to a study by the San Francisco Federal Reserve.
Last September, the entrepreneur warned that a massive increase in interest rates would cause long-term deflation. “A big Fed rate hike risks deflation,” said theSpaceX chief executive officer. The consequences of deflation can be devastating for the economy, because falling prices encourage households to postpone purchasing decisions in anticipation of a further decline in prices. This in turn can lead to a drop in overall consumption and an increase in stocks held by companies, which are no longer able to sell their products. In response, they reduce production and investment. In short, a devastating domino effect.