Amid the chaos in the US banking sector, Elon Musk, CEO of Tesla and owner of Twitter, has been critical of the country’s central bank. Musk insists that the US Federal Reserve is operating with “too much latency in its data”, and insists that the central bank must cut the federal funds rate “immediately”.
Musk’s criticism of Federal Reserve data latency; Study shows 186 US banks suffer from financial risks
Last week three major US banks collapsed, the First Republic Bank was bailed out and Credit Suisse received 50 billion Swiss francs from the Swiss National Bank. Last week, the US Federal Reserve lent banks $164.8 billion to shore up liquidity. Despite all the bailouts and the expectation that the central bank will inject up to $2 trillion in liquidity After the creation of the Bank Term Funding Program (BTFP), the banking industry is still not out of the woods. a recent post study shows that 186 US banking institutions are suffering from the same risks that caused Silicon Valley Bank to fail.
— Elon Musk (@elonmusk) March 17, 2023
On Twitter, Elon Musk, the CEO of Tesla, has been critical of the Federal Reserve, with his recent comment very similar to statements he made last December. At the time, Musk warned that if the central bank raised the benchmark rate in December, the risk of a recession would be greatly amplified. After the Fed raised the rate by 50 basis points, Musk reiterated his position, saying, “At the risk of being repetitive, these Fed rate hikes could go down in history as the most damaging ever. ”. In the past week, Musk has again criticized the US central bank in several viral tweets.
After the computer scientist and essayist Paul Graham shared an article on banking issues in the US published by the Washington Post, Elon Musk answered to Graham’s tweet. “The FDIC needs to switch to unlimited coverage to stop bank runs and the Treasury needs to stop issuing ridiculously high yielding notes, so there’s no point in having money in a low interest rate bank ‘savings’ account. Right now,” Musk tweeted. In another tweet about the small handful of US bank collapses, Musk insisted that the US central bank is too slow with its data. saying:
The Fed is operating with too much latency in its data. Rates should drop immediately.
Musk’s comment on Treasuries refers to long-term bills affected by the Fed’s tightening policy. The study of 186 banks suffering similar financial problems highlights the fact that 10-year Treasuries at 20 years and over 20 years have lost approximately 25% to 30% of their market value. “In general, as is evident, the tightening of the Fed’s monetary policy caused significant falls in the value of long-lived assets,” the study explains.
Musk has continually criticized the Fed’s rapid rate hike campaign. On January 13, 2023, Musk tweeted about the Fed and asked what would have happened in 2009 if the Fed had raised rates instead of lowering them. in a follow up cheepMusk added: “The higher the rates, the harder the fall.”
What do you think of Elon Musk’s criticism of the US Federal Reserve’s monetary policy? Do you agree with him or do you have a different perspective? Share his thoughts in the comments section below.
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