Elon Musk says the pile of dead banks proves more rate hikes will cause a severe...
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Elon Musk says the pile of dead banks proves more rate hikes will cause a severe recession
There's a severe recession coming if the Fed continues to hike rates, Elon Musk said.
The tech billionaire pointed to the pile of dead banks as a sign of economic stress.
Musk has slammed the Fed over 20 times in the past seven months for its aggressive tightening.
The graveyard of dead banks proves that more Fed interest rate hikes will spark a severe downturn, Elon Musk said, claiming that data from his companies meant he had more real-time insight into the economy than "anyone ever."
In a tweet on Sunday, the tech billionaire responded to an economic outlook from former US Treasury Secretary Larry Summers, who predicted that the US had a 70% chance of tipping into a recession within the next year.
"Mild recession is already here," Musk replied. "Further rate hikes will trigger severe recession. Mark my words."
In particular, Musk pointed to turmoil rocking the banking sector, with the most recent failure being First Republic Bank. That marks the latest bank to go under since March's collapse of Silicon Valley Bank, which suffered a bank run after high interest rates hit the bank's bond portfolio.
"It's not like just the canary in the coal mine (SVB) died, one of the staunchest miners (Credit Suisse) died too & the cemetery is filling up fast!" Musk said, making the case that the banking failures are signaling major stress on the economy stemming from Fed rate hikes.
The Fed has raised interest rates by 475 basis points over the past year to tame inflation, a move that could easily overtighten the economy into a recession, experts warn.
Musk, for his part, has slammed the Fed's interest rate hikes over 20 times in the past seven months. That's because inflation is lower than what shows in the Fed's data, he said, claiming its policy moves over the past year were "foolish" and responsible for Tesla's $600 billion market drop in 2022.
Musk's array of companies also gives him more insight into the state of the US economy, he argued.
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