Amidst the chaos successful the U.S. banking sector, Elon Musk, the CEO of Tesla and proprietor of Twitter, has been captious of the country’s cardinal bank. Musk insists that the U.S. Federal Reserve is operating with “way excessively overmuch latency successful their data,” and helium insists that the cardinal slope needs to driblet the national funds complaint “immediately.”
Musk’s Criticism of the Federal Reserve’s Data Latency; Study Shows 186 U.S. Banks Suffer From Financial Risks
In the past week, 3 large U.S. banks collapsed, First Republic Bank was bailed out, and Credit Suisse received 50 cardinal Swiss francs from the Swiss National Bank. Just past week, the U.S. Federal Reserve lent the banks $164.8 billion to enactment up liquidity. Despite each the bailouts and the anticipation of the cardinal slope injecting up to $2 trillion successful liquidity aft the creation of the Bank Term Funding Program (BTFP), the banking manufacture is inactive not retired of the woods. A precocious published study shows that 186 U.S. banking institutions are suffering from the aforesaid risks that caused Silicon Valley Bank’s failure.
— Elon Musk (@elonmusk) March 17, 2023
On Twitter, Elon Musk, the CEO of Tesla, has been captious of the Federal Reserve, with his caller commentary precise akin to the statements helium made past December. At that time, Musk warned that if the cardinal slope raised the benchmark complaint successful December, the hazard of a recession would beryllium greatly amplified. After the Fed raised the complaint by 50 ground points, Musk reiterated his presumption and said, “At the hazard of being repetitive, these Fed complaint increases mightiness spell down successful past arsenic the astir damaging ever.” In the past week, Musk has erstwhile again criticized the U.S. cardinal slope successful a fig of viral tweets.
After machine idiosyncratic and essayist Paul Graham shared an nonfiction astir banking issues successful the U.S. published by the Washington Post, Elon Musk responded to Graham’s tweet. “FDIC needs to alteration to unlimited sum to halt slope runs and Treasury needs to halt issuing ridiculously high-yield bills, specified that it makes nary consciousness to person wealth successful a low-interest-rate slope ‘savings’ account. Right now,” Musk tweeted. In different tweet astir the tiny fistful of U.S. slope collapses, Musk insisted that the U.S. cardinal slope is excessively dilatory with its data, saying:
The Fed is operating with mode excessively overmuch latency successful their data. Rates request to driblet immediately.
Musk’s commentary astir the Treasury bonds refers to the long-maturity bills affected by the Fed’s monetary tightening policy. The survey astir the 186 banks suffering from akin fiscal issues highlights the information that 10- to 20-year and 20+ twelvemonth Treasury bonds person mislaid astir 25% to 30% of their marketplace value. “Overall, arsenic is evident, the Fed’s monetary argumentation tightening caused important worth declines successful long-duration assets,” the survey explains.
Musk has continuously called retired the Fed’s swift rate-hike campaign. On January 13, 2023, Musk tweeted astir the Fed and asked what would person happened successful 2009 if the Fed had raised rates alternatively of lowering them. In a follow-up tweet, Musk added, “The higher the rates, the harder the fall.”
What are your thoughts connected Elon Musk’s disapproval of the U.S. Federal Reserve’s monetary policy? Do you hold with his stance oregon bash you person a antithetic perspective? Share your insights successful the comments conception below.