Elon Musk slams Federal Reserve data latency, calls for immediate rate cut amid banking chaos – Economics
Amid the chaos in the US banking sector, Elon Musk, CEO of Tesla and owner of Twitter, has criticized the country’s central bank. Musk insists the Federal Reserve is operating with “far too much latency in its data,” and he insists the Fed must cut interest rates “right away.”
Musk’s criticism of the Federal Reserve’s data latency; Study shows 186 US banks suffer from financial risks
Last week, three major US banks collapsed, First Republic Bank was bailed out, and Credit Suisse received 50 billion Swiss francs from the Swiss National Bank. Just last week, the US Federal Reserve loaned banks $164.8 billion to bolster liquidity. Despite all the bailouts and expectations that the central bank will inject up to $2 trillion in liquidity following the creation of the Bank Term Funding Program (BTFP), the banking industry is still not out of the woods. A recently published study shows that 186 US banking institutions suffer from the same risks that caused the collapse of Silicon Valley Bank.
— Elon Musk (@elonmusk) March 17, 2023
Taking to Twitter, Tesla CEO Elon Musk has criticized the Federal Reserve, with his recent comment very similar to comments he made last December. At the time, Musk warned that if the central bank hiked interest rates in December, the risk of a recession would increase sharply. After the Fed hiked interest rates by 50 basis points, Musk reiterated his position, saying, “At the risk of a repeat of these rate hikes, these Fed rate hikes could go down in history as the most damaging of all time.” Last week Musk has again criticized the US Federal Reserve in several viral tweets.
After computer scientist and essayist Paul Graham published an article published by The Washington Post about banking problems in the US, Elon Musk announced answered to Graham’s tweet. “The FDIC needs to switch to unlimited coverage to stop the bank run and the Treasury needs to stop issuing ridiculously high-yielding bills of exchange so there’s no point in having money in a bank savings account with low interest rates. Right now,” Musk tweeted. In another tweet about the small handful of US bank failures, Musk insisted the Federal Reserve was too slow with its data, saying:
The Fed is operating with far too much latency on its data. Prices must come down immediately.
Musk’s comment on Treasuries refers to long-dated Treasuries affected by the Fed’s tightening policy. The study of the 186 banks suffering from similar financial problems highlights the fact that 10-20 year and over 20-year government bonds have lost about 25% to 30% of their market value. “Overall, as can be seen, the tightening of the Fed’s monetary policy has led to significant depreciation in the value of long-term assets,” the study explains.
Musk has repeatedly pointed to 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 hiked rates instead of cutting them. In a sequel tweetMusk added, “The higher the prices, 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 his position or do you have a different perspective? Share your insights in the comments section below.
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Source: Crypto News Deutsch
