Elon Musk says, Fed rate hike on deflation risks

  • On September 21, 2022, the Federal Reserve will determine the next increase.
  • Economist Peter Schiff is sounding the alarm about impending hyperinflation.

Elon MuskThe CEO of Tesla and SpaceX has issued a dire warning to the US economy. Musk claims that deflation will happen if the Federal Reserve raises interest rates dramatically again. Musk’s warning comes as market watchers anticipate a massive interest rate hike from the Federal Reserve in September. Federal Open Market Committee Meeting.

Musk is not the first prominent person to paint a bleak picture of the future of the US economy. Michael Barryfounder of Scion Asset Management and a well-known investor, predicted an economic crash similar to the crash of 2008.

Stagnation on the cards?

But economist Peter Schiff is sounding the alarm about impending hyperinflation. According to him, the Fed will quickly switch to quantitative easing, which will lead to higher inflation.

For Elon Musk, if the Fed raises rates again, the result will be deflation. When the general level of prices falls, this is known as deflation. Deflation may result from a variety of sources, including increases in productivity and/or decreases in demand, or from a decrease in a country’s money supply.

As the money goes, customers benefit from the downturn. On the other hand, if this happens for a long period of time, it may cause the economy to contract.

On September 21, 2022, . was released Federal Reserve It will determine whether or not to raise interest rates. The CME Fed Watch now indicates a 91% probability of a 75 basis point rise. Even Goldman Sachs revised its forecast up from 50 basis points to 75 basis points. An important factor in the decision is the release of the Consumer Price Index data on September 13th.

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