Billionaire Elon Musk backed a prominent Wharton economist who accused the Federal Reserve and its Chairman Jerome Powell of a total failure in their response to the current economic recession.
Musk’s reaction to a fiery statement from Wharton professor Jeremy Siegel told CNBC that the Fed’s current policy path was “too narrow” and “absolutely meaningless,” according to the New York Post, which has seen it. Al Arabiya.net.
Siegel, who admitted he was “very upset” about the Fed’s handling of the situation, accused Powell and his colleagues of being too late to raise interest rates. Siegel also argued that the Fed is sabotaging the economy by being very aggressive in raising interest rates despite signs of already easing inflation.
In turn, Musk wrote, in a tweet on Twitter: “Siegel is clearly right.”
Siegel accused Powell of ignoring several economic indicators, including falling commodity prices, a slowdown in the US housing market, and a falling money supply.
Musk is among several business leaders who have taken a pessimistic view of the state of the US economy in recent months. In June, Musk laid off workers at Tesla while warning he had a “very bad feeling” about the economic outlook.
Earlier this month, Musk joined others in warning that the Fed risks causing “deflation”, or a harmful crash in prices, by raising rates too dramatically despite the slowing economy.
In turn, the stock market has moved deeper into bearish territory since last week, when the Federal Reserve raised interest rates significantly for the third month in a row.
Central bank officials have indicated that further large increases are likely in the coming months – a sign that the Fed is maintaining a hawkish approach to combating decades-old high inflation.
This is despite warnings from Siegel, Musk and others that the Federal Reserve could tip the economy into a prolonged recession. US GDP has already fallen for two consecutive quarters, which is the common definition of a recession.