So Elon Musk just said that the FED must pivot right now, meaning that the FED must change course, must change its policy and be more accommodative because they're about to send the United States economy into a recession. It's a very harsh statement. Now, it's one thing when this sort of talk comes out of: Kathy Wood when I think the level of credibility no offense to Kathy Wood is a little bit diminished because of the amount of Interest she has in their Arc funds. When it's Elon Musk it's a whole different enchilada because we know Elon Musk I Think there's literally zero percent that he's saying this because he wants to protect the share price of Tesla I Think he legitimately believes in that. Now whether he's right or wrong, it's a whole different discussion and in this video, you'll get my two cents. And let me just be clear about something here. Um, economics is the furthest thing from an exec science you can find on this god-given Earth I Mean this is pretty much a situation where we can have two Elite professors from some of the best universities literally telling you the opposite things. So you have to understand there's a lot of subjectivity in macroeconomics. That's the beauty of it. That's why I like it so much now. Elon is saying that the FED is overdoing its hawkishness so to speak. and if they're not careful, they're going to cause a major recession. Now my problem with that statement as much as I love me some Elon and I've been kind of known to be a huge Elon Musk fan, people laughed at. my password is probably Elon one, two three right But my problem with Elon Musk saying that and I'm going to call it like I see it regardless of my huge admiration of Elon Musk and his capabilities. I'm going to call him out on this because I think it's a lot of whole And here's why. The problem with what he's saying is that by definition, if you have driven the economy into an inflationary cycle which we have now, we've printed a lot of money. There was supply chain shocks because of the pandemic, a lot of moving Parts kind of came together causing this massive inflationary cycle. We have went up all the way to 9.1 inflation in June Currently at 7.7 inflation. If you have driven the economy into almost eight percent inflation when the normal inflation rate that everybody globally accept is two percent, there is no way there's absolutely no economical way to go down back to two percent inflation without causing a recession. In fact, I would claim that every session is necessary and required and mandatory to go from 7.7 inflation to two percent inflation. Because when you hear economists talking about demand destruction, this is exactly what they're talking about. You have to destroy demand so that prices of goods and services can come down right now. There's too much money in the system, people have too much money, and they're competing for too little goods and services driving the prices up. If you want to get rid of that, you have to cause pain. Jerome Powell Spoke about it multiple times before him. There's plenty of Fed chairs that talk about it. Paul Walker Talk about it. In the 80s, there's no way to cure massive inflation without causing pain and causing a recession. So when Elon Musk says if you don't stop, you will cause a recession. I Say good, They have to cause a recession. The only way we avoid recession is by letting inflation run and basically ignore it and accept that we can live in a six to seven percent inflation environment. The problem with that assumption, which I think was Elon is actually aiming it because he's not stupid. Obviously, He's basically saying, well, you know, let inflation be six seven percent. It doesn't really matter. It's better than putting the economy into recession. The problem is if you go down that path and you let inflation stay, it becomes very persistent and then slowly but surely it's going to erode the profit margins. It's going to erode retail and it's going to cause a slow decay of your economy, essentially causing elevated prices and high unemployment which is called stagflation which is exactly what we had in the 70s. And for those of you who are old enough to remember, the 70s were not a fun time. So if we don't want to cause a stagflationary decade, which we really run the risk of, there is no way we can accept Elon Musk saying that we need to slow down now and avoid the recession. Let me be clear: the politicians will not tell you that because it's unpopular. but I'm going to tell you we have to cause a recession. The politicians are lying to you. They're saying yeah, we're going to avoid a recession and kill inflation. And Elon Musk is saying no, no, no, don't do it. You're going to cause a recession. What's the actuality here? No, Elon Musk is saying something that I cannot accept, which is high inflation. Environment is okay to deal with. We can manage it unacceptable and the politicians are saying something unacceptable that they can kill inflation without causing recession. Both of this is a bunch of horseshit. The reality is, the Fed is right now fixing the mistakes and the sins of the past by causing this with printing too much money by ignoring it, Calling in transitory now for the first time in three attempts, They're getting it right and there's no way There's absolutely no way the U.S goes to two percent inflation. Which we have to without sending these. this without sending this economy into recession. it's going to be pain. It's gonna be a pleasant, but the alternative is much much worse. My two cents agree. Disagree. Comment below. Let's talk about it.