Elon Musk endorses economist Jeremy Siegel, slams Fed's aggressive policy for tackling inflation

Billionaire Elon Musk has once again blamed Fed for its aggressive policy to tackle inflation. Musk supported prominent economist Jeremy Siegel, a professor at Wharton, in calling out the Federal Reserve Chairman Jerome Powell for grossly mishandling the response to the current economic slump.

Musk responded to Jeremy Siegel's vehement outburst on the Fed's current policy stance, which he says is "far too tight" and "makes absolutely no sense at all." Siegel is a professor at the Wharton School.

Siegel was seemingly distraught with the Fed's handling of the predicament. He charged Powell and his team members with delaying interest rate hikes for far too long. Now, according to Siegel, the Fed's aggressive approach of raising rates despite easing inflation is ruining the economy.


Siegel blasted Fed for waiting too long to tighten the economic policy until inflation went out of hand. And now, by adopting an aggressive monetary policy, the Fed is making yet another blunder, he added.

The Wharton Professor for Finance claimed that the past two years were one of the most significant policy blunders in the hundred-year history of the Central Bank by assuming a soft stance when everything was booming.

In reaction to a video of Siegel's tirade, Musk tweeted on Saturday that Siegel is absolutely correct.

Siegel charged Powell with denying data on a number of economic indicators, such as declining commodity prices, a slump in the American real estate market, and a shrinking money supply.

Musk is one of many business giants, who have recently expressed pessimism about the status of the US economy. Musk hinted at Tesla layoffs in June, saying he had a "very awful feeling" about the situation.



A few weeks ago, Musk joined others in cautioning that by raising rates too quickly amid a sluggish economy, the Fed ran the risk of producing "deflation," or a devastating plunge in prices.

Since last week, when the Fed raised interest rates dramatically for the third consecutive month, the stock market had further sunk into bear territory. Officials at the central bank predicted additional substantial hikes in the coming months, a sign the Fed is staying on its hardline approach to battle decades-high inflation.

FAQs

1. What did Powell say about raising rates and its effects?
   Powell reaffirmed last week that the Fed would raise its benchmark rate to a "stringent level" and "leave it in place for a considerable time" until there were clear indications that inflation was beginning to decline.Powell acknowledged that the position would probably lead to job losses and a significant fall in the US real estate market.
2. Who is Jeremy Siegel?
   Jeremy Siegel is a prominent economist and finance professor at Wharton School, University of Pennsylvania.
3. Why has Fed's monetary policy drawn flak from several quarters?
   The Federal Reserve increased its target range for its benchmark interest rate by 0.75 percentage points last week, bringing it to 3%-3.25%. According to projections made by Fed officials at a recent meeting, the rate may rise far above 4% in the upcoming months.