‘Raining money on fools for too long’: Elon Musk weighs in on impending US recession

Tesla CEO Elon Musk has claimed a US recession would “actually be a good thing”, insisting the nation needed a “rude awakening” after the pandemic.

Tesla CEO Elon Musk has claimed that a US recession would “actually be a good thing”, insisting the nation needed a ”rude awakening” after rapidly increasing national debt in the coronavirus pandemic.

A Twitter user asked Musk for his thoughts on the impending economic crisis.

“Do you still think we're approaching a recession?” he asked.

“Yes, but this is actually a good thing,” Musk responded. ”It has been raining money on fools for too long. Some bankruptcies need to happen.”

The billionaire tech magnate estimated a recession would last at least a year if current economic conditions continue in the US.

“Based on past experience, about 12 to 18 months,” Musk said. ”Companies that are inherently negative cash flow (ie value destroyers) need to die, so that they stop consuming resources.”

Yes, but this is actually a good thing. It has been raining money on fools for too long. Some bankruptcies need to happen.

Also, all the Covid stay-at-home stuff has tricked people into thinking that you don’t actually need to work hard. Rude awakening inbound!

— Elon Musk (@elonmusk) May 27, 2022

BlackRock, the world‘s largest asset manager, this week warned that the US Federal Reserve’s move to increase interest rates to offset crippling inflation could indeed bring on a recession.

“The Fed‘s hawkish pivot has raised the risk that markets see rates staying in restrictive territory,” BlackRock said in a statement, via FOX News.

“The year-to-date selloff partly reflects this, yet we see no clear catalyst for a rebound. If they hike interest rates too much, they risk triggering a recession. If they tighten not enough, the risk becomes runaway inflation. It’s tough to see a perfect outcome.”

Inflation is soaring in the United States, with the Consumer Price Index rising 7.9 per cent in April — the highest amount in 40 years.

The Labor Department confirmed prices for petrol, food and houses and jumped sharply, up 7.9 per cent in February — compared to the same month last year.

analysts are warning of another shock to come from the sanctions imposed on Russia, a major producer of oil and gas.

“The Russia-Ukraine war adds further fuel to the blazing rate of inflation via higher energy, food and core commodity prices that are turbo charged by a worsening in supply chain problems,” Kathy Bostjancic of Oxford Economics said.

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The billionaire tech magnate estimated a recession would last at least a year if current economic conditions continue in the US.

US gas prices reached a record high May 10, as President Joe Biden said fighting inflation is his top domestic priority. The average price at the pump hit $4.37 per gallon, according to the American Automobile Association.

In news closer to home, Mr Musk was blamed this week for a price hike in Australia related to the NBN.

The National Broadband Network’s parent company claimed the billionaire’s Starlink technology had reduced the company’s viability.

NBN Co outlined a series of significant pricing changes in a proposal to the ACCC this week as part of its request for a revision of its special access undertaking (SAU).

The SAU governs how much NBN Co can charge retail phone and internet companies like Optus, Telstra and TPG Telecom.

In its proposal, which has been criticised by the ACCC, NBN Co claimed prices needed to be increased due to “increasing competition from 4G, 5G, fixed wireless network and low-earth orbit satellite operators in those markets in which residential services are supplied”.

As well as proposing significant changes to product and pricing commitments, NBN Co sought to incorporate fibre-to-the-node and other copper-based technologies in the SAU, to create a single regulatory framework that covers all network technologies.