Elon Musk Explains Why America Is Entering A Horrific Financial Crisis: For the year 2022, Tesla and SpaceX CEO Elon Musk does not have the most optimistic outlook for the economy. And why not? He has faced situations like bankruptcy and failures, so as a business he knows when things will go wrong and what would be the right thing to do at that time.
In a tweet, the tech billionaire predicted that the global economy would be in recession within the next few years. But why would Musk say that? Because things seem to be fine. Is he mocking like he always does?
In a tweet, the tech billionaire predicted that the global economy would be in recession within the next few years. Musk has said that the world is going to see an economic crisis and a financial crisis. But he didn’t provide any more details along with the comment, no reason as to how he came to this conclusion.
During his reply, he answered a question from a tweet that asked, “When do you think the next recession is going to be?” To which Musk replied, “Predicting macroeconomics is challenging, to say the least. My gut feel is maybe around spring or summer 2022, but not later than 2023.” But why does Musk say that?
Well, an investment guru, Soros once proposed the concept of “reflexivity” of the financial market, which is: “As long as the market has expectations for the future, it will often meet those expectations.”
So, as a world-renowned entrepreneur, Musk’s remarks are sufficient to change expectations in the market so that this “reflexivity” becomes a reality. However, he is also not betting a lot of money on unicorns.
In earlier posts, Twitter user Christopher Mims summarized a list of the most valuable startups, or perhaps we should say, global unicorns in different sectors like artificial intelligence, retail, auto, and transportation, and asked, “there are 936 startups valued at more than $1 billion in the world today.
What do we think this chart looks like in, say, 5 years?” To which Musk replied: “If history is any guide, not many will make it past the next recession”. However, he did not elaborate on why he thinks this and whether there will be something like a Great Recession or if it will only be something “ordinary”.
Apparently, there was an opinion that the recession to which Musk is referring would begin with the sale of US stocks. As Doug Ramsey, chief investment officer at Leuthold Group, points out, “Last week, when the S&P 500 reached a 52-week high, 334 companies that were listed on the New York Stock Exchange reached an all-time low, more than double the number of companies that achieved a one-year high during the same period.
That has only happened three other times in history – all of them in December 1999.” It can be stated categorically that the stock market in the United States is at an all-time high. However, there are not enough new funds outside of the stock market.
Many of the U.S. stock funds are pooled into the portfolios of a few leading companies. Because of this, the valuations of other companies are at a low level. To put it another way, financing has become a lot more difficult. As a matter of fact, the monetary policy of the Federal Reserve tends to be conservative.
This simply means that the situation in regard to liquidity is becoming increasingly tight. In addition to this, another Twitter user believes that the inflation rate in the United States has reached historical highs.
He has observed that the prices of goods in retail stores that he has observed have risen in the past six months, which is an obvious indication. If there will be a financial crisis in the next stage of the economic recovery, depending upon the Fed’s ability to effectively withdraw from the quantitative easing monetary policy.
The tweet read, “This is a chart of how much money, per hour, a working-age-population (WAP) person has to pay in taxes to keep the Federal Budget funded without increasing the deficit. That bump in 2008 is nothing compared to the bump in 2020.”
There is no doubt that these explanations are all logical. So let’s see what happens in the global financial market in the next few months and where it goes from there. Elon Musk responded to Michael Burry, the investor who brought about the “Big Short”, calling him a “broken clock.”
This statement came after Burry who is famous for predicting the 2008 financial crisis, called out Musk and Tesla, and said there is more speculation in the market today than there was during the 1920s. Burry has deleted his Twitter account, but not for the first time.
He has followed a pattern of reactivating his profile to issue dire warnings about financial markets before shutting it down again. The Scion Asset Management chief has a long history of calling Tesla a scam since its introduction, but he stepped up his criticisms in recent weeks after Musk started selling large amounts of Tesla stock.
He stated that Musk was just trying to profit from the high stock price and suggested that Tesla may be receiving taxpayer-funded subsidies. In response to his heavy shooting, Musk responded with a simple tweet: “Burry is a broken clock.” The man knows how to deal with things without getting high.
Anyways, Musk’s tweet made it clear that he believes Burry’s views of the market are stuck in the past. The statement was likely in reference to Burry’s history of dire warnings about the current state of the stock market as well as about certain companies such as Tesla.
Although both the equities market and the electric vehicle company have boomed over the past year and a half, despite the arguments of the Scion CEO that Tesla’s stock price is a sign of a massive market bubble and that stocks may crash significantly.
Before deleting his Twitter account, Burry posted a stock chart of Tesla. The chart has highlighted the fact that Musk had said the price was “too high” at about $180 when the stock is now worth $1,013. Burry said, “Just think about it.”
Also, he believes that Musk is trying to take advantage of the price rise by selling Tesla shares to capitalize on the price, after the tech entrepreneur started to dump large amounts of shares, mainly to cover tax obligations.
Recently, Burry tweeted Musk to suggest that Tesla had grown so big in part because of “massive government and electricity subsidies on the backs of taxpayers who don’t own your cars.” Although Burry has criticized Tesla in the past, he sold his bet against the electric-car company in the third quarter as he slashed his portfolio in order to improve his return on investment.
He shot to fame after he bet a billion dollars right before the financial crisis that the U.S. housing market would collapse, a bet that was fictionalized in the Michael Lewis book “The Big Short.” In the 2015 film adaptation of the Scion story, Christian Bale played the boss of Scion, who is also known for his irreverent attitude toward traditional finance and passion for heavy metal music.
According to new filings, Musk had sold $930 million more of Tesla stock, taking his total sales in his recent round of selling to $7.8 billion, which is a significant amount of money. Speaking of sales, recently, Elon Musk has just given away $5.7 billion worth of Tesla stock to charity.
Though we do not know the specifics of Musk’s donations, we do know that he is passionate about results and doing what it takes to solve problems. In other words, the man is not a follower of politically correct woke paths that go nowhere.
It is because the stakes are so high that Musk knows about the pervasive problem of homelessness that we are facing on our streets today. The so-called elected leaders in our country speak endlessly about the homeless problem, constantly begging for more funds, and yet the problem only worsens.
Our leaders repeat this circular pattern year after year, but the problem does not go away. On the other hand, American voters have demonstrated a total failure to remove leaders who cannot or will not solve our problems. Therefore, we need a new approach to solving the problem.
Consider the suffering that is being inflicted on the people of America, and the vast potential of the human race is lost. Imagine all of the crime, disease, and widespread environmental destruction that is taking place.
So, let’s not waste our time talking empty politics, let’s begin to help our homeless brothers and sisters get back on their feet. Anyways, what do you guys think about this? Tell us in the comments.
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