Elon Musk Tells Twitter Followers A Recession is a Good Thing
Elon Musk may be attempting to add “economist” to his list of many titles as he shared his views on the likelihood of a recession on Twitter — and why said recession could actually be good for the economy, ultimately.
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It started when Musk introduced a Twitter poll asking: “Who do you trust less? Real Question.” The choices were “politician” or “billionaire.” Politicians were winning (or losing, if you will) by a landslide of 76% to 24% with roughly 7 hours left in the poll on the afternoon of May 27.
The thread started a conversation about economics, discussion of taxing unrealized capital gains, and, finally, user @BLKMDL3 (Zack) asked, “Do you still think we’re approaching a recession?”
In his typically outspoken way, Musk replied, “Yes, but this is actually a good thing. It has been raining money on fools for too long. Some bankruptcies need to happen.”
He elaborated, “Companies that are inherently negative cash flow (ie value destroyers) need to die, so that they stop consuming resources.”
Musk also took aim at the work-from-home culture sparked by the COVID-19 pandemic, tweeting, “[A]ll the Covid stay-at-home stuff has tricked people into thinking that you don’t actually need to work hard. Rude awakening inbound.”
At the All-In Summit in Miami Beach in mid-May, Musk made a similar comment about recessions, Newsweek reported. “What tends to happen is if you have a boom that goes on too long, you get a misallocation of capital.”
He said at the time that he’d been through a few recessions. He recently tweeted that, based on his past experience, a recession would last about 12 to 18 months.
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Although the U.S. GDP dropped in the first quarter, based on the Bureau of Economic Analysis report, economists remain divided on whether or not the U.S. will face — or is facing — a recession. A survey of economists told Bloomberg in May that the odds of the U.S. entering a recession is just 30%, up from 27.5% in April.
However, asset management firm BlackRock said that the Fed risks triggering a recession if it raises interest rates too high, or too rapidly.
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