Business

Elon Musk says Jeremy Siegel ‘obviously right’ in Fed criticism, recession expectations

Wharton professor Jeremy Siegel is under fire for Federal Reserve Chairman Jerome Powell and a recession is expected. Elon Musk is backing him.

On Friday, Siegel had an animated spat against Powell, telling CNBC’s Mid-hour report that the Fed under Powell is making a big mistake by raising interest rates and tightening monetary policy too aggressively.

Musk, the richest man in the world and the CEO of Tesla and SpaceX, tweeted a video about the rantwrites, “Siegel is clearly right.”

Siegel, a prominent economist and one of the best stock-watchers alive, argued that the Fed was wrong last year by not tightening monetary policy before inflation was out of reach. control. He said they are making another mistake by raising interest rates and tightening monetary policy too aggressively.

“The past two years [are] One of the biggest policy mistakes in the Fed’s 110-year history, Siegel said, was being too lenient when things were booming.

He added: “When we had all the commodities rising at a brisk pace, Chairman Powell and the Fed said, ‘We don’t see any inflation. We don’t see any need to raise rates in 2022.’ Now that all the same commodities and asset prices are falling, he said, ‘Fixed inflation requires the Fed to keep it tight through the end. year 2023’. It makes absolutely no sense to me. ”

Expect a recession

Now, he adds, he expects a recession, with working and middle-class Americans paying the price.

Oil prices have fallen, home prices and home-building activity have also begun to fall, he noted.

“The only thing that hasn’t dropped is wages — and wages are in catch-up mode, by the way,” he said. “Don’t argue that they’re pushing inflation, they’re slowing it down. I mean, workers are trying to take back a little bit of what happens to inflation. “

Siegel questioned why Powell was “putting the burden on the people who are doing this, on the people who have jobs, when the prices of all other goods are falling.”

“I am very upset,” he continued. “It’s like a pendulum. They were too easy until 2020 and 2021, and now [impersonates the Fed], ‘We’re going to be the real hardliners until we disrupt the economy.’ I mean, that’s totally to me, poor monetary policy would be an overstatement.”

In July on the same show, Siegel said, “Powell must be someone who looks to the future. ” He added, noting that June inflation data has been trending out of date, adding, “The printed numbers will still be bad although the actual numbers will be much better.”

“I assume Powell knows this,” he added.

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