MICHAEL W. CHAPMAN | APRIL 19, 2023 | 10:21AM EDT
Elon Musk, the CEO of Tesla, Space X, and Twitter, explained that inflation is caused when the government increases the money supply -- which reduces the value of the money -- and that if this could be done "without negative consequences," then why not print continuously and turn everyone into a trillionaire?
He added that this was tried in socialist Venezuela and it was a disaster.
"As the old saying goes, there is no free lunch," Musk told Tucker Carlson on the Apr. 18 edition of Tucker Carlson Tonight. "So if you could just issue massive amounts of money without negative consequences, why don't we just take that to the limit and make everyone a trillionaire? Well, I mean, they tried that in Venezuela. How did that work out?"
Carlson replied, "Well, they ate zoo animals."
That is accurate. The economic and humanitarian situation became so bad, because of government-created inflation, that some Venezuelans turned to eating the animals at the zoo.
Earlier in the interview, Musk and Carlson talked about how interest rates set by the Federal Reserve can affect banks, mortgages, long-term loans, and Musk noted that "the last time the Fed raised rates going into a recession was in 1929," which helped spark "the Great Depression."
At that point, Carlson said, "[B]ut the concern is, if the Fed drops rates again, then inflation will accelerate and you can't do that in an election year."
Musk replied, "So inflation is going to happen no matter what. If you increase the money supply, you get inflation."
"So there's no -- there is not some magical cure for getting rid of inflation, except to increase the productivity, the output of goods and services," added Musk. "So if you say, like, what is money, you've got these sort of -- it's basically numbers in a database, that sum up to something, come up with the sum total, then you've got the output of goods and services of the economy."
He continued, "And the -- as long as the ratio of money to ratio of goods and services stays, if that stays constant, you have no inflation. If you add more money -- if you add money to the system faster than you increase goods and services, then you have inflation."
"So all of these COVID sort-of stimulus bills were not paid for," said Musk. "They just generated more currency, more -- you know, more money was created because the federal government, the checks never -- the checks always passed, you know, unless you had a debt limit, which there's probably going to be some debt limit crisis later this year."
"But provided you haven't hit the debt limit, the federal government, unlike state governments, or city governments, or individuals can simply issue more money, and that's what they did," said Musk.
"As the old saying goes, there is no free lunch," he added. "So if you could just issue massive amounts of money without negative consequences, why don't we just take that to the limit and make everyone a trillionaire? Well, I mean, they tried that in Venezuela. How did that work out?"
They ate zoo animals, said Carlson.
"Right, it is not good," said Musk. "You know, there is no free lunch. There is not some ability to issue money and not have inflation."
As for the current inflation and interest rates, CNBC reported on March 22 that the Federal Reserve "enacted a quarter percentage point interest rate increase, expressing caution about the recent banking crisis and indicating that hikes are nearing an end."
"Along with its ninth hike since March 2022, the rate-setting Federal Open Market Committee noted that future increases are not assured and will depend largely on incoming data," said CNBC.
The interest rate (national average) on a 30-year fixed mortgage today, April 19, is 6.81%, according to Bankrate.com. On April 26, 2022, the national average mortgage rate on a 30-year fixed was 5.75%. On April 17, 2021, it was 3.37%.
On March 31, 2023, the U.S. inflation rate was 4.98%. On June 30, 2022, nine months ago, the inflation rate was 9.06%
The 4.98% inflation rate is higher than the long-term national average of 3.28%.
https://www.cnsnews.com/blog/michael-w-chapman/musk-inflation-caused-govt-issuing-more-money-so-why-not-make-everyone
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