Wharton professor Jeremy Siegel criticizes Federal Reserve Chairman Jerome Powell and expects a recession. Elon Musk supports it.
On Friday, Siegel launched a heated tirade against Powell, telling CNBC half time 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 CEO of You’re here and SpaceX, tweeted a video of the rantwriting, “Siegel is obviously right.”
Siegel, a renowned economist and one of the best equities watchers alive, argued that the Fed made a mistake last year by not tightening monetary policy before inflation spiraled out of control. He said he was making another mistake now by raising interest rates and tightening monetary policy too aggressively.
“The last two years [are] one of the biggest policy mistakes in the Fed’s 110-year history, staying so quiet when everything was booming,” Siegel said.
He added: “When all commodities rose at rapid rates, Chairman Powell and the Fed said, ‘We don’t see any inflation. We don’t see the need to raise interest rates in 2022.” Now, with all those same commodity and asset prices falling, he says, “Stubborn inflation that’s keeping the Fed tight throughout long of 2023.” It makes absolutely no sense to me. »
expect a recession
He now expects a recession, he added, with working-class and middle-class Americans paying the price.
Oil prices, he noted, have fallen, and house prices and homebuilding activity are also starting to decline.
“The only thing that’s not going down is wages — and by the way, wages are in catch-up mode,” he said. “Don’t pretend they push inflation, they lag behind inflation. I mean, workers are trying to claw back some of what inflation is. »
Siegel asked why Powell is “putting the burden on these workers, on the wage earners, when the price of all other commodities goes down.”
“I’m very upset,” he continued. “It’s like a pendulum. They were way too easy until 2020 and 2021, and now [impersonates the Fed], “We’re going to be real badass until we crush the economy.” I mean, that’s just for me absolutely, bad monetary policy would be an understatement.
In July, on the same show, Siegel said, “Powell must be looking to the future.” Noting that the June inflation data was backward-looking, he added, “The printed numbers will stay bad even though the real numbers will improve.”
“I guess Powell knows that,” he added.
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