Tesla CEO Elon Musk, who is often on the agenda with Dogecoin shares, evaluated the US economy this time. Musk’s sharing came as the markets’ expectations for the FED meeting, which will take place on September 21, emerged. Accordingly, the markets expect another 75 basis point rate hike at the September FOMC meeting. The famous billionaire said that a major interest rate hike by the FED would create deflation in a US economy.
Dogecoin lover Elon Musk warns the Fed
Elon Musk says that an interest rate hike from the FED will lead to deflation in the US economy. For those who don’t know, deflation means falling prices of goods and services. This economic situation can be caused by a multitude of factors, such as greater productivity, less demand, or a contraction in a country’s money supply. According to Musk, the current risk of deflation arises due to the contraction in the money supply.
Recently, the FED has been reducing supply with a tightening policy to combat rising inflation. Fed Chairman Jerome Powell has already started to signal that they will raise interest rates on September 21. In addition, Powell also announced that the Fed will try to increase the strength of the dollar. By doing this, the Central Bank aims to help consumers fight inflation. While deflation is good for consumers, it means economic contraction in the long run.
Elon Musk isn’t the only one warning people
Dogecoin fanatic Musk is not the only famous name to warn about the US economy. Michael Burry, famous investor and founder of Scion Asset Management, is also joining Musk. Burry shares that a 2008-level economic crisis is approaching in the USA.
Meanwhile, popular economist Peter Schiff is among those who publish apocalyptic scenarios. Schiff warns investors and people about hyperinflation. He also thinks that the FED will quickly turn to quantitative easing, which will cause rising inflation in the economy. According to Schiff, if this happens, inflation will continue to rise in the US, but a risk of hyperinflation will disappear.
Markets expect these rates from the FED
The interest rates expected by Dogecoin lover Elon Musk are also accepted by the markets. Accordingly, the latest data reveal that market participants expect the FED to increase interest rates by 0.75 basis points on September 21. The tool called CME Fed Watch reveals that the probability of a 75 basis point increase is 91%. The latest move by the banking giant Goldman Sachs also supports this. The bank recently increased its 50 basis point increase forecast to 75 basis points.
However, as we have reported as Kriptokoin.com, the CPI data to be published on September 13 will greatly affect the FED’s decision. It is possible that the CPI data will come better than expected. If that happens, the Fed may raise interest rates by 50 basis points. Better-than-expected CPI data and low interest rate hikes will yield good results for Bitcoin, Ethereum and Dogecoin.
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