Elon Musk, CEO of Tesla and SpaceX, cautions that the United States is heading towards bankruptcy due to excessive government spending.
This concern comes after Musk shared a fiscal forecast suggesting the budget deficit could balloon to $16.3 trillion by 2035 from its current $1.8 trillion.
He directly links government overspending to inflation.
Tesla and Spacex CEO Elon Musk shared his view on the causes of inflation on social media platform X on Friday. Musk explained:
The rise in prices (inflation) is caused by government overspending, which increases the amount of money faster than the increase in goods & services output. That is the vast majority of the problem.
He cited the Covid-19 pandemic as a significant example, where massive government spending was coupled with a sharp decline in productivity as people were forced to stay home.
“This is further exacerbated by excess regulation, which prevents the market from solving an unmet need (eg housing in high-demand areas),” the Tesla CEO also warned.
The billionaire downplayed the role of monopolistic behavior by companies, suggesting it is a rare contributor to inflation and usually occurs when companies have control over industry regulators. Musk concluded that the real issue behind inflation stems from government policies rather than the private sector, stating:
A government, not private sector, problem.
Musk has intermittently shared his view on inflation. In June, he remarked: “Money supply increasing faster than the production of goods & services causes inflation. Not more complicated than that IMO.”
He has consistently expressed concerns about government overspending, calling it the fundamental cause of inflation and noting in September 2023: “Government overspending, which is the fundamental cause of inflation, has wrecked countless countries.”
Last October, he emphasized: “Stopping inflation requires government to stop increasing the quantity of money at a rate faster than the output of goods & services.”
Musk is not alone, and his concerns about the U.S. economy are growing. In fact, several indicators suggest that the country may be headed for a major financial crisis. Persistent high inflation and soaring national debt paint a bleak picture. In 2023, the government will spend an average of $1.265 billion per week just on interest on the national debt. Looking ahead, the Congressional Budget Office (CBO) estimates that these interest charges will climb to $1.715 billion per week in 2024.
US inflation fell below 3% in July for the first time since 2021, though core inflation remains at 3.2%.
The national debt, surpassing $35 trillion, is predicted to exceed $50 trillion by 2034, with a slow GDP growth rate.
U.S. government fiscal plan source：govinfo
In June, the Committee for a Responsible Federal Budget (CRFB) think tank claimed that the national debt grew by $4.3 billion under incumbent US President Joe Biden, compared to $8.4 billion during Donald Trump’s term in office.
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In August, Trump gave a lengthy interview to Musk on X. Shortly after that, the Republican presidential candidate said that he would consider the tech billionaire, whom he described as a “brilliant guy,” for a role in his administration if he wins the election in November. Musk replied to the offer in a post, stressing that he is “willing to serve.”
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