Elon Musk believes there is one clear reason for the massive inflation in the United States: the massive deficit in the US government’s budget. “Inflation is caused by the federal government spending more than it takes in,” Musk said.
Musk for efficiency
What is the solution to this problem? In Musk’s words, it is simple: “To solve inflation, we need to reduce government waste. Your tax money should be spent well, not badly.
These are logical words, of course, but what is Musk actually saying? He seems to be mainly referring to his disapproval of the way the US government is currently spending its money.
And within government, people will also be convinced that taxpayer money is better spent well than poorly. In that respect, Musk is a bit of an open door here.
Although Musk also suggests that he also wants to help solve this problem by taking a seat on something like an efficiency commission within the US government.
American Commission on Efficiency?
Elon Musk, in a conversation with Lex Fridman, see tweet above, notes that he has discussed this issue with Donald Trump. “I discussed the idea of a government efficiency commission with Trump and I would love to be part of that,” Musk said.
Coinbase CEO Brian Armstrong agrees with Musk. He says inflation would not exist if the US government stopped printing dollars.
Ultimately, it remains to be seen, because inflation is not caused by governments alone. Commercial banks also play a major role in issuing credit.
Basically, credit creation is the creation of money in the current financial system. If you buy things with a credit card, you don't receive that money from the company behind the card, but that company “creates” that money, as it were.
In this regard, it is too simplistic to say that inflation will disappear if Musk succeeds in solving this problem. More needs to be done for this. The question remains how good Bitcoin will be if there is no more inflation.
In principle, the hyperinflation of government money is what makes Bitcoin's absolute scarcity of 21 million units so attractive.
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