Wednesday, Sep 28, 2022
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Elon Musk advises holding tangible assets during high inflation

IFM_ELON MUSK-image
Musk also said that he will not divest his crypto holdings in BTC, Ether, and Doge.

Tesla and SpaceX founder Elon Musk on Monday advised that owning physical commodities like a house or good stocks during a high inflation period is better than holding cash. He also went on to say that he is not divesting his crypto holdings in Bitcoin, Etherium, and Doge. This came as Musk was tweeting about the high inflation rate in wake of the Russia-Ukraine war and Bitcoin evangelist Michael Saylor commented on Musk’s tweet.

Musk had initially tweeted asking for thoughts about probable inflation over the next few years. He went on to say that Tesla and SpaceX are facing “significant recent inflation pressure” in acquiring raw materials and logistics in the same thread.

Saylor commented on the same thread saying that the consumer inflation in the US will be near all-time highs. He also opined that with this, the value of weaker currencies will further dilute while “scarce property” like bitcoin will gain at the expense of all other asset classes.

Musk’s tweet also had a brief surge effect on crypto prices, which were down since November.

Meanwhile, inflation in the US is highest in 40 years as energy prices have increased substantially in light of the Russia-Ukraine conflict. This in turn is likely to have a ripple effect on food and other basic commodity prices.

Reuters on Monday reported that a New York Federal Reserve survey has found that consumers in the US expect to pay 6% more on basic amenities like food, gas, and rent for the next year. This 6% rate is 0.2% more than a survey in February recording the highest month-on-month growth since November 2021. Correspondingly the expected inflation over three years annually increased to 3.8% from 3.5%.

To counter this, the US central bank is likely to tweak policy measures in the form of increasing key policy rates.

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