yes to asset inflation! no to the inflation of the poor!

 yes to asset inflation!  no to the inflation of the poor!

Elon Musk and Jeff Bezos recently entered into open war against the administration of Joe Biden, responsible according to them for the record inflation affecting the American economy.

In April, over one year, inflation stood at 8.3%, against 8.5% in March, according to the consumer price index (CPI) published by the US Department of Labor.

The heated exchanges between billionaires Elon Musk and Jeff Bezos on the one hand and the President of the United States on the other began when the latter tweeted on May 13, 2022, without directly referring to Amazon or Tesla: “You want to lower inflation? Let’s make sure the wealthiest companies pay their fair share. »

Two billionaires accuse

Jeff Bezos responded to Joe Biden’s tweet by accusing him of following a “wrong trail”, arguing that there is no connection between inflation and corporate taxes.

Jeff Bezos tweeted:

“Raising corporate taxes is a good thing to discuss. It is even more essential to talk about controlling inflation. Mixing them together is just a red herring. »

As for Elon Musk, with a more direct style, the attack was short and concise:

“Inflation is the result of government printing money. »

Elon Musk makes a direct link between American public spending, which, it should be remembered, began under the Trump administration, and the monetary creation of the Fed.

Indeed, since 2010 and the Fed’s unconventional monetary policies, US Treasuries end up on the Fed’s balance sheet, making the US government an indirect creator of base money.

Elon Musk then makes a direct link between excessive money creation and record inflation. Remember that the Fed’s balance sheet has more than doubled since the start of the health crisis.

The so-called “accommodating” monetary policy of the Fed did not start in 2020 with the health crisis, but in 2010. Until the sharp drop in the markets in March 2020 and the first confinement, the central money created was injected into the financial markets, and found very little in the real economy.

Change of destination

As long as the magic money was injected into the financial markets and was used to inflate the stock market price of Tesla and Amazon with helium, we did not hear these two billionaires complaining…

Now that the magic money is injected into the real economy with a public spending plan of $3,500 billion, which is one of the causes of consumer price inflation, the two multi-billionaires are coming out of the woodwork.

Inflation raises fears of a lasting rise in rates and the end of the magic money so beneficial to the rise in Tesla and Amazon prices.

It is for this reason that Musk and Bezos are fighting back: the fall in their stock prices following the threat of the Fed to raise interest rates costs them much more than a possible increase in taxes.

In an incendiary tweet, Jeff Bezos denounces the duplicity of the American government which is trying to clear itself of its responsibility for the rise in inflation:

[…] It is understandable that [la Maison-Blanche] please blur the subject [sur l’inflation]. They know that inflation hurts the poorest the most. But unions don’t cause inflation and neither do the rich. […] »

It is interesting to see the angle of attack the CEO of Amazon takes to criticize the Biden government: he claims to care about the poor who suffer from this inflation, since it is not followed by a rise in wages. He even dares to put himself in the camp of the unions, which like him, would not be responsible for inflation.

The impact on the stock market

In reality, Bezos doesn’t care about the poor or the unions. What worries him the most is the fall in the price of Amazon, which has already lost more than 40% compared to the last high! All this while the Fed’s monetary tightening policy has only just begun.

What really worries Jeff Bezos is the recession that the Fed risks causing, by raising rates more firmly and turning off the magic money tap.

Bezos’ true state of mind is this: “Yes to the magic currency which is used to inflate stock market prices; no to magic money that is injected into the real economy; yes to stock market inflation; no to consumer price inflation. »

In summary, Bezos is at war with the Biden administration with this idea in mind: yes to the inflation of the wealth of the rich; No to “the poor man’s inflation” which is causing a loss of confidence in the currency and which can push the Fed to cause a recession to save the dollar from the scourge of inflation which is eating away at it!

Jeff Bezos, like Elon Musk, like wild beasts feeling threatened, released their claws. They hold on to their accumulated wealth, to their status as the richest men in the world, which gives them a feeling of absolute power.

He does not intend to be sacrificed by the Fed on the altar of the dollar. In their ideal world, the Fed should have continued to feed the golden calf of the markets thanks to low interest rates and massive injections of central money, without ever giving the plebs a taste of the magic money via public spending!