“The rise in prices (inflation) is caused by government overspending, which increases the amount of money faster than the increase in goods & services output,” Musk wrote on X (former Twitter), adding “That is the vast majority of the problem.”
US inflation, as measured by the Consumer Price Index (CPI), went from beneath the 2% per annum target of the Federal Reserve to a four-decade high of 9.1% by June 2022 as a result of government relief spending and breakdown of supply chains in the aftermath of the COVID-19 outbreak.
The CPI grew 3% per year in the latest reading taken in June this year, after the Fed hiked interest rates to two decade-highs — a phenomenon that dealt with the inflation problem while making home loans and all other borrowings for Americans costlier than ever since the early 2000 years.
The Biden administration has blamed part of the US inflation on corporate greed, saying the private sector took the advantage of raising prices more than deservedly after the pandemic and did not bring them down even after supply chains were restored.
Musk, who has openly criticized Biden’s policies and is supporting Biden’s arch-rival — former president Donald Trump — in November’s US election, disagrees with the blame offset.
“Occasionally, there is monopolistic behavior by companies, but this is relatively rare and usually only possible if those companies have gained control of their industry regulator,” Musk wrote. “Again, a government, not private sector, problem.”
In his X post, Musk noted that inflation was particularly bad during the COVID years, citing overruns in government spending amid a plunge in productivity as people stayed home.
This was further exacerbated by what he called “excess regulation, which prevents the market from solving an unmet need (eg housing in high-demand areas).”
US housing prices have hit record highs since the end of the pandemic, pushing up the cost of rentals as well for those who cannot afford homes.
Trump, a Republican, has vowed to bring inflation down if he returns to the White House, although he has not presented Americans with a clear plan on how he would do so. He faces Biden’s Vice President Kamala Harris in the November 5 election, after the president dropped out of the race earlier this month.