Elon Musk, the famous entrepreneur behind Spacex and Tesla, has just been talked about with a surprising statement to say the least. In a podcast hosted by senator Ted Cruz, he said he had gotten 14 “Magic Money Computers” linked to Dogecoin (DOGE)which would be able to create money from nothing. Naturally, this revelation has gone around social networks and fueled skepticism among finance specialists.
The declaration that makes people talk
This is not the first time that Musk has been moving away from the ordinary claims. This time, he spoke of 14 magic computers that the American government would hold, and which, according to him, would be used to generate money without tangible support, which has aroused controversies on accounting methods. According to him, these machines would be part of a secret financial mechanism, escaping the surveillance of the public.
The news quickly sparked a wave of internet reactions, Internet users seeking whether Musk revealed a sort of financial plot or if it was wrong in the operating mode of current monetary mechanisms. At the same time, finance specialists were not asked to react and clear things, adding to the criticisms of Musk’s leadership.
Experts react to Musk’s words
David Andolfatto, former senior vice-president at the Federal Reserve Bank From St. Louis, was quick to denounce the Musk’s statement which he described as a misleading. For him, even if the government can actually create money, this is done in a monitored and regulated manner, not in secret. The process is supervised by specific monetary rules and takes place in transparency.
To put it simply, the American financial system is based on several pillars such as:
-- monetary policy orchestrated by the Federal reserve,
- the issue of bonds to manage the budget deficit,
- and taxation.
When it comes to filling a deficit, the government issues obligations which are purchased by investors, whether national or foreign, thus allowing the Treasury to bring together the necessary funds.
A reference to modern monetary theory?
Some experts believe that Musk’s words could refer to the Modern monetary theory (TMM) (an economic idea that governments with their own currency are not limited like households or businesses in terms of finance). This theory explains that, under these conditions, governments can finance their expenses without worrying as one would do with a family budget. However, it also warns against the risks of excessive creation of currency without adequate supervision.
Musk seems to show concerns with a possible outbreak of prices linked to this poorly controlled monetary creation. These examples remind us of how much an economy can be penalized by such a phenomenon.
What it changes for everyone and criticism
Some observers believe that Elon Musk simplifies a complex question in order to create the buzz with the public. It should also be remembered that its recent troubles with various American regulators such as the SEC and the FTC nourish its criticisms of state institutions, reinforced by an investigation into Elon Musk.
Nevertheless, his remarks made it possible to highlight a subject often perceived as obscure: the way in which the government manages currency. For some, these revelations encourage us to question the real functioning of the global financial system, while others see it just a new strategy of the billionaire to stay under the spotlight, illustrating the tensions between philanthropy and profitability.
