In a Twitter on March 15th, 2023, Elon Musk and Cathy Wood engaged in a conversation about the current economic situation and its similarities to the Great Depression of 1929. Musk responded to a tweet by Wood about the crisis situation of banks such as Silicon Valley Bank (SVB) where bank runs occur and pointed out to regulators, “Focus on the centralized and opaque obstacles present in the traditional banking system, not DeFi.”

Musk has been warning since last year that the government’s interest rate hike will trigger an economic recession and crisis. He tweeted, “Lot of current year similarities to 1929.”

Cathy Wood, on the other hand, responded to Musk’s tweet by stating that the current economic situation is more similar to the early 1920s after a pandemic and a war, as three major innovation platforms were evolving into mass market opportunities – electricity, telephony, and the automobile, contributing to the breathtaking “Roaring Twenties”.

Wood believes that the current banking crisis could lead to “bad deflation” while innovation generates “good deflation”. She mentioned that five major innovation platforms are evolving at the same time – multiomics sequencing, robotics, energy storage, artificial intelligence, and blockchain technology, all of which are converging.

Tesla is leading the “charge” in three, but she wouldn’t be surprised to see four to five. Wood suggested that once the Fed stops looking backwards at CPI inflation and starts addressing the deflationary banking crisis that a 19-fold increase in short rates and an inverted yield have caused, we would not be surprised to see a return to the Roaring Twenties.

It is interesting to see two prominent figures in the business world engaging in a Twitter conversation about the current economic situation. It also highlights the potential impact of innovation on the economy and the importance of addressing banking crises to avoid deflationary impacts.

The period between 1929 and 1939 marked the most severe economic decline in the history of industrialized nations, commonly referred to as the Great Depression. Its onset can be traced back to the stock market crash of October 1929, which caused widespread panic on Wall Street and resulted in the loss of investments for millions. In the years that followed, there was a significant drop in consumer spending and investment, leading to a sharp decline in industrial output and employment. This resulted in the laying off of workers by companies that were failing. The Great Depression hit its lowest point in 1933, with approximately 15 million unemployed Americans and almost half of the country’s banks having failed.

#ElonMusk #Cathywood #Greatdepression

This article was republished from azcoinnews.com