May 23, 2023
By Chris RossiniIn a recent interview with CNBC, Elon Musk made a comment about the Fed and interest rates. He said: "You can think of raising the Fed rate as somewhat of a break pedal on the economy, frankly. It makes a lot of things more expensive."Now at face value, what Musk is saying seams reasonable. The Fed lowers interest rates and economic activity increases. They raise interest rates, and economic activity slows down. It does seem like the Fed is 'in charge' of how active the economy is.But it's important to look beyond what seems to be so obvious.Activity does not necessarily lead to prosperity. Activity must be economical and profitable in order to produce prosperity. One can be very active in producing things that people don't want in relation to other things. Unfortunately, that's exactly what the Fed specializes in creating on a massive scale.When the Fed artificially lowers rates, yes, economic activity picks up, but the Fed is actuall