Elon Musk, the CEO of Tesla and SpaceX, has once again criticized the US financial authorities, this time for their handling of the recent banking crisis.
In a comment on Bill Ackman’s tweet, Musk expressed his disappointment with the measures taken by the authorities, describing the system of money as an “inefficient” database for allocating resources.
The crisis was triggered by a bank run on the SVB bank, which led to the financial authorities promising a withdrawal guarantee for all deposits, immediately eliminating the statutory $250,000 deposit guarantee limit. However, even with unlimited deposit protection, the bank run did not calm down, prompting the US authorities to issue a prescription for SIBs to deposit their funds in problematic local banks.
The inefficiency of the set of heterogeneous resource allocation databases we call money is astounding
— Elon Musk (@elonmusk) March 17, 2023
Ackman argued that “unrestricted deposit protection is declared or the local bank collapses.” But Musk criticized the system of money as a “set of heterogeneous resource allocation databases” that are inefficient in allocating resources. According to Musk, money is just information, a database that stores various exchange processes necessary for economic activities.
Musk also used the word ‘heterogeneous’ to describe the existing currency and monetary system issued by the central bank, stating that it is not uniform and complex, which distorts the allocation of resources. The result is periodic financial crises, asset bubbles, and collapses.
Musk has been an avid supporter of Dogecoin and has been expected to equip Twitter, which he acquired, with a cryptocurrency-based payment system. In 2021, Musk caused a stir in the cryptocurrency market when he bought Bitcoin with Tesla’s own funds.
In conclusion, Musk’s comments on the inefficiency of the current monetary and financial system are not new. He has always believed that money is just information, and the current system is not efficient in allocating resources. His criticisms of the US financial authorities’ measures against the recent banking crisis highlight the need for a new, more efficient system that can better serve the needs of the economy.
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