Tesla CEO Elon Musk warned of the explosion of the American public debt, saying that it would financial collapse SAD be inevitable if artificial intelligence and robotics do not transform the economy and ease the burden of indebtedness, reports Index.hr.
In a lengthy interview with podcaster Dwarkesh Patel, which also featured Stripe co-founder and chairman John Collison, Musk was asked why he advocated aggressive cuts to government spending while leading the Department of Government Efficiency (DOGE) if he already believed technology would strongly boost GDP growth and ease debt repayments.
Musk responded that he was primarily concerned about waste and fraud, although numerous reports indicated that among the mass layoffs were key people who the government later had to rehire.
"Without artificial intelligence and robotics, we're basically dead because the public debt is piling up at an incredible rate," Musk added.
He said interest alone on the $38,5 billion U.S. debt is about $1 billion a year, already exceeding the U.S. military's budget.
Reflecting on his work at DOGE, Musk said he wanted to slow what he described as an unsustainable US fiscal trajectory and buy time until artificial intelligence and robotics fueled economic growth.
"That's the only thing that can solve the public debt problem. We will go 1.000 percent bankrupt as a country and fail as a country without artificial intelligence and robots. Nothing else will solve the public debt problem. We just need enough time to build AI and robots so we don't go bankrupt before then," Musk said.
Photo: AP Photo/Markus SchreiberArtificial intelligence is conquering the planet
On deflation and increased debt
He warned, however, that the rapid growth in the production of goods and services, fueled by those technologies, would likely lead to strong deflation.
"That seems likely because you simply won't be able to grow the money supply as fast as the amount of goods and services produced," Musk added.
Deflation would, in real terms, further increase the debt burden, while inflation would initially ease the situation, but a subsequent rise in bond yields would once again lead to a strong rise in interest costs.
The United States does have some built-in advantages, however, because the dollar continues to serve as the world's reserve currency, allowing the Treasury Department to borrow at lower interest rates than would otherwise be possible.
The ability of the US to issue debt in its own currency, as well as the capacity of the US central bank to buy bonds, further reduce the risk of outright bankruptcy. Even so, the Committee for a Responsible Federal Budget warned last month that the US is on a path that could cause as many as six different types of fiscal crises.
Although, as they state, it is impossible to predict when a breakdown could occur, "some form of crisis is almost inevitable" if the direction of fiscal policy does not change, the board said.
Source: Index.hr
