Wharton professor Jeremy Siegel is heaping criticism on Federal Reserve Chair Jerome Powell and expects a recession. Elon Musk is backing him up.
On Friday, Siegel went on an animated tirade against Powell, telling CNBC's Halftime Report that the Fed under Powell is making a big mistake by raising interest rates and tightening monetary policy too aggressively.
Musk, the world's richest man and CEO of Tesla and SpaceX, tweeted a video of the rant, writing, "Siegel is obviously correct."
Siegel, a renowned economist and one of the best stock watchers alive, argued the Fed erred last year by not tightening monetary policy before inflation went out of control. He said it was making another mistake now by hiking interest rates and tightening monetary policy too aggressively.
"The last two years [are] one of the biggest policy mistakes in the 110-year history of the Fed, by staying so easy when everything was booming," Siegel said.
He added: "When we had all commodities going up at rapid rates, Chairman Powell and the Fed said, 'We don't see any inflation. We see no need to raise interest rates in 2022.' Now when all those very same commodities and asset prices are going down, he says, 'Stubborn inflation that requires the Fed to stay tight all the way through 2023.' It makes absolutely no sense to me whatsoever."
Expecting a recession
He now expects a recession, he added, with working- and middle-class Americans paying the price.
Oil prices, he noted, have fallen, and home prices and home-building activity are starting to drop as well.
"The only thing that's not going down is wages-and by the way, wages are in catch-up mode," he said. "Don't argue they're pushing inflation, they're lagging inflation. I mean, workers are trying to get a little bit back of what the inflation happens to be."
Siegel questioned why Powell is "putting the burden on these working people, on the employed people, when every other commodity price is going down."
"I am very upset," he continued. "It's like a pendulum. They were way too easy through 2020 and 2021, and now [impersonates the Fed], 'We're going to be real tough guys until we crush the economy.' I mean, that is just to me absolutely, poor monetary policy would be an understatement."
In July on the same show, Siegel said, "Powell must be forward-looking." Noting June inflation data was backward-looking, he added, "Printed numbers are going to remain bad even though the actual numbers are going to be getting much better."
"I assume Powell knows this," he added.
This story was originally featured on Fortune.com