If you were paying attention to the news this week, you probably noticed that certain politicians on the left as well as certain leftist media outlets bellyached about the injustice of Elon Musk becoming “the world’s first trillionaire” after the SpaceX IPO.
Some even offered instructions on how to dislike him.
Before I continue, I’ll say that I’m not an Elon Musk fanboy, and I’m not here to defend him.
I don’t own any Tesla or SpaceX stock, and I liked Twitter a lot more before he owned it.
I also generally don’t trust a lot of what he says and think that the cult of personality around him is strange.
That said, I think his companies have built some incredible technology, and he deserves credit where it’s due.
As far as his having $1 trillion on paper (mostly in the form of equity in his own companies, not in the form of cash sitting in a bank account), I don’t really care, and I mostly agree with Erik Voorhees’ take on the matter.
He’s worth that much, nominally speaking, in large part because of the absolute and saddening lack of discipline at the U.S. Federal Reserve (the Fed) and U.S. Treasury.
You couldn’t have trillionaires today without these two institutions.
It’s only because they’ve created so much money and debt respectively that one person’s net worth can now exceed a trillion dollars.
For context, in 1913, when the Fed was created, only $3.3 billion dollars circulated in the U.S. economy and the U.S. debt was just over $1 billion.
The richest man in the U.S. at the time was John D. Rockefeller, and he was worth $900 million.
Since the Fed’s creation, we’ve seen a drastic devaluation of the U.S. dollar, one that accelerated in 1971, when the U.S. officially left the gold standard.
The amount of public debt accelerated beginning in 1971, as well.
It’s only in this parabolic phase of money printing and debt issuance that we’re seeing a trillionaire in the U.S.
If the world were on a bitcoin standard right now, Musk would have to own just about half the sats in existence to have a trillion of them, which would be virtually impossible.
What is more, all of the reports of him being the world’s first trillionaire are factually incorrect.
In U.S. dollar terms, sure, he’s the first trillionaire.
But there are about 175 fiat currencies in existence and many others that failed before these.
Some currencies hyperinflate before they fail, creating many “trillionaires” in the process.
Just ask any Zimbabwean or Venezuelan.
There have been an abundance of trillionaires in those countries.
In 2008, the Zimbabwean government printed 100 trillion dollar notes toward the peak of hyperinflation in the country.
Each of those notes was worth approximately $35 U.S. dollars, or 0.04 troy ounces / 1.25 grams of gold — virtually nothing compared to the massive 100 trillion number.
In 2021, the Venezuelan government had to take six zeros off of 100,000,000 bolívar notes, reducing them to 100 bolívar notes, in the wake of the country’s hyperinflation crisis.
My point is less than the U.S. dollar will hyperinflate tomorrow, and more that when you start to see trillionaires in a country, it’s more a sign of a broken monetary and financial system than it is of real wealth being created.
Don’t get me wrong, Elon Musk has real wealth (and I’m more than okay with both him and his companies paying their fair share of taxes), but what you’re witnessing here is more a sign of the real monetary and financial issues the U.S. is facing than it is an indication of Musk’s financial success.
Best,
Frank
No posts
Comments
Nothing yet. Say the first thing.
Sign in to join the conversation.