Elon Musk, the CEO of Tesla, intensified his concerns regarding the U.S. debt, stating that if technological advancements like artificial intelligence and robotics don’t revolutionize the industry, financial disaster will be inevitable.
In a long, in-depth interview with podcaster Dwarkesh Patel and Stripe president and cofounder John Collison on Thursday, the tech billionaire was questioned about why, as head of the Department of Government Efficiency, he advocated for drastic spending cuts when technology would boost GDP growth and reduce the nation’s debt.
Musk said he was concerned about waste and fraud. Despite indications that many across-the-board job layoffs included important employees who needed to be rehired.
“In the absence of AI and robotics, we’re actually totally screwed because the national debt is piling up like crazy,” according to him.
Musk pointed out that interest payments alone on the $38.5 trillion debt pile total approximately $1 trillion each year, which exceeds the US military budget.
Costs of debt servicing also surpass expenditures on social programs such as Medicare. However, President Donald Trump has pledged to increase yearly defense spending to $1.5 trillion, which might temporarily or permanently push the defense budget above interest payments.
According to Musk, who reflected on his work with DOGE, he had wanted to slow down the United States’ unsustainable financial trajectory in order to buy more time for robotics and artificial intelligence to spur growth.
It is the sole solution to the country’s debt. Without AI and robotics, we are 1,000% more likely to fail as a nation and go bankrupt,” he said. “The national debt cannot be resolved in any other way. All we need is enough time to develop the robots and AI so we don’t go bankrupt before then.
Similar remarks were made by Musk in late November when he stated on Nikhil Kamath’s podcast that the only way to address the US debt situation is to use AI and robotics “at very large scale.”
However, he emphasized that the increased output of goods and services as a result of the technologies would almost certainly lead to considerable deflation.
“That seems likely because you just can’t increase the money supply at the same rate that you’re increasing the output of goods and services,” Musk continued.
In fact, deflation would make the debt load worse in real terms, whereas inflation would initially make it easier, but a subsequent spike in bond yields would eventually send debt-interest payments skyrocketing.
To be sure, the United States has some built-in advantages because the dollar is still the world’s reserve currency, allowing the Treasury Department to borrow at cheaper interest rates than would be available otherwise.
The United States’ ability to issue debt in its own currency, as well as the Federal Reserve’s bond-buying capabilities, reduce the chance of an outright default.
However, the U.S. is headed toward a trajectory that could lead to six different kinds of fiscal crises, the Committee for a Responsible Federal Budget said last month.
The CRFB stated in a report that although it is “impossible” to predict when a disaster will occur, “some form of crisis is almost inevitable” in the absence of a course correction.
