Elon Musk, CEO of both Tesla and Twitter, has given new incentive to move money out of US bank accounts. In response to a tweet citing Hugh Hendry of Eclectica Asset Management, Musk highlighted a significant interest rate gap created by the US Treasury and Federal Reserve, where the interest rates on money market accounts (Treasury Bills) stands at 4.5%, while bank accounts have interest rates of less than 1%. As more people and companies realise this, Musk warns that a bank depositor flight will cause trouble for even banks “too big to fail”. This is not the first time Musk has warned of the problem, but his latest comments come after the recent failures of First Republic Bank, Silicon Valley Bank, and Signature Bank. Commentators have warned of more bank failures to come, with Swedbank strategist Freddy Martino warning of a “vicious spiral”. However, Federal Reserve Chairman Jerome Powell has called the banking system “sound and resilient”.
