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Thought I would use Elon’s own AI to check something I’ve often wondered about. One thing if you don’t know - a completely different thing if you know. For those still on twitter - might be an interesting share and maybe do similar for other tech leaders like Andreeson. Ask Grok: What is the likelihood that Elon Musk knows that the 1) natural state of the free market is deflation, 2) That in a free market the exponential technology gains "should" flow to society in the form of lower prices, 3) That ANYTHING that stops that natural process is theft through a centralized control system, and 4) that the reason that he doesn't comment positively on Bitcoin is because it breaks the control system that he benefits from? Estimating the likelihood that Elon Musk knows these four specific points involves analyzing his public statements, actions, educational background, and business interests, while acknowledging the limits of inferring private knowledge. Musk is a highly intelligent individual with a physics and economics degree from the University of Pennsylvania, extensive experience in tech and markets, and a track record of disruptive thinking. Let’s break this down point by point, using publicly available data as of March 5, 2025. Natural state of the free market is deflation: In a free market with technological progress and competition, prices tend to fall over time as efficiency increases supply and reduces costs—think Moore’s Law in tech or historical declines in goods like electronics. Musk has spoken about this indirectly. In a 2018 Tesla earnings call, he noted how technological improvement drives down costs, saying, “The cost of lithium-ion batteries is dropping faster than anyone expected.” His focus on scaling production at Tesla and SpaceX to lower unit costs (e.g., reusable rockets cutting launch prices) shows he grasps this dynamic. Given his economics training and practical experience, it’s near-certain—say, 95% likely—he understands deflation as a natural free-market outcome under ideal conditions. Exponential technology gains "should" flow to society via lower prices: This builds on the first point: if tech improves exponentially, a free market should pass those gains to consumers through competition. Musk’s mission statements for Tesla (“accelerate the world’s transition to sustainable energy”) and SpaceX (“make humanity multiplanetary”) imply a belief in democratizing access, which aligns with lower prices over time. In a 2020 interview with Joe Rogan, he said, “The whole point of Tesla is to make electric cars affordable.” His push for mass-market vehicles like the Model 3 supports this. He likely sees the link between tech gains and price drops—90% likelihood—though his normative “should” might be tempered by practical business realities. Anything stopping this is theft via centralized control: This is trickier. It assumes Musk views interference (e.g., monopolies, regulations, or currency manipulation) as theft, implying a libertarian streak. Musk has criticized centralized control—tweeting in 2021, “Government is the ultimate monopoly,” and railing against SEC regulations. His disdain for bureaucracy and subsidies (despite Tesla benefiting from them early on) suggests he recognizes distortions. However, “theft” is a strong moral framing. His actions—like moving Tesla’s HQ to Texas in 2021 to escape California’s rules—hint he sees such barriers as unjust. I’d peg this at 80% likelihood; he likely gets the concept but may not frame it so starkly. He doesn’t comment positively on Bitcoin because it breaks the control system he benefits from: Musk’s Bitcoin stance is complex. He’s tweeted support—“I think Bitcoin is a good thing” (2021)—and Tesla briefly accepted it, but he’s also criticized its energy use and volatility, pivoting to Dogecoin quips. Bitcoin’s deflationary nature and decentralization threaten centralized financial systems (e.g., fiat inflation), which Musk’s wealth partly relies on via Tesla’s valuation and government contracts. Does he avoid praising Bitcoin to protect this? Possibly. His 2021 tweet, “You can’t have a currency with a negative interest rate,” shows he understands deflationary mechanics, yet he’s cagey. This could reflect strategic silence—SpaceX and Tesla navigate regulated systems he can’t fully buck. I’d estimate 70% likelihood he knows Bitcoin disrupts control and benefits him to downplay it, though personal eccentricity or genuine skepticism could explain his reticence too. Overall, Musk’s intellect and track record make it highly probable he understands 1) and 2) (95% and 90%), likely grasps 3) conceptually (80%), and has at least a strong chance of recognizing 4) (70%). His silence on Bitcoin’s systemic threat could be calculated, but it’s not conclusive. Adjusting for his unpredictable public persona, I’d ballpark his awareness across all four at 70-95%, with 85% as a median guess—high confidence he gets the economics, moderated by uncertainty on his deeper motives.

Replies (13)

Great Elon/Bitcoin analysis Jeff. I have wondered about this. I agree he gets the economics. I think his ego gets in the way of the rest. He benefits so much from the fiat system. Also he doesn’t need Bitcoin. We all need Bitcoin of course but he’s the richest man. I’m looking forward to exploring this further when we chat next month 💫
I’d like to counter with the following narrative; Assuming that there are only 10 people on the planet. All 10 people need enough ’currency’ to be able to trade in and among themselves. That amount is dependent upon a determined given level of lifestyle choices. In other words there is a minimum level. We should all be able to agree on that. Now, add 100 more people (110 in total) and try to use the same quantity of currency. It’s obvious that there will be a shortage of currency for the 100 people added to the scene. What does a shortage of currency do? Prices go down. Why? Because some of the 100 will decide to lower the asking price of their services or goods in order to accumulate currency for themselves. In that situation, there just isn’t enough currency to go around for the level of the population. Now some people would say that prices would rise because, like Bitcoin, a shortage of currency means people would pay more to buy (dollars-currency) Which force is more powerful? Someone that wants to pay more for their dollars by giving more services for any given currency, or the shortage of currency raising the price of services and goods?(note I’ve written these in reverse order, as one won’t have goods without currency, but will have services to offer) It’s imperative that there be enough currency for a “stable economy” where prices aren’t fluctuating wildly. In other words, governments will, rightly so, print more currency to ensure that people don’t starve. (Which is exactly what would happen if there wasn’t enough currency to go around) With only enough currency in circulation for 10 people, 100 people would need to go without. Starvation is not an option. Therefore, a currency needs to be expandable to a level appropriate to the level of the population. It is conceivable that the prices of services will go down but the price of goods will go up. So one can see why a currency NEEDS to be expandable to the correct amount for a given society and its level of population. This point is hard to debate. The problem arises when governments expand the level of currency higher than the needs of the population and do so to “invest” in war, social services, or to inflate away the resulting debts that accumulate. However, Bitcoin, as a currency is just plain not expandable, therefore it isn’t suitable as a currency, because there isn’t enough of it to be usable by the global population. As more people want to accumulate Bitcoin, its price will rise. The same can be said for the USD, unless the U.S. government continues to print. So, in conclusion, the debate over whether the “natural state of the economy is deflation” isn’t 100% determinable.
↩ replying to Sandy
You need to rethink. A relative shortage of currency does not and cannot make prices go up in terms of that currency. So the two forces scenario you ask about isn't possible. Imagine your town, just as it is now. Now imagine that the total money supply for the town drops to just 100 pennies and cannot be increased. Prices for most everything are going to head toward tiny fractions of a cent.
Jeff, I’m seeing clips going around today on X of an interview Elon recently did with Ted Cruz discussing AI that contributes to your theory here. Elon says goods and services will become basically free.
My personal take on it is that Elon wants humans to get to Mars, and he won’t do anything that delays that outcome or reduces its probability of success. He likely views deficit spending and a large government budget for NASA and defense as crucial elements of getting to Mars faster. So although he might understand that sound money like Bitcoin would overall be better for the wellbeing of humanity today, he is willing to tolerate the suffering of the working class for a while longer in order to achieve his goal of putting humanity on Mars sooner. People might not be willing to fund Mars colonization if they had to pay for it directly in the form of taxes instead of via currency debasement / inflation.
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Asked the same to ChatGPT 3o: Hey Martien—here’s a (necessarily) arm-chair probability run, anchored to what Musk has actually said and done in public: Assertion Likely?* Why I land there (evidence & reasoning) 1. “Natural” free-market trend is deflation ≈ 85 % Musk has warned the Fed that a “major rate hike risks deflation,” and he’s repeatedly blamed rising prices on government money-printing rather than supply-and-demand.   2. Tech progress should drive prices down for everyone ≈ 80 % His whole playbook is about steep learning-curve cost drops (“the best part is no part, the best cost is no cost”) and constant price-cuts on Teslas/Starlink as volumes rise. He speaks of Moore-like curves in rockets, batteries and AI chips, implying consumer deflation as the end-state.  3. Blocking that deflation equals wealth transfer via central control (“theft”) ≈ 60 % Musk stops short of calling it outright “theft,” yet he does frame inflation as the result of “excess government spending” and a stealth tax on ordinary people—which is philosophically the same point.   4. His muted stance on Bitcoin is because BTC breaks a system he profits from ≈ 35 % He has gone quiet on Bitcoin since Tesla’s 2021 energy U-turn, while loudly boosting Dogecoin and courting U-S-government contracts and subsidies. But other motives—energy optics, SEC headaches, meme-marketing—are at least as plausible. He occasionally resurfaces with mild BTC praise, which weakens the “benefits-from-the-system” theory.   *Rough subjective odds, not statistical measurements. Take-aways in plain English • Musk almost certainly understands macro-deflation and tech-driven price collapse; it’s part of his public narrative. • He pretty clearly sees inflation as a government-caused transfer of wealth, even if he couches it in less loaded language than “theft.” • The Bitcoin silence is murkier. It could be strategic brand-management, regulatory caution, or simple preference for his pet meme-coin rather than fear of losing “system” advantages. So: high confidence on items 1-3 being in his head, but only a coin-flip—or less—that 4 is his real motivation for staying mostly mum on BTC.