Elon Musk's "budget-cutting hand" aims to reach the Federal Reserve, is it really to pressure the Federal Reserve on behalf of "the one who understands"?

According to Zhitong Finance APP, the world's richest man Elon Musk recently emphasized that the core mission of the U.S. Government Efficiency Department (DOGE) he leads is to make the U.S. government more efficient starting January next year when Trump officially returns to the White House. Holding the "imperial sword," he has even set his sights on the Federal Reserve, known for its "independence," for streamlining DOGE's budget and expenditures. In his latest tweet, Musk stated that the "overstaffed" Federal Reserve has been listed as the latest budget cut target in the pursuit of government efficiency improvement under his leadership of DOGE. In the preliminary plan of "Minister Musk," DOGE plans to cut up to $2 trillion from the federal government budget, an unprecedented level of austerity in the U.S. since World War II.

Musk wrote in his latest tweet on social media platform X (formerly Twitter) that the central bank responsible for protecting the world's largest economy is "ridiculously overstaffed." These remarks are part of a series of comments triggered by Musk and other influencers on X regarding the Federal Reserve's latest policy decisions. Previously, Donald Trump, the elected president known as the "king of understanding," also viewed the Federal Reserve as his "primary target," emphasizing that he should have a say in monetary policy and interest rate setting, rather than being completely "out of the loop."

Notably, before Musk made his latest comments on the Federal Reserve's overstaffing, he had single-handedly "caused a stir in the U.S. Congress," continuously posting on social media X to strongly intervene in congressional voting. The impact of Musk's strong words on social media was evident, as shortly after, Trump himself began to respond to Musk's call, pressuring his Republican allies and demanding Congress reconsider the budget proposal. Some Republican lawmakers also started replying to Musk on X, stating that he had persuaded them to oppose the initial version of the budget bill.

Some analysts still believe that "letting Musk take the lead and act according to circumstances" could become one of Trump's strongest weapons in the next four-year term. This also belongs to the "power game" of billionaire Musk, who plays a very critical role as a "forerunner" in Trump's next four-year term.

This successful pressure on Congress indicates that the influence of Tesla CEO and the world's richest man in U.S. politics is increasing, and it makes Tesla stock believers more convinced that the federal regulatory resistance encountered by Tesla under Musk's leadership in recent years regarding FSD/AI supercomputing-based autonomous driving will be largely cleared under the new era led by the Trump administration. Musk's immense influence is very likely to span both the political and business realms in the U.S.

Is Musk's hand reaching for the Federal Reserve, actually pressuring Trump?

As Trump prepares to return to the White House, Musk has become one of Trump's closest private advisors and will lead a new government agency—the U.S. Government Efficiency Department (DOGE)—together with well-known American entrepreneur Vivek Ramaswamy OGE aims to establish a more streamlined and efficient U.S. government, with a focus on an initial plan to cut federal spending by up to $2 trillion.

The Federal Reserve Board, located in Washington, D.C., along with the 12 regional reserve banks across the United States, employed approximately 24,000 people last year, far fewer than similar government agencies. In the Eurozone central banking system, composed of the European Central Bank and the central banks of 20 Eurozone countries—including Germany, France, and Italy—the total number of employees is significantly higher than that of the Federal Reserve.

The Federal Reserve's monetary policy and Federal Reserve Chairman Jerome Powell have been frequent targets of Trump's attacks. Although Trump appointed Powell as chairman during his first term, he has publicly disagreed with Powell on multiple occasions. Therefore, Musk's focus on budget cuts at the Federal Reserve is seen by some analysts as Trump using Musk to pressure the Federal Reserve to adopt a more accommodative monetary policy rather than "maintaining high interest rates for a long time."

Recently, Trump even publicly mocked Powell's role on social media, calling it "the best job in government." In his post, he wrote, "You go to the office once a month and say: Let's see, let's flip a coin."

Although Powell did not respond directly, European Central Bank President Christine Lagarde, leading the Eurozone central banking system, questioned Trump's recent complaints about global central banks and invited him to Frankfurt to observe how her team works under high pressure.

"We have thousands of very hardworking people—economists, lawyers, computer scientists—I can assure you they are working very hard every day, not just once a month," she stated in a recent media interview. "We defend the euro, we fight for the euro, just as the Federal Reserve defends the dollar. I am sure—first, I want to point out that I do not want to speak for Powell, but I am sure he views the daily work of the Federal Reserve staff in the same way."

Trump seems to have discovered a very useful model: Musk, you take the lead

As mentioned earlier, "Let Musk take the lead, and act as he sees fit," seems very likely to become one of Trump's strongest weapons in the next four-year term. Musk has already proven the feasibility and efficiency of this model by causing a stir in Congress through social media.

However, despite Musk's influence on American politics sometimes exceeding that of Trump due to his status as the world's richest person, their relationship does not appear to show any signs of deterioration. According to sources cited by The Guardian, Musk's recent political bombshell may be a rehearsal for the "Trump 2.0 era" where Musk takes the initiative, while Trump navigates the situation to pressure core organizations like the U.S. Congress and even the Federal Reserve.

Recently, Trump also stated that Musk's latest performance indicates that once he takes office and leads the so-called "U.S. Government Efficiency Department," he could become an effective catalyst for any significant budget activities of the U.S. government. This could mean that Trump finally has the strongest "frontline soldier" in his "2.0 term." During the 1.0 period after his victory in 2016, Trump had to personally push his policy agenda and often faced obstacles in congressional legislation and domestic social opinion, both of which Musk can undoubtedly help Trump navigate perfectly Even in the face of negative public opinion, Trump has ample room for maneuver behind the scenes.

Is Tesla's stock price heading towards $500?

With Trump set to return to the White House in January next year, the approval progress for Tesla's FSD and Robotaxi may enter an accelerated phase. Dan Ives, a senior analyst at Wedbush, and his analysis team believe that Trump's return to the White House will fundamentally change the narrative logic for Tesla and CEO Elon Musk's companies in the coming years regarding artificial intelligence, autonomous driving, and Tesla's AI supercomputing system. According to Ives' team, after Trump resumes the presidency, the U.S. federal government's approval process for Tesla's FSD full autonomous driving and Robotaxi self-driving taxis may see significant acceleration.

Ives' analysis team emphasized: "We estimate that the development opportunities in artificial intelligence and autonomous driving alone are worth $1 trillion for Tesla. We fully expect that under Trump's leadership in the new U.S. government, these key initiatives will be fast-tracked and advanced. Trump has previously promised to let Musk lead the so-called Government Efficiency Committee to oversee the efficiency of federal government operations. The federal regulatory spider web that Tesla, under Musk's leadership, has encountered in recent years regarding FSD/AI supercomputing-based autonomous driving will be significantly cleared in this new era under Trump's leadership."

It is reported that Wedbush has significantly raised its 12-month target price for Tesla from $400 to $515 in its latest report, making it the highest target price on Wall Street. The firm also provided a bullish target price of $650 under an "optimistic scenario," which would bring Tesla's market value to approximately $2.1 trillion. As of last Friday's close, Tesla's stock was at $421.060, marking a 70% increase since Trump's election victory in November. Additionally, Wedbush expects the Nasdaq Composite Index to reach 25,000 points within 18 months, with Tesla becoming the "biggest winner on the mountaintop" due to Musk's unparalleled influence in both political and business circles