“The Planet Needs Jerome Powell”
“The planet needs Jerome Powell.”
This we learn from a certain Robinson Meyer — a staff writer for The Atlantic magazine. More from whom:
Biden should renominate Powell for the climate’s sake. The argument for keeping him is simple. Biden wants to do a lot of hard things to combat climate change, including passing an infrastructure bill, regulating car and truck pollution, revitalizing American industry and attaining full employment. Powell is a Republican who wants to reach full employment. By keeping him, the president can spend more political capital on his other goals.
How much political capital President Biden retains in his hip pocket, we do not know. The Afghanistan “withdrawal” was very rough going for him.
The latest poll — the latest Rasmussen poll — reveals 52% of Americans would have the president resign his post.
Their chief reservation is his successor — 58% do not believe Ms. Harris meets the requirements of office.
But to return to the main road…
The Planet Needs Low Interest Rates
Mr. Powell’s zealotry for low interest rates warrants his continued bossing of the Federal Reserve:
If Powell is replaced by a Democrat, there’s no guarantee that his successor would continue to keep interest rates low… When interest rates are low, the federal government can borrow more money. If the Fed hiked interest rates, then the left’s dream of passing a Green New Deal would immediately become impossible.
For the first occasion in its 108 years, the Federal Reserve has labeled climate change a risk to financial stability — a risk greater, ostensibly, than even itself.
That is, the Federal Reserve must bulge out beyond its dual mandate of price stability and maximum employment.
It must also police the weather. Yet the Federal Reserve is not alone.
The European Central Bank (ECB) considers climate change a mighty fee-fi-fo-fum that menaces financial stability.
ECB President Christine Lagarde says caging climate change is “mission critical.”
The central bankers can moan about climate change all they please. But is it within their power to address?
After all, you say, they make such awful botchwork of their current responsibilities.
They cannot distinguish up from down, left from right, one from the other, fiction from fact — at the price of their souls.
How then can they command Nature herself? How can they dictate her thermometer readings across all four corners of Earth?
Your questions are the proper questions. And they deserve a square answering.
Here is another question: Are the central banks chasing a phantom menace, a false bugaboo?
0.04% of the Atmosphere
Carbon dioxide is a “greenhouse gas.” It imprisons heat within the atmospheric penitentiary.
And humankind’s carbon dioxide emissions have increased notably across the years.
Yet have they produced a serious sweat?
We ordered our minions to investigate the literature. From them we learn:
Carbon dioxide represents a vanishing 0.04% part of Earth’s atmosphere.
Imagine — if you will — the atmosphere as 2,400 one-liter bottles.
Of those 2,400 one-liter bottles, only 24 contain greenhouse gases.
Only one of these bottles — one bottle of the 24 — houses carbon dioxide.
Of the one bottle that holds the demon molecule, perhaps 50 milliliters represent mankind’s annual contribution — roughly one shot glass worth.
And so… of our theoretical atmosphere of 2,400 liter bottles, humans account for perhaps one shot glass of carbon dioxide.
This one shot glass has Earth imperiled upon the devil’s shovel? We are far from convinced carbon is so mighty.
Measured in Millimeters
Alternately: Consider Earth’s atmosphere a 100-story building. How high does the human CO2 contribution stack?
The human contribution rises… to the linoleum on the ground floor.
That is, it cannot be measured in stories, in feet, in inches, in centimeters.
It must be measured in millimeters.
Again we ask: This piddling trifle is scorching the planet?
The authenticated documentation, please — chapter, verse, line — all footnotes included.
The science is… complex. We claim no mastery of it whatsoever.
And it is fully plausible that fuel-burning has tinkered Earth’s temperature.
Yet if Earth’s climate was so exquisitely sensitive to minor carbon dioxide fluctuations… why didn’t it burn up ages ago?
Our men inform us this planet has endured CO2 levels 25 times or greater than today’s — a nice point to put somewhere.
Yet the match never struck. Why should it now?
The central banks are answering the klaxon nonetheless… and clearing for action.
How might central banks rout the evil molecule? How might they break the fever?
The Central Bank Battle Plan
By placing “carbon-intensive” industries on ice. Reports the New Economics Foundation, regarding the Europeans specifically:
In the “lower carbon” scenario, the ECB stops buying bonds issued by fossil fuel companies and by companies with relatively high carbon intensity that belong to the energy-intensive, non-renewable utilities and carbon-intensive transportation sectors. Instead, the ECB would purchase bonds of potentially green and renewable sectors, as well as green bonds and bonds of “other” non-carbon-intensive sectors. The second, “low carbon” scenario excludes all the bonds issued by carbon-intensive sectors…
The same remedy holds for the Federal Reserve. Central banks must therefore abandon “market neutrality.”
That is, they must thumb the market scales.
That is, they must choose winners — and choose losers.
That is, they must act through political consideration.
“We have to ask ourselves,” says Ms. Lagarde … “whether market neutrality should be the actual principle that drives our monetary-policy portfolio management.”
The question itself is the answer.
The Green Behind Green Energy
The scheme is green in this one sense: It would green the “clean energy” industry. Jim Rickards:
Central bank support for the climate change agenda is more than just rhetoric. Central banks regulate commercial banks and control payments systems. They may decide that loans to energy companies should be discouraged and finance for wind and solar systems should receive favorable treatment. They can also require disclosures by banks intended to cast carbon-intensive sectors in a bad light.
A term exists for the foregoing — crony capitalism.
The scoundrels and frauds will be holding out their hats… promising to hold down Earth’s temperature… while holding up taxpayers.
But are cleaner wind and solar energy not desirable? Should the world burn coal instead — and choke?
We take no position. If the world prefers wind over oil, solar over coal, let it have wind and solar over oil and coal.
Yet the world must evidently come to terms with fundamental physics…
The Point of Diminishing Returns
Mr. Mark Mills co-directs Northwestern University’s Institute on Manufacturing Science and Innovation. He says:
All sources of energy have limits that can’t be exceeded. The maximum rate at which the sun’s photons can be converted to electrons is about 33%. Our best solar technology is at 26% efficiency. For wind, the maximum capture is 60%. Our best machines are at 45%. So we’re pretty close to wind and solar limits. Despite big claims about big gains coming, there just aren’t any possible.
If this fellow is correct — our minions inform us he is — we begin to suspect we are being taken for a sleigh ride.
Wind and solar energy are vastly inadequate to energy needs. And they will remain inadequate to energy needs.
Yet they may become highly efficient absorbers of capital.
We hazard many green energy businesses will prosper, with central banks pushing them along.
Though few will produce much by way of value.
That is, they will grab valuable capital from worthier and more productive hands. They will likely form a lovely bubble in time.
Does the planet need Jerome Powell?
The planet needs Jerome Powell… the way the economy needs Jerome Powell.
That is, the planet needs Jerome Powell not at all…
Managing Editor, The Daily Reckoning