June 24, 2023
He asked it again at last week’s FOMC press conference.
The reporter from Fox Business asked Fed Chair Jay Powell the question I’ve been asking (and hoping someone would ask) for a year…
Edward Lawrence with Fox Business. So I want to go back to comments you made in the past about [the government’s] unsustainable fiscal path. … At what point do you talk more firmly with lawmakers about fiscal responsibility? Because assuming monetary policy alone cannot handle inflation or keep that inflation in check with the higher level spending.
Powell was as to-the-point as he’s ever been…
I don’t do that. That’s really not my job.
Jay’s not kidding there. He does not do that. Case in point…
This week at his semi-annual testimony in front of Congress he basically delivered the same message he told reporters at the press conference last week: We thought a pause was in order to see the effects of our hikes thus far combined with the general tightening in the financial system… But we expect that further tightening will be in order… But we’re taking it meeting by meeting… blah blah blah.
Not a word about government spending.
And this in front of the legislative body that just OK’d a debt ceiling moratorium that has seen the debt spike to $32 trillion…
That is now projected to hit $50 trillion by 2030.
Sure, the Fed is supposed to be an independent entity. But they’re going to be fighting a losing battle forever if something doesn’t change. (Maybe that’s the plan?) Monetary and fiscal policy have to go at least somewhat hand-in-hand to keep an economy on track.
But the government’s nothing if not fiscally irresponsible. It’s a shortsightedness — their absolute unwillingness (or maybe inability) — to consider longer term impacts of their fiscal policies that keeps leading the US down a path of financial destruction from which we might never return.
Their latest act of irresponsibility is their nonsense Green Dream.
Cooling the Planet
The US entered the Paris Climate Accord back in 2015. The agreement is summed up on the UN Framework Convention on Climate Change site (emphasis definitely theirs!):
The Paris Agreement is a legally binding international treaty on climate change. It was adopted by 196 Parties at the UN Climate Change Conference (COP21) in Paris, France, on 12 December 2015. It entered into force on 4 November 2016.
Its overarching goal is to hold “the increase in the global average temperature to well below 2°C above pre-industrial levels” and pursue efforts “to limit the temperature increase to 1.5°C above pre-industrial levels.”
Notwithstanding the original science behind the whole movement is debatable at best (I told you that story last June), the powers that be are doing everything within their powers of propaganda to keep the movement pushing forward. (Despite warnings from Europe and elsewhere that a full on transition could have potentially devastating economic consequences.)
Most recently US Climate Emperor Czar Envoy John Kerry was called out for spreading more non-science hyperbole.
A government watchdog group filed an ethics complaint against Special Presidential Envoy for Climate John Kerry on Tuesday morning, alleging he spread misinformation about climate change.
Go figure…
“15 million people are dying every single year around this planet as a consequence of greenhouse gas emissions in the atmosphere, in the air which travels around and drops in the form of pollution and is warming the ocean at record rates, changing the chemistry of the ocean itself,” Kerry remarked on May 10 at the Department of Agriculture’s AIM for Climate Summit.
It turns out, according to actual data, that “climate change is expected to cause 3.4 million deaths by the year 2100.” Another study calculated that 4.2 million people die per year as a result of airborne particulates and pollution.
Now I’m not saying these numbers are nothing. But they’re far from 15 million a year. Especially when he offers no scientific proof to back him up. It’s really all an effort to advance a political agenda that no one has thought through.
And the media only tells half the story too. According to an opinion piece in The Hill…
In the article the author lambasts GOP efforts to repeal President Biden’s Inflation Reduction Act (which is largely a $1.7 trillion spending plan). In the article the author cites a $3 billion car battery plant GM and Samsung were committing to build in Indiana thanks to the law. The plant is expected to provide 1,700 new jobs in 2026 when the project is complete.
He speculated on what would happen if the GOP got its way…
The easy answer is it would flatten a clean energy industry that is one of the fastest-growing sectors in the U.S. economy, betraying companies that have chosen to invest and leading to economic chaos and layoffs in a number of industries including construction, steel and energy. Recently announced manufacturing plans would likely be scaled back or scrapped altogether.
Let’s be clear on something.
It’s NOT one of the “fastest-growing sectors in the US.” The growth the sector is experiencing isn’t due to huge demand that a real, established industry (like, say, fossil fuels for example) would generate. It’s largely driven by the laws and financial incentives that Washington has forced in place to achieve their ends.
Much of the future of the green movement is dependent on a lot of variables that 1) simply can’t be known now and 2) simply can’t replace what’s currently working at scale.
Said it before and I’ll say it again. I’m not against green energy. There’s definitely a place for it in our energy landscape. I’m against the government’s arrogant “all in” attitude when it comes to overhauling the most essential driver of our economy.
That is the entire problem. Washington wants everything to move forward without seriously considering the very real ramifications…
Theory… Meet Reality
Over the past couple years, there has been a push from certain investment community heavyweights (like BlackRock) for companies they invest in to limit their investments in fossil fuel companies. It’s called the Environmental, Social, and Governance (ESG) movement. (I previously wrote about it here.)
Those in the movement have unofficially embraced a 2021 report by the International Energy Agency (IEA) titled Net Zero by 2050: A Roadmap for the Global Energy Sector. In it, the IEA claims to set out “more than 400 milestones for what needs to be done, and when, to decarbonise the global economy in just three decades.”
In response, the RealClear Foundation asked the Energy Policy Research Foundation, Inc. (EPRINC) to conduct an analysis of the IEA’s projections where net zero goes and assess the likely economic impact of unilaterally cutting off investment in new oil and gas fields. This was their studied conclusion (my emphasis):
The IEA asserts that the “Net Zero by 2050” scenario would enable a smooth energy transition that ensures constant fuel and electricity supplies, minimal stranded assets, and reduced volatility in energy markets. However, comprehensive evaluation reveals that the net zero path is anything but smooth, imposing enormous costs and risks on the economies of the West.
NZE would inflict a double whammy on the West. The first blow comes from NZE’s recommendation to cease investment in new oil and gas fields beyond those already approved. There is no evidence that the world is experiencing falling demand for hydrocarbons, and policies to restrict supplies would lead to rapid and sustained increases in oil and gas prices. The second blow comes from the switch to a near all-renewable electrical grid, which would have electricity prices soaring more than threefold.
Those results would be what we have to look forward to in the distant future. But Joe Biden’s single-minded push is already creating potential problems for the country’s grid this summer.
The North American Reliability Corporation’s (NERC) summer reliability assessment forecasts that no less than two-thirds of the United States, including most everyone living west of the Mississippi River, could experience power outages. The major problem is that dispatchable generating resources (coal, natural gas and nuclear) are retiring far too quickly and in quantities that threaten the ability to keep the lights on, as insufficient wind and solar power are being added to replace the retirements.
The EPRINC’s report concluded pretty much the same thing:
Renewable and low-carbon energy will play an important role, but it will not see massive introduction until major technological and cost concerns are overcome.
Now that makes perfect sense.
Nobody in Washington REALLY Thinks Things Through…
A lot of people cite the loss of reliable power when it comes to green energy. Windmills and solar just can’t keep up.
But I’ll bet nobody asked about this during the NZE discussions…
A recent article by Professor Vaclav Smil — Distinguished Professor Emeritus at the University of Manitoba and author of dozens of books on the topic of energy — pointed out that while mankind could thrive without a number of modern day conveniences, there are four materials we pretty much can’t live without.
Four materials rank highest on the scale of necessity, forming what I have called the four pillars of modern civilization: cement, steel, plastics, and ammonia are needed in larger quantities than are other essential inputs.
And?…
And these four materials, so unlike in their properties and qualities, share three common traits: they are not readily replaceable by other materials (certainly not in the near future or on a global scale); we will need much more of them in the future; and their mass-scale production depends heavily on the combustion of fossil fuels…
In fact, they’re so essential and so reliant on dispatchable (on demand) energy sources that their global production uses approximately 17% of the world’s energy supply.
How does renewable energy replace that?
Crickets.
Why believe Professor Smil? His response to that question says it all…
“I have never been wrong on these major energy and environmental issues because I have nothing to sell.”
Your government, in fact governments around the world, believes it can steer and spend the country into prosperity.
What are they selling?
Make the trend your friend,
Bob Byrne
Editor, Streetlight Confidential