"Last week, Bank of America sparked a firestorm of reaction amid both the pro and contra climate change camps,
when it published one of its massive "Thematic Research" tomes, this time covering the "Transwarming" World
... which serves as a key primer to today's Net Zero reality,
The bottom line: no less than a stunning $150 trillion in new capital investment would be required to reach a "net zero" world over 30 years -
equating to some $5 trillion in annual investments
- and amounting to twice current global GDP.
... the private sector has nowhere near the capital required to complete this investment
which is why Bank of America generously estimate that all or parts of the bill would have to be footed by central banks in the form of tens of trillions in QE (money printing).
And since QE is essentially debt monetization, and since $150 trillion in new debt would have devastating consequences on the economy,
BofA was kind enough to share its calculation of just how inflationary this billionaire pet project would be:
the "full monetization" scenario, where central banks inject $5 trillion in liquidity every year via QE for 30 years, would result in incremental 3% of inflation for a good decade.
This is inflation over and above whatever is already coming down the pipeline.
Which is where we get to the punchline, because as BofA admits, the crusade against climate change, the ESG doctrine, the "Net Zero" world,
whatever one wants to call it, it's all about green lighting the biggest QE episode in history,
one wrapped in the "noble" veneer of fighting for the most important cause in the history of civilization,
but in reality it's just the biggest wealth transfer scheme in history:
... Under more aggressive scenarios where central banks opt to absorb either half or the full decarbonization bills through quantitative easing, the risks of an inflation shock grow.
... At this point alarm bells should be going off even among the most brain-dead progressives because for all its touted benefits, the costs are starting to emerge and
- at least when it comes to the next two or three generations
- they will be absolutely crushing for the middle class,
while allowing the top 1% to plunder and pillage virtually all the world's assets.
Think of it as the biggest mandated theft in world history,
and suddenly one can understand why every private-jet setting billionaire is oh so very vocally in support of a "net zero" world.
... Now that the genie is out of the bottle, and the hard questions like "who gets to pay for all this" are being asked,
Bank of America had a follow up report in which it made it abundantly clear that "contrary to some arguments, we think climate mitigation efforts are likely to hurt growth in the next decade or so."
In his note titled
"A hot take on climate change" ... Bank of America chief economist Ethan Harris first goes through all the familiar steps of just why it is so imperative - and noble ...
.. None of the above is new as the mainstream media has been bombarding its audience for the past decade with emotional platitudes and qualitative appeals as to why something has to be done.
... First, unlike other technology “races”, climate mitigation is more of a cooperative “game” than a competition.
When countries like the US and China “compete” to develop new technologies, two points of conflict often tend to arise—a fight for market share and a fight for geopolitical superiority.
By contrast, countries that develop efficient climate mitigation technologies have a strong incentive to share the benefits.
If they hoard the technology, the impact on their own climate will be much smaller.
This is great... if only it weren't a pipe dream.
Why?
Because as the recent refusal by China's Xi Jinping - incidentally the world's largest polluter
- to join his fellow "climate change crusading" world leaders at the COP26 Net Zero summit in Italy later this month, it's all one giant spectacle meant for the masses.
Because if the world's largest polluter is making it clear he has no interest in actually reducing his own CO emissions, then anyone preaching some bullshit about a "cooperative game" can shove it.
... the "depressing consensus out of the climate change literature" that even if everyone cooperates, the earth will continue to warm as there are lags in the link between GHG and global warming.
Indeed, under the best of outcomes—with every country hitting aggressive mid-century goals—the policy shift will mitigate, not stop the problem.
... In other words, the net zero theater of the absurd i
... where even a best case scenario of complete cooperation has no chance of actually stopping the problem, just mitigating it.
Oh, and meanwhile, the world is set to incur some $150 trillion in costs.
... Bank of America (writes) that by the time serious climate mitigation efforts are underway the global economy will likely be close to full employment.
This will likely be the case in the US.
Hence staffing up the industry means drawing workers out of the rest of the economy.
At the same time, building up green energy infrastructure will require more than a doubling of investment in the sector, from roughly 2% of GDP now to a 4.5% average over the 2020-30 period.
Where is that 2.5% of GDP going to come from?
(... money printing, and everyone knows this).
... the "net zero" crusade against climate change really is
... the necessary and sufficient condition to trigger the hyperinflation that the world's massively indebted nations need to inflate away their debt.
... Big structural changes in the economy tend to create big transitional challenges.
Workers need to move from one sector to another,
some industries will boom while others shrink,
and as regulations and taxes increase, capital that had been invested in producing and using dirty energy will rapidly become obsolete.
All of this means lower trend growth during the transition from a dirty to a green economy.
... there isn't even any assurance that a transition to a green economy will ever be completed once it has begun;
at best, we may be stuck in the "mitigation" phase for ever.
... given the regulatory outlook, and the now prevailing stigma associated with any fossil fuels, investment in dirty energy capacity will be low and depend on high prices.
Meanwhile green energy is not ramping up fast enough to fill the gap.
... changes in wind and rain patterns seem to have affected the supply of wind and hydro power.
The same wind and hydro power that was supposed to lead the world out of its fossil fuel addiction.
... Reuters figured out last week that European and U.S. cities planning to phase out combustion engines over the next 15 years
first need to plug a charging gap for millions of residents who park their cars on the street.
... perhaps in retrospect, the policymakers and scientists should have thought of the blindingly obvious first,
instead of rushing to goal seek the agenda to makes them the most monetary benefits."
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Tuesday, October 19, 2021
Bank of America Estimates $150 Trillion Needed For the Global Crusade Against Climate Change
Note:
This very important article
was significantly edited
to focus on the key points
and improve readability.
Ye Editor
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