A Change in Climate Is Coming

A Change in Climate Is Coming

If you tell a lie big enough and keep repeating it, people will eventually come to believe it. The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State.

Joseph Goebbels

Why? Why? Why do we fail to learn from history?

The Nazi propaganda chief understood the power of controlling the public narrative.

The State must use all of its powers to repress dissent.

Any challenge to the government’s false and self-serving storyline must, at first, be discredited and, preferably, silenced.

On 9 June 2022, Axios reported:

Gina McCarthy, President Biden’s top domestic climate adviser, said tech companies should do more to prevent the spread of inaccurate information about climate change and clean energy.

“The tech companies have to stop allowing specific individuals over and over again to spread disinformation,” she told Axios’ Alexi McCammond at a virtual event that aired Thursday.

‘“We need the tech companies to really jump in,” McCarthy said.

Who determines what qualifies as ‘inaccurate information about climate change and clean energy’?

Politicians, who tell us ‘the science is settled’? Sycophant bureaucrats? Climate change activists with money invested in ‘green schemes’ benefitting from huge amounts of taxpayer-funded subsidies to personally enrich them? Scientific research funded by green groups? Or all of the above.

This whole ‘science is settled’ argument makes a nonsense of what science is really about: testing and retesting theories.

As reported by NBC News on 3 August 2019:

Fat Tail Investment Research

Source: NBC News

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Here’s an extract:

“Newton had a great time for a long time with his description [of gravity], and then at some point it was clear that that description was fraying at the edges, and then Einstein offered a more complete version,” said Andrea Ghez, an astrophysicist at UCLA and a co-leader of the new research.

And so today, we’re at that point again where we understand there has to be something that is more comprehensive that allows us to describe gravity in the context of black holes.

Einstein tested Newton’s long-held theory of gravity and found a better version.
Now, science is challenging Einstein’s findings.

That’s what science is about.
Relentlessly trying to disprove a theory, in order to test the truth of the subject.

But when it comes to climate change, any such robust and relentless testing of the theory is shut down.

If you dare challenge the legitimacy of the so-called science, you’re a climate denier.
It’s such an easy put down for those long on virtue signalling and short on facts.

What the policymakers and shapers (politicians, bureaucrats, central bankers, and virtue signalling institutions) won’t ever tell you is…

The real story behind CO2 emissions

Our fixation with perpetual growth has sown the seeds for a future that’s going to be far more challenging than the past.

Since 1980, China’s competitive cost structure, up until recently, has exported low inflation to the world…

Fat Tail Investment Research

Source: World Bank

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Low inflation gave central banks the room to manoeuvre interest rates lower.
Lower rates gave the world the capacity to borrow more…much more.

The more we could borrow, the more ‘cheap things’ we could buy from China…which, due to economies of scale, made the price of goods even cheaper.

Debt funded demand led to debt funded supply.

China geared up (literally) for production.

More factories. More ships. More power plants. More housing.

The combination of cheap production and cheap debt resulted in…surprise, surprise…China pumping out more emissions.

The cosy commercial arrangement between ‘Eastern makers and Western takers’ created a self-feeding loop of low inflation.

Central banks thought they had discovered economic Shangri-La.
Above average GDP growth without runaway inflation.
Pure genius.

But underneath it all, there were losers.

The manufacturing base in the developed countries went into decline.
China not only exported low inflation, but also lower wage costs.
Wages began stagnating for the first time in decades.
Which, in turn, forced consumers to borrow to maintain living standards.

The trend in global debt moved into the exponential phase around the same time as China embarked on its economic reform…the early 1980s and 1990s:

Fat Tail Investment Research

Source: Market Cap

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Compare the pair…here’s the chart for the world’s annual CO2 emissions:

Fat Tail Investment Research

Source: Our World in Data

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Is it pure coincidence China’s emissions have risen in tandem with global debt levels (used primarily for consumption) AND emissions in the developed world have decreased as its manufacturing base shrank?

I don’t think it’s drawing too long of a bow to suggest there’s a link between these factors.

Which invites the question…

Is the debt-funded growth model the real environmental vandal?

But those, like Biden, McCarthy, Powell, et al, who worship at the altar of perpetual growth, will never admit to it.

Imagine a world where consumers decide there’s more to life than ‘buying things we don’t need, with money we don’t have, to impress people we don’t know’?

In that world, eventually, the factories stop producing as much stuff. Ships remain in port. Transportation — by air, road, and rail — slows down. Power stations are mothballed.

Partial retrenchment of the fossil fuel dependent links in the supply chain would reduce CO2 output.

Here’s how this hypothetical world actually played out during the early days of the COVID pandemic:

Fat Tail Investment Research

Source: ABC News

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Curtailing economic activity is one proven way of reducing emissions.

However, as we’ve witnessed, government, business, and individuals cannot afford for this to happen. Any tapping on the economic brakes causes much disruption to a world (that’s literally) geared for growth.

So much has been promised to so many, based on an ever-increasing quantity of debt…which fuels the CO2 emitting perpetual growth machine.

Which leads us to…

The real great moral challenge of our generation

And, you might be surprised to learn, it’s neither debt nor climate change.

The real challenge we face is how to deal with the consequences of promises that can never be kept.

When the next credit crisis arrives…and, with a global debt load that’s US$200 trillion greater than what caused the GFC, believe me, it will arrive…the illusion of perpetual growth is going to be shattered into a million pieces.

The collapse in debt levels — from defaults to deferred payment arrangements — is destined to trigger another (more permanent) slowdown in the global supply chain.

Emission levels will fall in line with lower levels of Western demand.

The legacy from four decades of debt-fuelled consumption is…a world of make-believe in perpetual growth.

For perpetual growth to occur, it requires each successive generation to go even deeper into debt than the preceding generation…it’s a Ponzi scheme.

Demographics, sky-high debt levels, and historically low interest rates all combined make the base of this pyramid scheme about as broad as it can get…which is why a piddling 0.5% rate increase is causing household stress…there’s more to come.

Government can and will broaden the debt base.
But this is highly unproductive debt.
Government wastes money on political quick fixes and funding unaffordable welfare schemes.

For an economy to achieve genuine growth, debt has to be productive.

Think of the promises that have been made on the nonsensical premise of perpetual growth.

Pensions — private and public. Health care. Households are taking out massive mortgages on the premise house prices always rise. Enterprises started (with debt) based on assumed growth. Retirement plans made on past returns (a performance influenced by debt-funded growth).

The great moral challenge of our generation is how to deal with the social cost of promises not being kept — marriage breakdowns, business failures, suicides, mental health problems, community anger over job losses, and closure of services.

We’ve created a system loaded with overpromise…but cannot possibly deliver.
The winding back of expectations is destined to be extremely painful.

Climate change is coming…but not the one you think.
The political climate is where the heat is going to be felt most.

And it’s the political response we must watch closely.

Are we going to see the formal introduction of a universal wage or ‘helicopter money’ or more ‘knee-jerk’ handouts to compensate for the inflation caused by the idiocy of green activism or a combination of ‘harebrained’ policy responses or all of the above?

You bet.

The failure to address the global debt problem in 2007 has produced an environment far more toxic and lethal to our community’s wellbeing than any number of coal-fired power stations could ever be.

A climate of hostility, disbelief, and disappointment will herald a change in public attitude…a new frugal generation is in our future.

Ironically, it’s going to be this change in attitude to wanton consumption, not renewable energy, that’ll lead to the greatest reduction in CO2 emissions.


Vern Gowdie Signature

Vern Gowdie,
Editor, The Daily Reckoning Australia