by Eric Worrall at wattsupwiththat.com
h/t Peta of Newark; “The net zero transition is disinflationary”: Central bankers are clinging to the fantasy that renewable energy investment will cause a dramatic fall in energy prices.
How central bankers got it spectacularly wrong on net zero inflation
Experts fear the elite’s obsession with going green will cause prolonged pain for millions
By Szu Ping Chan10 July 2023 • 6:00am
It was presented as a new utopia. Clean abundant energy, available to all. Millions of new jobs, flourishing economies and a cleaner, greener world. And all while cutting bills and freeing up money spent on light and heat to be used elsewhere.
However, as the transition to net zero speeds up, and wind and solar power replace oil and gas, it is becoming increasingly clear that prices are not coming down fast. Instead experts fear that going green will make the inflation crisis worse – in a fresh blow to the credibility of a string of central bankers who have predicted the opposite.
“The green transition will be expensive and, if tax collection does not keep up with increased spending, there will be an expansionary fiscal impact that could add to economic demand relative to supply, and thereby inflation,” says George Buckley, UK chief economist at Nomura.
All of this is likely to confound the central baking elite, who have called for a swift end to fossil fuels.
“The net zero transition is disinflationary,” Mark Carney insisted in a speech last year. The former governor of the Bank of England doubled down on this assertion last month, admitting that while prices would probably rise for about a decade in pursuit of net zero, going green will ultimately help to keep inflation low and stable.
In the long run, net zero may indeed bring down prices. But before then, the politicians – and central bankers – face the challenge of explaining to the public that their utopian rhetoric on green energy is falling short of reality.
How could otherwise smart people get the inflationary impact of renewable energy so wrong, when it is obvious to anyone with basic scientific training that renewables are not fit for purpose?
There is only one explanation which makes sense. They don’t personally understand the science, and they are getting bad advice.
The only question is, how long will central bankers persist with this folly until they realise the emperor has no clothes? How long until they wake up to the reality that renewables will never have a deflationary impact, that pushing forward will lead to inevitable economic ruin?
And once bankers realise the green energy revolution has failed, how long one of them summons the courage to speak out, to admit their tenure as a central banker has all been a ghastly mistake?
We can only hope that at least one central banker is brave enough to remember their first duty is to the public. It will only take one central banker to tell the truth, to shatter the green mirage, to awaken everyone in the financial world to the reality that renewables are a dead end. Because if no central banker has the courage to step forward and say “enough”, we are all in for a hell of a ride.
Update (EW): Added the last paragraph of the Telegraph article, which claims one day renewables might bring down prices.read more