Rate Hikes Without Austerity, The Cost of The War on Fossil Fuels: Bank of England warns of the longest recession in 100 years as it raises rates to 3% – November 4, 2022,
The declaration of war on fossil fuels is fueling consumer price inflation, everyone knows it, but everyone also appears to imagine that central banks are more powerful than they really are. What separates me from Libertarians is that I don’t put much emphasis on central banks; instead, my focus is on DEMOCRACY.
Libertarians use the central bank as the boogeyman, typically pointing to the central banks as the root cause of economic hardships globally; I personally point to the current structure of our Democratic system in the west as the root cause to poverty WORLDWIDE. The evidence suggests that the Swiss and U.S Democratic Systems are ON THE RIGHT track to imagining a better system of democracy.
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In the U.K, the Federal government has a little too much power, which is problematic once the voting public starts to imagine that government needs to control the climate. Not all voters in the U.K are in favor of phasing out fossil fuels, and even if they are, I’m certain that not all of the citizens of the U.K want the entire country to have this one size fits all approach to “climate change.”
What I’m getting at here is that the current war being waged on fossil fuels in the U.K is praying for a miracle, and the people in the U.K are waking up to the reality that FIAT MONEY can’t do all the things they imagined it could. Government PRINTING money is a term you hear a lot from people who are trying form a narrative that gives their audience the illusion that the central bank PHYSICALLY prints and distributes money.
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In order to prevent HYPERINFLATION, The distribution of money printing is mostly a PRIVATE SECTOR function. The reason our monetary system is designed in the way it is is that if the government were the only money printer in town, hyperinflation would happen quickly because the GOVERNMENT is not designed to be EFFICIENT with resources; the government’s main role is supposed to be to protect our liberties, property rights and freedoms.
When the government gets into the business of controlling the DOMESTIC weather patterns, the government instinctively will have a seek and destroy mentally. Now, if let’s say, a local municipality in the U.K wanted to phase out fossil fuels, all fair and good, then that particular region can enact polices that phase out fossil fuel usage, but when the Federal of Government not only declares war on fossil fuels domestically but also locks arms with other nations with similar aspirations, what you get is economic destruction at an alarmingly fast rate.
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Government people are usually not in business, and those politicians who are in business will usually find it difficult to articulate their common sense ideals to people who know NOTHING about how the private sector functions. It’s no surprise to anyone that King Charles III who has been living off the public his entire life, is pro-green agenda, one could argue he’s a WELFARE KING.
When you’re a King, you’re FREE to align yourself with any “progressive” agenda you want WITHOUT consequence. It’s not like King Charles III will have to worry about his standard of living declining, he’s the KING, that demands the public pay all of his bills and supports all of his endeavors, whether or not they agree with them.
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But common sense has to reign supreme somehow, and because humans, which include businesses, tend to VOTE with their feet, many, myself included, have IMAGINED a world in which a smaller FEDERAL government is practiced in more nations. Why I’m making this a relevant point in this post is that I believe in a DIVERSIFIED energy economy and I personally believe a diversified energy economy would allow CLEANER fuels to rise to the top.
Most people already know Nuclear energy works, but because of a lot of existing laws that benefit labor unions, most western countries have allowed manufacturing jobs to be shipped to HOSTILE nations like China. Now, with this war on fossil fuels, what’s actually going to happen is that DOMESTIC energy jobs will be shipped to hostile nations like Iran.
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In the United States, the Biden Administration, which has also declared war on fossil fuels, has been begging Iran, Saudi Arabia, and Venezuela to pump oil for them. This is beyond stupid, BUT… it’s being normalized by modern FEDERAL politicians, and this puts a huge strain on the CENTRAL banks, whose main goal is to PREVENT DEFLATION.
For most people, it’s hard for them to imagine that consumer price inflation creates DEFLATION, but that’s exactly what happens. In Weimar Germany, their hyperinflation created wealth and prosperity in the economy. Instead, it created economic DEFLATION. Higher prices make things LESS affordable, higher prices don’t make things more affordable, this should’ve common sense, but because a lot of people imagine that central banks PRINT MONEY, they associate central banks with power central banks DO NOT have.
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Central banks are mostly a dog and pony show; the central bank is there primarily to keep FEDERAL GOVERNMENT SPENDING in check. I should point out that by government spending, I also include GOVERNMENT REGULATIONS on economic activity. When the central bank is FORCED to raise interest rates, it’s usually a sign the Federal Government’s economic policies are WRONG!
If I’m in business and I know how to turn $1 into $20 I don’t care what the central bank’s interest rates are; in fact, I might not even care what the private bank’s interest rates are; the only thing I’ll care about as a business owner are governments and regulations on PRODUCTIVITY. If let’s say I’m in the oil business, but the government declres war on fossil fuels, I have to price that into my profit margins and RISK.
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If the risk is too great, I’ll stay away from the oil business. If other business people are looking at the oil or fossil fuel business the same way I’m looking at it, the countries wanting to phase out fossil fuels may soon find themselves with a fossil fuel SHORTAGE, even though the consumers are demanding more fossil fuels.
Shortages and deflation work hand in hand, and money is nothing more than a medium of exchange; if business people don’t want your TOXIC money in fear, your money will cause the government to make them public enemy number one; those business people get out of dodge fueling shortages, now to combat SHORTAGE problems, the government then has to INCENTIVIZE people to hoard its currency.
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In the U.K, the pound lost a lot of ground to the U.S dollar, and the Swiss Franc, primarily because of how the Swiss and U.S democracies are structured. Joe Biden’s powers as president are LIMITED in compassion to the powers the Federal government in the U.K has, meaning that U.S States can push back against the U.S Federal government’s agenda, whereas in the U.K, their Federal government yields a lot more ECONOMIC power.
It’s pretty obvious that Austerity is coming; nobody is talking about it now because everyone is waiting for the central banks to reward their FEDERAL GOVERNMENTS with lower interest rates; what I’m arguing is sure central banks can lower interest rates again, but then they’re submitting to inflation and submitting to phasing out DOMESTIC fossil fuel production.
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As you’ll notice, in most western nations that have declared war on fossil fuels, their governments have only one tool to deal with rampant inflation, which is BUY votes. In Canada, as an example, the government continues to DISTRIBUTE money to voters to counteract the consumer price inflation the federal government caused with its carbon tax and other regulations on fossil fuel companies.
One of the reasons Liz Truss is yesterday’s news is that she assumed that she could BUY her way out of recession; Liz Truss, in my opinion, likely stepped down as Prime Minister once she realized that AUSTERITY MEASURES was the only way to stop inflation. Recessions are easy to solve if you can STOMACH the backlash that comes from cutting government spending.
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A lot of people don’t understand that some PRIVATE companies, as well as a lot of individuals, are 100% reliant on government welfare to be profitable or solvent. With fossil fuel companies, however, the OPPOSITE is true; most fossil fuel companies are the main reasons why consumer prices are SO LOW! Without fossil fuels, you don’t have MACHINES or AUTOMATION, so think about what phasing them out means to your standard of living.
Once you grasp that fossil fuels are the main reason for our standard of living, you start to better understand the bind the central banks are in when Federal governments declare war on fossil fuels. Sure the central banks can lower interest rates in this heavily regulated environment; just don’t be surprised that if central banks lower rates in this climate that inflation doesn’t run even hotter.
Bank of England warns of longest recession in 100 years as it raises rates to 3% | theguardian.com
Interesting times ahead!
