Renewable Faith

Testing mankind's eternal belief in fake money, green energy and political hubris...

(Source: Getty Images)

Bill Bonner, reckoning today from Paris, France...

The West became very rich by ‘printing’ money to buy many more consumer goods than the value of the output made warranted. But that ability to ‘print’ arose from unique circumstances of low inflation - that was, in turn, enabled by cheap exports coming from Russia and China.     

Naturally, the West crucially doesn’t want the low inflation paradigm to end, but in this conflicted era where commodities, factories, and fleets of ships are dominated by states (Russia and China) that are in conflict with the West, the low inflation world has reached its end.

~ Alistair Crooke

Thoughts, like viruses, pass from person to person; some succumb, some recover, some are barely affected at all. And then, when enough people get the bug, they are likely to do something crazy. Not just individually, but collectively. 

In the 13th century, the Christian ‘West’ allowed as many as 60,000 of its children to embark on a suicidal crusade to the Holy Lands. The idea – according to traditional accounts – was that two groups… one from France and the other from Germany… would march to the Mediterranean (begging for food along the way)  and there, with the Grace of God upon them, the sea would part. We can imagine their disappointment when the water failed to cooperate.

What happened next is subject to dispute. But it was long believed that many were loaded onto ships and sold in the slave markets of North Africa.

You will say: ‘what morons!’ But was the Childrens’ Crusade so much more benighted than today’s great campaigns? After all, the Moors in the Holy Land represented a ‘clear and present’ danger to Christendom’s most sacred sites. And the children; perhaps innocence would succeed where hardened warriors had failed?  

Solar Fossil Fuel

History is festooned with such wild tales. The purge of protestants from France… the purge of Jews from Europe…the purge of muslims from India and Armenians from Anatolia – all were bloody disasters, and most were catastrophes for the perps as well as the victims. They left millions of corpses… millions of refugees… broken families, broken countries and broken societies.

And now, ‘western’ civilization undertakes its most ambitious purges ever – to bleed out racism, sexism and inequality… (it has apparently given up the fight against poverty and drugs)…

…and to rid the world of fossil fuel. Janet Yellen, America’s Treasury Secretary, and former head of the Fed, will take up this last challenge today. The Hill:

Yellen will vow to ‘rid’ US from ‘dependence on fossil fuels’ in Detroit speech     

Treasury Secretary Janet Yellen will call out the fossil fuel industry in a Thursday speech on the Biden administration’s economic agenda to be delivered in Detroit, Mich., where oil and gas companies have long held influence in the U.S. auto manufacturing sector.  The visit to Detroit comes on the heels of the Democrats’ passage of the Inflation Reduction Act (IRA), which includes $14.2 billion worth of subsidies for electric vehicles meant to wean the auto industry off of gasoline in an effort to reduce U.S. transportation emissions that are contributing to a rise in global temperatures. 

As they say on TV: ‘what could go wrong?’

We don’t know. But if 15% of our power is generated, as claimed, from “renewable” sources, that means that 6.8 billion people depend 100% on the energy from the sun, condensed over millions of years into ‘fossil’ fuels. And while governments have encouraged the use of more ‘green energy’ – putting up windmills all over Europe – most of the energy in the Old World still comes from oil, gas and coal.      

So, with that as prologue, let’s look at what is already going wrong, right now, in Europe.

Childlike Faith

First, most Old World countries went with childlike faith for the ‘lockdown strategy’ when the Covid hit. It was obvious from the early reports coming from Italy in February 2020, that lockdowns were unnecessary. The disease targeted the old and the weak – not the general population. The average age of death from Covid was little different from the average age of death without the Covid. In other words, it posed a considerable risk to some people, but little to most people.

These initial findings were confirmed two years later, when the ultimate infection and death rates were little different between those countries (or US states) with strict lockdowns… and those that were more relaxed about it. Lockdowns produced nothing but inconvenience and financial losses. 

And those collateral damages are piling up. Look at how our children (the ones who were never at risk from the Covid) pay the cost. Here’s just one that came to our ‘inbox’ yesterday. The World Bank:

This generation of students now risks losing $17 trillion in lifetime earnings in present value, or about 14 percent of today’s global GDP, as a result of COVID-19 pandemic-related school closures, according to a new report published today by the World Bank, UNESCO, and UNICEF. The new projection reveals that the impact is more severe than previously thought, and far exceeds the $10 trillion estimates released in 2020. 

Years before the Covid, European economies were already deeply infected with central bank jackassery. Interest rates went below zero in Denmark in 2012… and then, the European Central Bank (ECB) followed.

Three-Legged Race

Even now, with double digit inflation in many places in Europe, ECB interest rates have only just risen – to zero! The inflation rate in Estonia is 23%. Europe-wide it is 9.8%. This leaves the ECB real rate at nearly MINUS 10% (in the US, the Fed Funds rate subtracted from the CPI gives us a real rate of MINUS 6%).

Like Americans, Europeans only have two feet. But they found a way to shoot themselves in a third one. When the Russo-Ukrainian conflict broke out, they could have gone either way… or sensibly ignored the whole thing. Instead, they chose to make an enemy out of the country that delivers their fuel. Along with their fellow naifs in America, they sent money and weapons to the Ukraine and applied sanctions to Russia.

Joe Biden led off the madness when – by Executive Order! – he banned the importation of Russian energy into the United States. Then, Europeans jumped into that woebegone crusade with all three feet. They could not ban Russian energy; they needed it. Instead, they joined US sanctions against all manner of Russian goods and services… and seized Russian assets – even the yachts and chic apartments of Russia’s oligarchs – while hoping that the gas would keep coming. ‘Russia needs the money,’ they said to themselves.

But last week, the Russians said ‘nyet.’ Playtime is over. No more gas.

What’s next? Stay tuned…

Regards,

Bill Bonner