2043. The Fed and Climate change

gets the facts righter than most.

www.frbsf.org/economic-research/publications/economic-letter/2019/march/climate-change-and-federal-reserve/

But there is some waffling.

“While the effects and risks of climate change are relevant factors for the Fed to consider, the Fed is not in a position to use monetary policy actively to foster a transition to a low-carbon economy. Supporting environmental sustainability and limiting climate change are not directly included in the Fed’s statutory mandate of price stability and full employment.”

 Clearly the facts would indicate lots of impact on employment. The whole social reaction to climate will have major impacts on price and employment. Why this dodge?

Another dodge in the papaer is to stick with the proposal for carbon tax. Carbon tax, if I am correct, is a way of keeping things from changing.

The producer is charged for extraction, the producer adds that additional cost to the price. The consumers are compensated by the government for increased costs (otherwise the burden falls on the poor). Thereby the consumer can afford the same amount of energy as they used before. And will. Hence no net change in the amount of energy used.

“there are also transition risks associated with the adjustment to a low-carbon to a low-carbon economy, such as the unexpected losses in the value of assets or companies that depend on fossil fuels such as the unexpected losses in the value of assets or companies that depend on fossil fuels.”

To my mind all companies fit into that category. For example. For example their workers commute and come to buildings that are heated or air-conditioned. The Fed is not drawing conclusions from its own analysis.

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