{"id":667,"date":"2013-04-29T08:46:01","date_gmt":"2013-04-29T13:46:01","guid":{"rendered":"https:\/\/allenergyconsulting.com\/blog\/?p=667"},"modified":"2014-10-16T08:51:13","modified_gmt":"2014-10-16T13:51:13","slug":"its-not-the-end-of-the-world-climate-change-quantitative-easing-printing-money","status":"publish","type":"post","link":"https:\/\/allenergyconsulting.com\/blog\/2013\/04\/29\/its-not-the-end-of-the-world-climate-change-quantitative-easing-printing-money\/","title":{"rendered":"It\u2019s not the end of the world \u2013 Climate Change& Quantitative Easing (Printing Money)"},"content":{"rendered":"

I have wanted to write about the similarity between the two most potentially transformative societal issues confronting us, \u00a0Climate Change & Quantitative Easing (AKA Printing Money).\u00a0\u00a0 Of recent the\u00a0latest debacle in a spreadsheet<\/a>\u00a0error by Rogoff and Reinhart in their paper\u00a0\u201cGrowth in a Time of Debt\u201d<\/a>\u00a0has led my writing astray.\u00a0 \u00a0However this issue further substantiates the similarity.\u00a0\u00a0 I am sure my readers know that there was also an issue with climate change data.\u00a0\u00a0 The most famous was the hockey stick graph presented in the IPCC report.\u00a0 The graph originally came from a report done by Michael Mann in the paper\u00a0\u201cNorthern Hemisphere Temperatures During the Past Millennium: Inferences, Uncertainties, and Limitations\u201d.<\/a>\u00a0 (One difference is the climate change titles are much longer than economic papers!)<\/p>\n

Though the recent debacle includes a simple spreadsheet error the\u00a0biggest difference<\/strong>\u00a0from what was reported to what is being challenged by\u00a0Thomas Herndon, Michael Ash, and Robert Pollin<\/a>\u00a0is based on how one treats data and what one excludes or includes.\u00a0\u00a0 Mr. Herndon and team believe since more data was available for other countries they should be weighted more no matter the differences in economy or time period.\u00a0 Many of the same arguments were made to refute the Mann graph.\u00a0\u00a0 In the end, BOTH data sets from Mann and Rogoff can be presented to be less dramatic than what both authors presented.\u00a0\u00a0 However in BOTH cases it does not eliminate the issue that both have presented.\u00a0 In Rogoff case, Mr. Herndon and team state and their own data shows that high debt does not likely lead to better outcomes relative to a lower debt situation.\u00a0\u00a0 The Herndon and team did conclude there is no magic number that leads to a NEGATIVE growth.\u00a0\u00a0 However they do note that growth is much less than it would be when debt levels grow above the 90% level.\u00a0\u00a0 In Mann case, one could argue the graph he presented was on the high-end of uncertainty but the end message no matter what statistical approach you use there is some warming relative to the last 1000 year perhaps just not as dramatic as Mann\u2019s graph.<\/p>\n

We can ignore both the issues just because of some technicalities and potential showmanship or we can pay attention to these both very critical points because they contain\u00a0some<\/strong>\u00a0<\/strong>probability.\u00a0 We can argue to death to the extent of probability, but there is some threshold that action becomes required no matter what.\u00a0\u00a0 I believe we have crossed that threshold a while ago in both issues.\u00a0\u00a0 In terms of actionable items I am not as extreme as some could be since everything is a probable outcome in my mind.\u00a0\u00a0 Actions need to be commensurate with the probability and timing of the impact.\u00a0\u00a0 And both issues probability and timing may change as more information and responses are made.<\/p>\n

Getting back to the discussion of similarity, both are issues that rely on sacrifice of the future for the current state.\u00a0\u00a0 Clearly it is \u201ceasier\u201d and \u201ccheaper\u201d to continue to burn fossil fuel versus transform the economy.\u00a0\u00a0 The consequences may be dire, but they are many years off.\u00a0\u00a0 It is also easier and politically more appealing to increase the money supply driving investments now and have the savers and the future generation deal with the pain later.\u00a0\u00a0 In each case one could argue we don\u2019t really know the future and perhaps even solutions in the future we cannot predict now will come to fruition.\u00a0 However I would attest that is very poor planning.<\/p>\n

There are measures we do each day thinking of the future.\u00a0 Some are simple and have been engrained in society \u2013 such as buckling up.\u00a0\u00a0 We buckle up because it can save our lives.\u00a0\u00a0 The odd of getting into a serious car accident in your lifetime is 30%.\u00a0\u00a0 I am not arguing for you not to buckle up, but to show we do act when probabilities are not as great along as the action can be commensurate with the risk and its probability.\u00a0 I am sure you can find many climate deniers to admit there is a 20-30% probability they are wrong \u2013 of course that means they are 70% confident it is not.\u00a0\u00a0\u00a0 Nonetheless this would argue for action at SOME level if one cared about the future.<\/p>\n

Both climate change and quantitative easing are actions that are not apparent at the moment similar to indulging on funnel cake and other unhealthy foods.\u00a0\u00a0 It feels good now but eventually you will likely get obese and have health issues not worth the gains gathered from the near term enjoyment of sweets.\u00a0 \u00a0In fact, it will typically be better to emit and print money now.\u00a0\u00a0 The ultimate consequence of each of them requires a view over many years if not hundreds of years.<\/p>\n

On the point of obesity, it clearly shows society is not ready for problems requiring long-term thought.\u00a0 Obesity in the US is very high. \u00a0This is a matter of caring about what you eat and the long-term issues involved with your choices.\u00a0 We are a society designed for Carpe-Diem and keeping up with the Jones.\u00a0\u00a0 It may be quite pointless to argue the science of climate change and\/or long-term impacts of quantitative easing when society could really care less.\u00a0 It amazes me to see such low savings in both general and retirement savings.\u00a0\u00a0 So much of society is living on debt.\u00a0\u00a0 By that logic people don\u2019t really focus on the long-term.\u00a0 I can see somewhat the rationale for many religions to eliminate interest charges – usury.\u00a0\u00a0 Most religions are focused on maintaining\/reducing our vices \u2013 e.g. Ten Commandments.\u00a0\u00a0 I think they realize debt living is not healthy.\u00a0 Living on debt makes you feel good in the moment, but any day it can overwhelm you with a change in your life.\u00a0 A humble lifestyle is too easily gone with the ability to borrow money.\u00a0 We cannot solve these two very large issues without changing society to think longer term.\u00a0\u00a0 If people do not care about their own lives and cannot plan even their meals to live healthy, do we really expect them to be able to comprehend and plan for climate change which impacts us significantly in 100 years?<\/p>\n

Climate change to me seems more tangible and more discussed with various opinions across academia compared to quantitative easing.\u00a0 This may be based on my career largely in the energy space.\u00a0 However I do read quite a bit and find much more literature on climate than quantitative easing impacts.\u00a0\u00a0 Climate change certainly seems to have much more historical data with ice core samples thousands of years old.\u00a0\u00a0 The oldest data set Rogoff and Herndon was working with was 1830.\u00a0 Given this I thought I put some graphs up from various recent reports just so you see why I am alarmed with quantitative easing even though the \u201cmarket\u201d is doing well.<\/p>\n

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We are in a world so dependent on debt and fossil fuels.\u00a0 Current trends on climate change and quantitative easing cannot be changed until we change the mindsets of people to think ahead.\u00a0 Planning is gone for Carpe Diem.\u00a0\u00a0 I like the concept to live for the moment, but what if the next moment depends on how you live in this moment.\u00a0 Do you want more moments?\u00a0 We do not live in Hollywood we live in reality.\u00a0\u00a0 Please take care of yourselves \u2013 eat healthy – do not over-extend your finances \u2013 reduce the temptation to keep up with the Jones.<\/p>\n

The world will not end because of climate change and quantitative easing.\u00a0 However the world could be very different and potentially less inhabitable and stable if we don\u2019t start dealing with some of our issues which require thought.\u00a0 The probabilities of significant harm to society may not be significant (+50%) but given the extent of outcomes it does make it worthwhile to do some actions similarly as we buckle up.<\/p>\n

Your very concerned and thoughtful Energy Analyst,<\/p>\n

David K. Bellman<\/a><\/p>\n

614-356-0484<\/p>\n

\u201cWhat is the hardest thing in the world – To think\u201d Ralph Waldo Emerson.<\/p>\n

\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

I have wanted to write about the similarity between the two most potentially transformative societal issues confronting us, \u00a0Climate Change & Quantitative Easing (AKA Printing Money).\u00a0\u00a0 Of recent the\u00a0latest debacle in a spreadsheet\u00a0error by Rogoff and Reinhart in their paper\u00a0\u201cGrowth in a Time of Debt\u201d\u00a0has led my writing astray.\u00a0 \u00a0However this issue further substantiates the […]<\/p>\n","protected":false},"author":1,"featured_media":216,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,3,4,26,6,17],"tags":[157,200,181],"class_list":["post-667","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-market-insights","category-natural-gas","category-ngls","category-oil-petroleum-products","category-power","category-renewables","tag-climate-change","tag-debt","tag-quantitative-easing"],"_links":{"self":[{"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/posts\/667","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/comments?post=667"}],"version-history":[{"count":6,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/posts\/667\/revisions"}],"predecessor-version":[{"id":672,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/posts\/667\/revisions\/672"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/media\/216"}],"wp:attachment":[{"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/media?parent=667"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/categories?post=667"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/tags?post=667"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}