The policy of U.S. and European governments since the September 2019 “repo crisis” and the March 2020 spread of the COVID pandemic has been dictated by the biggest central banks and by City of London, Wall Street and Frankfurt banks and investment funds. It has been to combine hyperinflationary money-printing for those banks and new government debt for “pandemic relief” programs; with incentives and pressure for the “shift of trillions” into a “green finance” wind and solar investment bubble. Despite economic collapse and large-scale unemployment, it has excluded investment in new productive infrastructure and productive employment, while applying the label “infrastructure” only to replacing reliable nuclear and fossil fuel power technologies with unreliable throwback “renewables.”This “net-zero carbon” policy is fundamentally Malthusian. After two years pushed “from the top,” it is now triggering physical-economic breakdowns in just those economies needed to provide capital goods to rebuild the shattered economies of Afghanistan after war and Haiti after neglect and natural catastrophe. The European economies have been hit this summer and early fall by a doubling of the price of natural gas, which is still rising fast despite increasing purchases from Russia’s Gazprom. It passed $26/million Btu at Amsterdam Sept. 27, rising another 11% for the day. The spiking price is shutting down supplies of CO₂ which slaughterhouses and food processors need, among others; and shutting down fertilizer plants. The natural gas price in Asia (from LNG) is even higher. In the U.K., the natural gas price has quadrupled in 2021. The retail suppliers of power and energy are shutting down. Wholesale and retail gasoline/petrol stations are shutting down; BP, for example, acknowledged that 370 of its 1,200 sites in Britain were closed because they were out of fuel over this weekend. Britain and some other European countries which have closed down coal power plants are now trying to reopen them. But the price of coal—ordered stranded, “left in the ground” and forgotten by the green financiers led by Mark Carney and Sir Mike Bloomberg—has risen by 65-100% in Europe and Asia this year. Thus China, whose industrial production and exports have been growing rapidly, has suddenly had to order electric power shutoffs to electricity-intensive businesses in aluminum, chemical fibers, textiles, etc; and this week, to households as well. In the United States, nationwide freight transportation is breaking down. Well over 100 container ships, from the large to the huge, have now been waiting off the West Coast ports for up to a month, unable to unload. Once finally in port, turn-around time for one of these ships now averages six days. The third stage of blockage is in the railyards around the ports, where the average storage time for containers unloaded from the ships ranges from 6-16 days depending on the port. This is usually just the delay before a short-distance rail transport to a “railhead” or warehousing center for truck loading, since the great majority of freight still moves long distance by truck. Because of frenetic money printing of the Federal Reserve and borrowing by the Treasury, consumer goods either produced or final-assembled in China have been bought in huge quantities by Americans, whose disposable income has actually risen during an economic collapse. This has overloaded the inadequate rail and port infrastructure to cause these breakdowns, which in turn have caused shortages of everything from lumber to auto parts to machine tools to consumer goods, and thus further inflation. Bloomberg on Sept. 26 quoted a Hapag-Lloyd shipping executive that this breakdown condition will last “at least through the end of the year.” The international shortage of semiconductor chips is projected to last at least until the end of next year, 2022, and is still worsening. The clearest sign is that U.S. new car sales have dropped from recent normal of 16-17 million/year, to 12 million projected in 2021 due to the lack of new cars to sell, and sharp inflation in price of used cars. The hyperinflationary pressures and shortages will continue, and worsen, until enough citizens in these “advanced” nations wake up to the truth that “green” policies are rushing toward a Malthusian reduction of the human population. The solution, refused for so long, is new missions for productive employment, infrastructural and economic development of underdeveloped nations. Afghanistan must be rebuilt; Haiti must urgently be developed. That is the Schiller Institute’s strategy.
