"ESG investing" in its current form is similar to people who take selfies of themselves in fancy locations to show they were there, while barely experiencing it for real.
Mostly theater, little substance.
For example, we pollute, but buy offsets to make it someone else's problem.
We outsource our manufacturing base to another country to reduce headline energy consumption, but then buy products they make while blaming them for polluting.
This is deflection, not reform.
Software companies that build a business around addicting teens to their platform with regular dopamine hits & abuse user data sit atop the ESG investment indices, while fossil fuel producers that keep billions of people alive and comfortable are often excluded as a whole sector.
There's a trend to cut off existing energy production before having viable replacements.
Solar and wind for example, are intermittent. They require grid-scale storage, which doesn't exist in cost-effective form yet. It requires massive copper/nickel/other-metals production.
If you run the math on how much copper, nickel, and other metals the world needs to produce in order to reduce oil/gas/coal usage as a percentage of global energy production, it's far beyond what we can currently produce. And those metals require fossil fuels to dig up.
Politicians score narrative points by making goals to do a certain thing by a certain date, without the technology in place to make it possible.
It's often a bunch of non-engineers making engineering decisions.
And as voters we feel good, despite having done little yet.
We barely know how to recycle wind turbines yet (which are made from petroleum and don't biodegrade), so we just burry them in mass graves.
Wind is renewable but wind turbines are not, yet we pretend they are or simply assume they one day will be. bloomberg.com/news/features/…
We cut existing nuclear production and end up relying more on coal than we otherwise would have.
We overbuild intermittent sources of power production, without proper storage, run into energy shortages, and then act surprised and resort to coal. nber.org/papers/w26598
We rightly condemn human rights violations that China is doing to Uyghurs, but the biggest holding in Vanguard's ESG ETF is Apple, which signs quarter-trillion dollar deals with the CCP: theguardian.com/technology/202…
So people sell their Chinese shares, buy Apple shares instead, and pat themselves on the back.
Meanwhile their phone, computer, chair, sneakers, cookware, electronic devices, and kids' toys are all partly Chinese made.
A lot of it is window dressing.
"ESG" as currently used is corporate, sanitized, and nearly meaningless.
It's like the the word "synergy". It's a TPS report.
It's policymakers vowing to increase taxes on public air travel while excluding the impact on private jets for themselves. That sort of thing.
I'm 100% in favor of environmentalism. We should absolutely prioritize less pollutants going into the air, water, and ground.
And I'm very in favor of diverse boards of directors. A broad background of experiences is beneficial for risk management and growth opportunities.
And a good company over the long run takes care of its employees and clients rather than just emphasizing executives and shareholders.
Nucor outperformed US Steel in large part because it took care of its employees through cycles, realizing how valuable they are.
We should absolutely reward companies that do good, fundamentally. That treat employees and customers well. That maximize environmental efficiency over the long run. That are aware of their limitations and echo chambers and seek diverse expertise to flourish.
It's less about what sector a company is in, and what check boxes they are ticking off, and more about whether they, at the core philosophy of their business, are emphasizing the long-term or the short-term in terms of investment and stakeholders.
Most government and corporate actions are about the next election cycle, the next quarterly report, the next vesting period. Almost all short-term.
Real progress is more about long-term thinking and sustainable designs, not short-term narrative point-scoring and signaling.
If anything, pretending we are doing good to check off certain boxes as perceived by others, while still doing whatever we were doing before, slows real progress.
One of the worst things we can do is to feel like we are doing something constructive, without actually doing so.
• • •
Missing some Tweet in this thread? You can try to
force a refresh
CPI for November came in this morning. Headline numbers continue to bounce around above 3%, while core continues to gradually decrease. 🧵
Some people assume that the end of inflation means prices go down, but instead it just means the rate of change of prices decreases to the target rate.
There's permanently more money in the system, and prices in aggregate are permanently higher.
Currently, China has weak domestic consumption but strong production/exports, the United States has decent consumption but weak production, and Europe's domestic consumption *and* production are weak.
This weakness weighs on energy prices and other materials.
Since the start of 2020, the United States has taken on $10.7 trillion in new public debt (i.e. accumulated deficits).
That's about $80k per household in four years.
Has your household received that much in deficit spending? Some did, but likely not yours.
Some households received hundreds of thousands or even millions in stimulus.
And a sizable chunk of them were wealthy law firm or investment firm owners, or and various rather large business owners (100s of employees) that were not even disrupted by the pandemic/lockdowns.
Some households received indirect deficit expenditure. For example, if your employer received it, it may have positively affected your job.
But most analysis (e.g. see above tweet) showed that most of the money didn't go to that. It instead pooled near the top.
-The Golden Monarch
-Lord "Uncle" Sam
-The Dragon Emperor
-Archmage Nakamoto
🧵
The Golden Monarch economically defeated all opposition and reigned supreme for thousands of years. Now ancient and wise, and having seen the entirety of history, he contemplates his diminishing role in the modern world and wonders if he could have done anything differently.
Lord Sam, usurper of gold, known merely as “the Uncle” to many, sits at the Cantillon Source and wields the mighty dollar. Liberating in his youth, now oppressive in his age. His monetary power reigns supreme but shows increasing signs of decadence, decay, and defiance.
Often I see people assume that with full-reserve banking, there would be no credit.
But full-reserve banking just means that loans are funded by time deposits rather than demand deposits. In other words, there is duration-matching between assets and liabilities. 🧵
In that arrangement, bank customers that need to be able to access their money on demand, get full-reserve liquidity.
Customers that want to earn a yield with risk can put some money into time deposits, which the bank can use to make loans of similar duration or less.
With fractional-reserve banking (which all countries do today), there is a duration mismatch which can lead to liquidity problems.
Demand depositors are told they can withdraw at any time in banking hours, and yet most of their money is loaned out in illiquid loans/securities.
1) published the Bitcoin white paper before he launched it, 2) kept it on track for 2 years with upgrades, 3) disappeared without ever spending his own coins for profit, and 4) had such skill that people can't prove his identity,
is... remarkable.
Literally the Batman vs Bruce Wayne comparison is the only good one here.
Even if Satoshi is the NSA, people should have evidenced it by now.
A man can be killed, embarrassed, or shown to be weak.
An idea lives on and becomes a legend or a god. It's his material that matters.
And Bitcoin was built as an open source decentralized project to survive regardless of who the creator was.
The departure and the absence of the creator only made it *more* decentralized since it removed any sort of ultimate authority, and it iterated from there.