A question to zoom out: Did high energy prices embolden Putin? Are the commodities markets responsible for Russia’s invasion of Ukraine? @rupert_russell’s timely new book 'Price Wars' says: YES. penguinrandomhouse.com/books/622647/p…
2/ Moscow’s military interventions have come at times of historically high oil prices. And right now, energy prices are approaching triple digits for the second time in a decade. Previous highs:
1979 - Afghanistan invasion
2008 - Georgia invasion
2014 - Ukraine "
2022 - Ukraine "
3/ The Oil price - Conflict relationship is not unique to Russia. Russell draws on @cullenhendrix’s discovery that as oil prices increase, oil exporting petrostates are more likely to initiate military conflict. sci-hub.se/https://journa…
4/ High oil prices lead to conflicts because
- Petrostates get WINDFALL of $$ to spend on their military & FX to buffer sanctions
- Limited supply acts as SHIELD from sanctions on oil exports
- In Russia’s case, the GAS WEAPON becomes more potent
- Which combine into CHESTINESS
5/ So High oil prices-> Conflicts. But why volatile oil prices?
2000's Commodity Futures Modernization Act. It created over-the-counter derivatives. Allowed WallSt to make "commodity index funds". Oil,Food,Metals-previously uncorrelated- turned into another volatile asset class.
6/ In effect, the West’s financial centres inflated an oil bubble that in turn, inflated Putin’s chestiness.
⇒ Doesn't mean Putin's brinksmanship is rational
But it informs his sense of confidence. Behind Russia's Nuclear WMD are Wall St Financial WMD willamette.edu/law/resources/…
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MMT on managing inflation with multiple tools
"Whether it's businesses raising profit margins or passing on costs...there are a range of sources of inflation that aren’t caused by the general state of demand & aren’t best regulated by aggr demand policies" ft.com/content/539618…
Balanced critique of Kelton's book "The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy" ht @JWMason1 prospect.org/culture/books/…
Economists who don't pay attention to details of production are not economists. Production of cars, oil and meat was disrupted because they are "just-in-time" and bottlenecks in production or transport (like shipping/ports/trucks) hurt.
Thread
2/ Started the thread here 2 years ago, as it became clear that coronavirus would shock the world economy. The shock of E Asia shutting down was immediate to markets & commodities and our "just-in-time" fossil-fueled systems #CoronavirusImposesCarbonTax
3/ The idea of #CoronavirusImposesCarbonTax thread was to understand structure by exploring how a shock propagates across the world economy. Economists find out in 2021 that bottlenecks caused inflation in sectors of OIL, CARS and MEAT.
Pickens hated Dole & Agribusiness love of Corn ethanol. Told Dole, its a fuel that requires more energy (and oil+subsidies) to produce than it delivers at the pump.
2/Witnessing the disaster in Indonesia in 2015 was devastating. Most ppl outside Midwest don't know that 2007 RFS mandate replaced 10% of each gallon of gas sold in the US with corn ethanol. It was pushed by all major envtl group then. Horrifying impact.
3/ Corn: US's leakiest oil pipeline. Hated by Oil companies, but such is power of Agribusiness.
Fossil fuel goes into tractors & fertilizers & comes out as corn-ethanol, that is put back into....cars, tractors. 10% of every gallon of gas in the US is corn ethanol. Thank Dole.
US defense technocrats will now include Climate in prioritizing threats; in strategies for countering threats; in planning missions of the armed forces; in what weapons to develop and five-year plan for investments that support strategy #GeopoliticsOfGHGs media.defense.gov/2021/Oct/21/20…
gotta love the big nerd brain energy in Pentagon planners.
Guys guys this climate change thing that our scientists are telling us about for 50 years? What if, like, its too hot for planes to take off or, get this, wildfire smoke makes bombing harder? media.defense.gov/2021/Oct/21/20…
Worlds largest oil and gas producers? ✅✅
Military budgets many times larger than green investment? ✅✅
Grains in drought?✅✅
Massive forests going up in smoke? ✅✅
Massive chutzpah to create carbon offsets with said forests? ✅✅ bloomberg.com/news/articles/…
2/“You wouldn’t always know it, but it went up every year I was president. That whole, suddenly America’s like the biggest oil producer & the biggest gas — that was me, people"-@BarackObama
Energy Independence/Dominance is a hell of a drug in both US (green line) & Russia (blue)
3/ Biden's infrastructure bill is now ~$2 Trillion over 10 years. Sounds like a lot right? $200 billion each year. But just about $30B each year is for Climate
US spends ~$750B p.a on the military,25 TIMES more than all climate programs #GeopoliticsOfGHGs