E Negative Rates, Climate Science And A Fed Warning

Jerome Powell recently warned Congress that US debt is exceeding economic growth. He reported that this trajectory is unsustainable. This comes on the heels of a letter issued by climate scientists seeking less economic growth.

Climate Science Goals

11 thousand scientists have signed a letter calling for the decline of growth in world economies. They want a reduction of GDP throughout the entire world. From the letter:

To secure a sustainable future, we must change how we live, in ways that improve the vital signs summarized by our graphs. Economic and population growth are among the most important drivers of increases in CO2 emissions from fossil fuel combustion (Pachauri et al. 2014, Bongaarts and O’Neill 2018); therefore, we need bold and drastic transformations regarding economic and population policies. 

Negative per capita growth seems to be the goal of these scientists. It is, hopefully, not likely that scientists will get their way.

But in case people may latch onto the Utopian economic goal they have, we have an example of declining per capita growth in Japan resulting from economic issues in the past.

Japan in Crisis As Per Capita Income Declines

Shifting goals from GDP growth is certain to cause big economic problems. Japan is just one nation, but it is an example of what could happen to the world if science gets its way. Japan, a nation that is experiencing population decline, is being buried in debt and forced to invest in nations that are growing. Japanese banks are often making reckless bets in Unicorns like the one Softbank made in WeWorks. Japan's GDP is growing, but per capita income is not.

From the Japan Times we see an article explaining Japan's decline:

In fact, Japan’s per capita income measured by purchasing power parity declined to about 70 percent of the U.S. level in 2013, while in 1990 it had been about 80 percent of the U.S. level. 

Japan's Purchasing Power Parity (PPP), has been declining for years:

(Click on image to enlarge)

The Japanese had the highest per capita income in the world in the 1970s:

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Disclosure: I have no financial interest in any companies or industries mentioned. I am not an investment counselor nor am I an attorney so my views are not to be considered investment ...

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Gary Anderson 2 weeks ago Author's comment

Update: Environmental groups are protesting black Friday because they believe that consumerism is destroying our planet. Economists must make these people aware of the economic dangers of the reduction of GDP that climate scientists are promoting. This is a warning to the business community to wake up!