Tuesday, August 9, 2022

Silver Linings: Lower Inflation and Greener Energy?

I get access to a free online version of the Economist Magazine. Unfortunately the free version is not complete. You can't read a whole article. One of the article summaries on 7/27 was titled "The Silver Linings of a Recession: Lower Inflation and Greener Energy are worth the price of a Short Recession."

So my comments here are based on the title without me reading the actual article. 

The title suggests it might be a good thing if policy was aimed at lowering inflation and reducing pollution from oil and gas. It implies that if such a policy were to cause a recession it would be worth it to attain lower inflation and greener energy. 

Interesting. We now have recessions that are not worth it and recessions that are worth it. I thought that recessions were bad but now we have a major policy periodical saying that some recessions are good. I wonder if they talked to the people who will be unemployed or otherwise adversely affected by the recession in coming to this conclusion. 

Who gets negatively affected by a recession? Laid off workers come to mind. What about all those bright and optimistic young people or other people who are new to the job market? Moving in with mom and dad after graduation might not be that great. Stockholders often see declines in their savings during a recession. Companies have to adjust to a recession. Some quit buying new plant and equipment. That hurts plant and equipment providers. Some find their own markets collapsing. They have to figure out how to adjust to that. What do they do with all those unsold goods? 

Recessions never have been and never will be fun. Even if they are short. Of course the article doesn't say how short short is. 

What about the silver lining -- apparently the article believes that a recession will have some really cool impacts. A short recession will reduce the inflation rate and it will somehow make energy greener. 

Will a short recession really do those two wonderful things? Where is the evidence? Maybe the authors have never heard of stagflation. It is quite possible that a recession will come with higher, not lower, inflation. Think about the theory. A recession means unemployed resources. Those unemployed resources quit buying as much. After enough time, the lack of demand finally sends a clear signal to producers that they better lower prices or nobody is going to buy their stuff. 

In today's economic and inflationary environment, how long do you think it will take before producers decide inflation's back has been broken and it's okay for them to start lowering their own prices? How deep or how long a recession will be required to get people to think the worse is over and they can go back to buying? 

My hands are cramping after discussing inflation. The green energy part of this story seems even more ludicrous than the inflation part. So I will leave it to you, my precious readers, to let me know how a quick recession is going to reduce inflation and move the green energy agenda ahead. 



3 comments:

  1. Dear LSD. Schizophrenia defined: “Is a serious mental disorder in which people interpret reality abnormally. When active, its symptoms can include delusions, hallucinations, disorganized speech, trouble with thinking and lack of motivation.”

    “ . . . some recessions are good?” “ . . . a short recession . . . ” OK, might mitigate inflation somewhat, but “ . . . will somehow make energy greener . . . ” ??? W-T-F??? Clearly, Dr. Tuna suggests folkz holding these concepts as “twue” are schizophrenic . . . light-yearz detached from reality. And, certainly, the idiot at the top of the Executive espousing these stooopid ideas has manifested delusions, hallucinations, disorganized speech (can you say, "word salad"?), and trouble with thinking.

    Stooopid is as stooopid does, starts at the top and infectz the bottom. Silver lining my tail.

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    1. It gets crazier every day. Where is Jerry Ford when we need him?

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    2. Jim Gibson
      This is different than the others. Just like full office building and wor at home spaces.

      Many of the green products will do quite well and be good investments . I can write why if asked. Cost of operating is still rising those markets involved will grow to meet demand.

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