The ECB Blames Inflation on Climate Change

With consumers shunning electro-mobility, farmers throughout Europe revolting against the “renaturation” laws and decarbonization targets far from being reached, the financial Green Bubble threatens to pop, taking with it the mega-profits hoped for by investors. This has prompted the European Central Bank to sound the alarm. In seeking to persuade governments to finance the bubble nonetheless, ECB officials have come up with the argument of climate change as the main cause for inflation.

Climate change affects price growth and its variability”, ECB executive board member Piero Cipollone stated at a conference in Trent May 27, adding that “Greater availability of renewable energy” would reduce the extent of inflation. “The EU is currently not yet on track to meet its climate targets for 2030 and 2050,” Cipollone complained, citing a report by the Network for Greening the Financial System, the central bank Green Club set up by bankster Mark Carney (cf. SAS 6/20). “These scenarios underline that to achieve the net zero target by 2050 the share of fossil fuels in the EU energy mix must be reduced from around 73% in 2020 to around 20% in 2050.” And to do this requires investing 3.7% of the EU’s GDP per year, i.e. €620 billion.

Fighting inflation with decarbonization is like “quenching thirst with prosciutto”, is how one economist from Rome put it. In reality, inflation is due to the central banks’ monetary policy and not to climate change. By decoupling the financial economy from the physical economy and pumping up financial values with trillions of dollars of cheap money, central banks have created a hyperinflationary potential that is already spilling over into consumer inflation. The ECB now says that the physical economy (which, in their logic, is the cause for climate change), is responsible for inflation.

The expansion of global financial aggregates and overall debt has continued over the past years despite the attempt to drain liquidity through interest rate increases. The so-called “Quantitative Tightening” policy has created almost half a trillion “unrealized losses” in the U.S. banking system alone, but this has been offset by a massive expansion of U.S. government debt, which is now getting out of control. This year it will increase by a net amount of 2.5 trillion – more than the entire government debt of Germany, the third largest economy in the world in GDP terms. To try and contain this expansion and reduce the banks’ unrealized losses, the Treasury announced a buy-back program at the end of May, which is based on the assumption that the newly issued debt will cost less than the old one. In other words, on the assumption that the Fed will cut rates. This, in turn, means that the financial casino, driven by the new liquidity which will be leveraged by financial derivatives, will enter the expansion mode once again, i.e., the gap between the curve of financial aggregates and the real economy (de facto flat) is going to increase.

This, in a system which the ECB itself admits is highly vulnerable and can blow up in a geopolitical crisis.

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