Governance

Joshua Schwartz and Sabrina Arias write that although Congress seems unable to act, enough states, cities and counties are mobilizing to make a dent in U.S. carbon emissions. The states, cities, counties, and towns that have committed themselves to upholding the Paris agreement currently release a majority of U.S. carbon emissions. If they do manage to meet their targets, they can make a meaningful difference.

Professor Joseph Aldy says the incoming U.S. administration can breathe new life into global efforts against climate change, but faces daunting political and economic obstacles.

President-elect Joe Biden’s decision to create a new cabinet-level position for climate-related issues — and to choose so prominent a figure as former Secretary of State John Kerry to fill it — demonstrates Biden’s sincerity over putting climate at the very center of U.S. foreign policy. It is easy to understate the importance of this appointment, given the flurry of czars created by most new administrations.

Today’s economic crisis leaves us with an unsettling and perplexing regret. Why weren’t financial portfolios already adjusted for risks that stem from health events such as pandemics? After all, financial portfolios are adjusted for liquidity risks, market risks, credit risks, and even operational and political risks.

Events like the COVID-19 pandemic of 2020, the US housing crash of 2007-09, and the terrorist attack of September 11, 2001, are called “black swans”: in each case, few people were able to predict them reliably, at least not with precision.  But they were known unknowns, not unknown unknowns.  That is, in each case, knowledgeable analysts were fully aware that such a thing could happen, even that it was likely to happen eventually.  They could not predict that the event would happen with high probability in any given year.  But the consequences of each of these events were severe, and predictably so.  Thus, policymakers should have listened to the warnings and should have taken steps in advance. They could have helped avert or mitigate disaster if they had done so.

Could using the cash in your pocket have the potential to spread covid-19? That question has rarely appeared in the news, but many governments and leaders in the digital payments industry are wondering how the virus might impact the use of cash. Several countries have already taken drastic measures to limit circulation of bank notes. Could such interventions lead to the end of cash payments?

Because hand-to-hand exchange of physical currency could transmit the coronavirus, countries around the world are being forced to reconsider the use of cash. In fact, COVID-19 might turn out to be the catalyst that finally brings digital payments fully into the mainstream. Not surprisingly, the digital-payments industry is already focusing on the opportunities created by the crisis.

A century ago, the gold standard was considered a guarantor of monetary stability.  That golden era is long-gone.  (If it ever really existed at all.  The general price level fell 53% in US and 45% in the UK during 1873-1896 due to a dearth of gold deposit discoveries.)

Continuing my thoughts on the Fed candidacy of Stephen Moore: he has said several times that he favors a return to gold.  In true Trumpian fashion, he recently denied having said it despite the clear video evidence.

US President Donald Trump’s intended nominee for the US Federal Reserve Board, Stephen Moore, may end up doing whatever Trump wants, instead of what is best for the economy. Moore’s views on the Fed’s interest-rate policy, and his support for returning America to a gold standard, are disturbing.