Guest Post: Federal Reserve Carbon Footprint And The End Of Cheap Coal

Submitted by Joaquin Ferrer Benat of Qmunty

Federal Reserve Carbon Footprint And The End Of Cheap Coal

When analyzing the Federal Reserve monetary expansions, pundits only assess economic issues like inflation, balance sheets, bubbles or public debt. Significant as they are, it will be very useful that all this smart people were added to the camp of those who want to “save the planet”. Let me to try pin down it.

On January 27 OTC Derivatives Supervisors Group (ODSG) and major market participants met at the Federal Reserve Bank of New York to discuss how to improve infrastructures and reduce risks in derivatives markets, supporting G20 objectives. They agreed to set out those plans in a letter to the ODSG by March 31.

We will continue to focus on increasing standarization and transparency, as well as the further development and innovation of central clearing facilities to reduce counterparty credit risk. We must continue to advocate for solutions that will extend central clearing benefits to a broader set of participants in a safe and sound manner.

These are the words of Mr. William Dudley of the New York Fed. But before the letter reaches its destination, the President sould take a look at this charts.

Direct relationship between OTC market growth, foreign purchases of US debt and China’s coal consumption is obvious. And of course also between the disorderly monetary expansion cheered by the Fed, american deficits, global imbalances and Asian country CO2 emissions. This chart is enough.

We are in luck, because ODSG wants to support “G20 objectives” and we can read the notes of an attendee of the 2010 G20 meeting. According to the documents, the delegates concluded that a process of fiscal consolidation would be the key solution to the crisis, involving country-specific ideas with central coordination. Although the delegates evidently discussed the need to address the sovereign debt crisis “through cutting expenses and not through increased taxes”, that statement is immediately followed in this attendee’s notes by the idea of introducing carbon taxes.

I have never bought “save the planet” lema, because to save something we need first to find the culprit and the fault. And in this case the matter is really subjective. But now I like it so much, because to reduce carbon footprint G20 wants to tax everybody. But brother, is necessary to see first financial institutions practising what they preach and began to grab the taxes where the root is. OTC markets are the key to reduce carbon emissions and we need more “fiscal consolidation” and “increased transparency” indeed to do it. Otherwise they were watching the straw in the eyes of others, but not the beam in them.

If someone wants to audit the Fed, what will need first is to change the moto and search something banks seems to understand very well: the carbon footprint. And this is a really pretty one: