To the question: What do global warming and inflation have in common?
The answer is: When it comes to combating them, what science recommends is stubbornly ignored.
© dpaThe fight against climate change cannot move forward with this willful ignorance. We now know that carbon dioxide and methane are the driving forces of global warming. However, according to the Global Energy Monitor, there was a 48.4-gigawatt increase in the world's available coal energy capacity last year. About two-thirds of the new coal plants are located in China.
© imagoAnd the United States, already the leading oil-producing nation, has continued to ramp up its oil production.
Eine Infografik mit dem Titel: Drill, Baby, Drill!
US crude oil production, in barrels per day
As a result, the earth is warming at an accelerated rate.
The same pattern emerges in the fight against inflation. Economists understand how inflation works: when more money is put into circulation than there are goods, resources and services, excess liquidity is created.
This excess liquidity drives up prices and weakens currencies.
© imagoInflation in the U.S. is currently at 3.5 percent, well above the 2 percent target. Core inflation, which excludes energy and food prices, is even higher at 3.8 percent. This raises the question: Will the Federal Reserve cut interest rates this year?
Eine Infografik mit dem Titel: USA: Far Off Target
Annual change in inflation in selected countries, in percent
It is governments, not anonymous forces, that complain about, yet also create the emergency. They are the demons they seek to exorcize. They mandate banks to fight inflation on Sundays, only to borrow additional trillions on the capital markets during the week and inject them into the economy.
© dpaThe monetary policies of banks frequently conflict with the fiscal policies of the government.
Take Italy, for example:
© imagoThe "Superbonus" program allows citizens to cover 110 percent of the cost of improving their home’s energy efficiency through tax credits — essentially a massive tax giveaway.
Italy's debt-to-GDP ratio is 137.3 percent, more than double the 60 percent limit set by the Maastricht Treaty.
Another example is Great Britain:
© imagoIn the U.K., government debt is currently 100 percent of GDP, up from about 35 percent twenty years ago. Debt is growing while real economic growth is stagnant. The International Monetary Fund (IMF) forecasts GDP growth of 0.5 percent for 2024.
Eine Infografik mit dem Titel: The Development of National Debt
Public debt of selected countries incl. IMF forecast for 2029, as a percentage of GDP
And lastly, the U.S.:
© imagoJoe Biden's administration seems intent on buying prosperity and, thus, his re-election. Its global subsidy program, though called the Inflation Reduction Act, has nothing to do with fighting inflation. Instead, the government is lending money to foreign companies to relocate to the United States.
© imagoAs a result of the accelerated pace of U.S. borrowing, seven trillion dollars in new Treasury bonds will be issued in the first quarter of 2024 alone. The IMF projects that U.S. national debt will rise from about $34.5 trillion today to nearly $45 trillion by 2028. It is worth noting that ten years ago, in 2014, the national debt was only $18 trillion.
Eine Infografik mit dem Titel: Biden: Credit Boom
US national debt (including IMF forecasts until 2028), in trillions of US Dollars
This reflects a fiscal policy aimed at boosting the economy and counteracting bank efforts to tighten the money supply. The U.S. must allocate one trillion dollars solely to interest payments, which in turn will contribute to higher inflation rates well beyond the two percent target.
Eine Infografik mit dem Titel: The Cost Surge: Interest Burden in the US
The interest burden on the USA since 1947, in trillions of US Dollars
The U.S. budget deficit poses a “significant risk” to the global economy, the IMF warned.
They said to expect the U.S. to have a deficit of 7.1 percent next year - more than three times the average for other advanced economies.
The U.S., China but also Great Britain and Italy must “finally get the fundamental imbalances between government income and expenditure under control,” according to a report published on Wednesday.
So, what are the positives? Is there any country that is doing well in regards to national debt?
© dpaGermany is the lone exception to this international trend. Here, constitutional debt limits, a debt ruling by the Federal Constitutional Court and a liberal finance minister, who would rather close the floodgates of money than open them, are keeping German debt to a limit.
They are curbing politicians' immediate desires, thereby decelerating the growth of the money supply.
But even so, the similarities between global warming and inflation are hard to ignore.
Germany's pursuit of responsible fiscal and ecological climate policies is often neither followed nor respected by other nations; instead, they are ridiculed and undermined. Consequently, the global fight against inflation is unlikely to benefit from Germany's efforts. And the same goes for the climate.
Decided: The USA launches new funds for Ukraine.
Market Uncertainty: Although there were indications of easing tensions in the Middle East, the direction of the U.S. stock markets remained unclear last week.
Immanuel Kant is the most important philosopher of modern times. Today marks the 300th anniversary of his birth.
Decided: The U.S. is providing new funds to Ukraine. Equivalent to a total of €57 billion. So far, the package has only been passed by the House of Representatives. The necessary approval from the Senate is still pending.
According to the latest figures from the IFW-Kiel's Ukraine Support Tracker (January 15), the U.S. has sent about €68 billion in military, humanitarian and financial aid to Ukraine since the start of the war. With this next package, the U.S. is essentially doubling its monetary support.
But is it enough? Militarily, the aid is unlikely to change the course of the war. Only a quarter of the money goes to direct arms deliveries. In other words, the cash prolongs the battle for Ukraine rather than changing the dynamics.
The funds do, however, demonstrate to Ukraine and Europe that the U.S.'s can be relied upon as a supportive ally – at least for the time being.
And Trump? Just last month, the former president spoke out against further aid to Ukraine. In March, Trump said he would "not spend a penny" on the Ukraine war if re-elected.
© imagoNevertheless, Trump now speaks of an American interest in Ukraine's "survival" and supported House Speaker Mike Johnson in the vote. With an eye on the November elections, Trump cannot afford to make any mistakes. Another Russian advance on Ukraine would jeopardize his chances of re-election.
Now it's your turn: Europe must follow suit or, as Donald Trump asks in his newly acquired tone on Truth Social:
Why can't Europe equalize or match the money put in by the United States of America in order to help a country in desperate need?
Everything must go: Tesla has slashed prices across its fleet due to slowing demand. In Germany, the price of the Model 3 "Highland" has dropped by €2,000 to €40,990.
The company has made similar price adjustments in China and the U.S. In addition, the price of the self-driving assistance software has been reduced by a third from $12,000 to $8,000.
Why? Tesla's vehicle lineup is performing poorly in Europe. An aging product line coupled with increasing competition, particularly from Chinese manufacturer BYD, led to a decline in Tesla's sales in the year's first quarter. For the first time in four years, the company sold fewer cars than a year ago.
According to Bloomberg calculations, China has been particularly challenging, with Tesla's market share shrinking to about 6.7% in the fourth quarter of 2023 from 10.5% in the first three months of the year.
Looking ahead: Tesla will release its first quarter 2024 earnings tomorrow. Analysts are expecting a year-over-year decline in profits. Since the beginning of the year, Tesla's stock has already dropped more than 40%.
The final chapter of the Elon Epoch has yet to be written.
Although there were indications of easing tensions in the Middle East, the direction of the U.S. stock markets remained unclear last week. In particular, tech stocks, including heavyweights such as Nvidia and Amazon, came under renewed selling pressure amid ongoing concerns about interest rates.
The Nasdaq exchange, known for its technology giants, posted its worst performance in two years with a weekly decline of 5.4 percent. This was triggered by a sharp drop in Netflix, which fell more than nine percent despite strong quarterly earnings after the company announced a disappointing outlook for the future. Nvidia fell by almost eight percent, Amazon and Apple by over six percent and Meta by nearly seven percent.
© imagoMicrosoft was also hit by profit-taking, falling 5.5 percent.
Interest rate worries dominate: Uncertainty on the markets is largely influenced by the US Federal Reserve's interest rate policy. The latest economic data from the US, such as retail sales and the labor market, show no signs of an imminent interest rate cut.
Outlook and market sentiment: Investor confidence in the markets is being overshadowed by a toxic mix of concerns over interest rates and war.
Monday:
German President Frank-Walter Steinmeier begins his official visit to Turkey. The occasion: the 100th anniversary of the establishment of diplomatic relations.
The peace research institute Sipri sheds light on global military spending over the past year in a new report.
Quarterly figures from: Cadence Design Systems, Sandvik, SAP, Verizon.
Tuesday:
The Federal Constitutional Court starts deliberations on the electoral reform proposed by the current government.
Trial against AfD politician Björn Höcke continues: Thuringian AfD chairman used the banned slogan of the Brownshirts, Hitler’s paramilitary forces, in two speeches.
Quarterly figures from: Deutsche Börse, Enphase Energy, General Motors, Kühne + Nagel, PepsiCo, Tesla, UPS, Visa.
Wednesday:
Ifo’s Business Climate Index for April will provide information on future market and economic development.
Amnesty International publishes an annual report on the current global human rights situation.
German President Frank-Walter Steinmeier concludes his official visit to Turkey.
Quarterly figures from: AT&T, Boeing, Canon, Ford Motor, Hilton, IBM, Meta Platforms.
Thursday:
The European Central Bank publishes its economic report.
German Chancellor Olaf Scholz visits the Federal Criminal Police Office.
Friday:
Chancellor Scholz receives the Secretary General of NATO, Jens Stoltenberg.
Immanuel Kant is the most influential philosopher of modern times. Today would be his 300th birthday.
He was born and also died in Königsberg, which he rarely left throughout his life. His geographical radius may have been limited, but his thinking knew no bounds. He researched and wrote about natural science, metaphysics, ethics, aesthetics, law, religion, astronomy and history.
"Sapere Aude" - dare to know - is Kant's answer to the question: What is enlightenment? He burdens the modern individual with the duty of self-empowerment while freeing him from the shackles of his own immaturity.
© imagoKant doesn't view humanity through the lenses of biology, sociology, or history. Instead, he sees humanity primarily through a moral dimension.
© X/omri_boehmIn his book "Radical Universalism," which recently won the Leipzig Book Prize for European Understanding, philosopher Omri Boehm reinterprets Kant's legacy:
What makes people human is not a natural attribute, but their freedom to follow moral laws.
On the 300th anniversary of Kant's birth, we celebrate the dawn of the world we live in today. But this anniversary is also a reminder that freedom of speech, democracy, and especially academic freedom are under pressure worldwide.
Therefore, Immanuel Kant's legacy is not secure. It is not a matter of praying but rather of fighting for him.
Wishing you a wonderful start to your week. Stay informed. Stay with me.
Best wishes,