..... And Nero fiddled while Rome burned?
..... And Nero fiddled while Rome burned?
GangaPrasad Rao
Energy, Environmental and Mineral Economist
.......So says history, but an evolutionary millennium later, are we any different? We have, across a century of fossil-fuel powered electricity and road-motoring, reduced the very life-giving air we breathe. From a warming greenhouse that melts glaciers, icebergs, even ice-continents, cardiac stress due warmer evenings, climate and urban heat-island-externality-reinforcing indoor air-conditioning, sea-erosion and drowning islands from rising oceans, typhoons and storm surges, the impacts are real and palpable. Why then do we turn a blind eye to an exacerbating disaster? Didn’t the Political we elected delay solar and wind technology decades, and whittle down a carbon tax/permit regime until and eventually it turned a non-binding joke of the century? And what do we have now? A run-away global smokestack economy that has more than doubled atmospheric CO2 concentrations, and at 400+ppm, is at the verge of triggering a Climate disaster, of which the ‘Larsen C’ is, but, merely one portent. If we are indeed intelligent humans, wouldn’t we sit up, and take note? And put in to force a suit of long- and short-run, as well as emergency measures to contain the raging fire that Climate Change is to humanity? Or, shall we, despite decades of investment in education, knowledge, and investment in the next generation and generations ahead, continue to stick our face in the sand and wish away the fire in the air? Why Earth when Mars, heh?
No entity, least of all, a Chennai blogger, can arrest the enlarging Climate externality and put it back on a track to environmental sustainability overnight. But if there is a long-run plan to return the Earth to Climate Sustainability that might however take decades to solve, shouldn’t we, as intelligent humans representing the pinnacle of evolution on Earth and nearby spaces, act early and with foresight, even in emergency mode, to stop an exacerbation of Climate Change, so the long-transition to a carbon-sustainable is not irreversibly derailed by short-run excesses? Human society, with, literally, millions of patents in Renewable technology, Nuclear technology, Biotechnology, Nanotechnology and Space technology, must, with prescience, apply them today to secure the bridge to long-run sustainability – as opposed to buying them away to either shelve and delay, or worse, nix them and thus guarantee a climate disaster. Nero might have fiddled awaiting water to douse the fire, but we seek ways and means to contain the risk of an irreversible exacerbation of the environment – an exacerbation that, potentially, could deny us the benefits of our long-run investments in renewable and nuclear technology. But what can we realize in the immediate- and short-run in our fragmented global societies, that must cooperate even as they compete, for a share of the larger global pie? And do we have the stomach, errr....the allegedly evolved brain for it? What emergency measures could we devise and how, to secure the Earth some breathing time, so our long-run sustainability plans and technological innovations could bear fruit, and return us to environmental sanity? These are questions of immediate import that we must find an early solution to.
The Outlines of a Climate-Desperate Policy
Desperate times call for desperrr.....foresighted, prudent, sagacious, smart and efficient policies! In the context of an impending climate precipice, the intention of a climate-desperate policy would be to delay tripping the Climate Tipping point, and buy time for global and national policies based on innovative technology, to take effect in the long-run and attenuate the externality.
Aggregate annual CO2 emissions from an economy are governed by the identity:
CO2 Emissions = f(Relative Fuel Prices, Technology, Sectoral Shares, Env. Regulations, Trade Regulations, GDP Growth) = CO2/$Fuel * $Fuel/GDP * GDP
Rewriting CO2 Emissions as ‘E’, emissions intensity of production as ‘e’, energy share of production as ‘i’, and GDP as ‘Y’, we have,
E = e*i*Y1
The first ratio on the right, the Emissions-intensity of Energy purchases, reflectsthe carbon-content and environmental characteristics of fuel. It relates tofuel choice – a function of fuel price,technological efficiency, and environmental regulations. The second ratio represents the Energy-Intensity of economic activity, and implicitly, the Sectoral mix of economic activity as determined by relative factorprice-dictated Factor Advantage. Whereas Emissions Intensity of fuel consumption, a short-run intensity of use construct,would vary to the extent of short-run technological, and economic and environmentalsubstitution across fuel types, the Energy-Intensity of GDP – a long-run construct, varies with the overall price of energy relative other factors of production, and its consequent impact upon the Sectoral mix of economic activity2. Thus,
% Emissions Growth = % Change Emissions Intensity + % Change Energy Intensity of GDP + % GDP Growth
Given the first two ratios vary in the short- to long-run; ie, over a period of couple/several years to decades, the imperative to rein-in carbon emissions in the immediate run to avoid triggering the Tipping point,could imply curtailingglobal GDP growth across various nominal economies.
Further, and given ∂E/∂Y, the incremental impact of GDP on CO2 emissions, evaluates to c*i,(equivalently, the CO2-intensiveness of GDP), reducing sectoral economic activities in declining magnitude of the above evaluation, would obtain a (globally) efficient environmental outcome irrespective of whether the redux-activities are at the frontier of the nominal economy, or are infra-marginal.
Energy consumption patterns suggest CO2-emitting fossil fuels are primarily consumed, beyond Surface/Air Transportation, as Electricity and Fossil fuel inputs to Sectoral activity. Thus, one would target emergency CO2 curtailment measures across Transportation and other sectors of the economy by their relative emissions intensity, and their marginal cost of abatement. It is then expedient upon us to construct a market mechanism that naturally follows this criterion to obtain the necessary reductions in emissions, and push back the triggering of the Climate Tipping point.
Capitalists, logically, would reject policies that curtail rents from expansionary nominal economies. In the context of their economic and social relevance, such curtailments must be part of an anticipatory, voluntary, hedged, market-based strategy. The ‘Nominal Political’ – an alliance of political parties, technology providers and Capitalists, that de facto, administers the Nominal economy with implicit participation by the Monetary authority-projects a Potential GDP, PGDP, that implies an expanding basket of Nominal Sectoral Interests, NSIs3, FV-equivalents of NGDP Bonds, at the NGDP Bond market. These Nominal expectationalFV-units of economic activity, issued NGDP Bond market Participants in numbers proportional Bonds held, may be Growth-monetized for Nominal M2dot at the nation’s Central Banker, or ‘Redux-monetized’for Real-Green ‘K2dot’ from multi-lateral institutions such as the UNEP-IMF. K2dot, obtained from redeeming Gold ETFs in the Gold-FX-RoW for a Real-Green globally-validcurrency, would then imbue a purpose the polar opposite of the Nominal economy.Capitalists, endowed with Real Green Capital in lieu of rents from GHG-exacerbating nominal economy, would thenchannel it to climate-sustainable pursuits. Whereas Growth Currency obtains post paying a price for its Indiligence and Unsustainabilities in Gold markets, the Redux Liquidity –‘Hedge-Monetization’4of a fall in Gold prices due attenuation of the Nominal - obtains only upon voluntarily bidding reductions in future economic activity, ie, NSIs, at the UNEP-IMF Redux Reverse auctions. These reductions in economic activity would be bidded by an alliance amongst‘Nominal Political’ regimesglobally, who then re-direct it to activities consistent with environmental sustainability.
Contingent upon the feasibility of issuing such ‘Aural AO Hedge - Nominal OE Liquidity’, the stratagem relies on transferring the less Climate-sustainable and hence less-defensible PGDP activities asredux activity transferred over to, and participated in toReverse NSI Redux auctions.The winners of the Reverse auctions are issued ‘Real-Aural Hedge K2dot Green-Nominal OE Liquidity’Capital Stream as compensation for surrendering (CO2-intensive) nominal activities at the reverse-auctions – the intention being to offer a mechanism that offers, even incentivizes Nominal entities the opportunity and the means to reverse course, attenuate the nominal exacerbation,and pursue sustainable goals with Green Capital. The redux and diversion of CO2-intensive economic activity, and the engendering ofClimate-friendly sustainable investment through an (Economicand Environmental) efficiency-preserving reverse-auction mechanism, facilitates significant, if not immediate and effective control of the expanding Nominal frontier – a primary cause of externality exacerbations.
The Nature of Real Mirror PV – Nominal OE Monetization
Toward this end, consider first an FV-Financial Potto serve as the compensation source for curtailment of Nominal activity. Households worldwide cumulate‘House 6G RoW FV-Family 3G Local PV’ FDs while growing their families around a career. For reasons serving as Collateral for ‘ZS PV Equity’ and ‘Havala FV Revenue PV Bonds’, FDs, that hold on to ‘Principal PV-Interest PV’, issue a polarized ‘Equity Local FV-Social Havala Pareto-Bond ToBe Opportunity PV’, a ‘LQ Havala Local Axe PQ RoW ZS’, and a ‘RevBond Local Nominal Monetary FV Key - FD-FMP-AnnuityReal/Green Fiscal FV Line5’. If the ‘Bond Local Nominal Monetary FV key’ from FDs is cumulated across Banks and deposited as a ‘Sovereign Monetary FV Key Repository’ at the Central Bank that welcomes NSIs as its PV-monetizing complement, and further, if the ‘RoW Real-Green Fiscal FV Line’ is FXZS-Gold-Mirrored across peoples worldwide by an multi-lateral institution such as the UNEP-IMF, to obtain a ‘Global Real-Green Aural FV Key’, then their dichotomized transfers, respectively, to the Nation’s Central Bank and to UNEP-IMF Reverse Auctions, permits for the creation of PV Liquidity of respective designs6, 7. Whereas the set of ‘Real CC-PV Cognizances’, as registered in Gold, and ‘Nominal OpCy-FV Indiligences’ imbued in NSIs, permit the PV-Monetization of ‘RevBond Local Monetary FV Repository’ in to ‘Nominal FV BakeyHasten-Real ReduxLiquidity-Sovereign M2dot-PGDP Expect PV Liquidity’ by the nation’s Central Banker, the ‘FD RoW Real Cause FV-FMP Local Nominal ZS Mirror StrategicOE FV-Annuity Green Fiscal OC FV’ cumulated in to a ‘Global Real-Green Aural FV KeyRepository’,that is aggregated from various Banks, Markets and Insurances, and directed to UNEP-IMF Gold holdings, enlarges the ‘Real Green FV-Nominal OE FV’ imbued in it. This ‘Global Real Cause-Green OC-Nominal Aural OE FV’ may be ‘NSI Expectations OE - Real RoW Social CognizancesOE - PQ Environmental Indiligences OE - LQ Green Mirror OE’ - Monetized in to‘Real Cause FV-Green Capital PV-Sustainability BV’ ‘Aural K2dot’ liquidity. This K2dot Liquidity, essentially PV-Liquidity obtained from OE-Monetizing a strategic ‘Nominal Aural Hedge FV’ through and in magnitude equal depreciation of Gold due nominal redux auctions, may be issued in any Currency that espouses the ‘Real Cause FV-Green Capital PV-Sustainability BV’ purpose).
Given the context of an NGDP Bond-NSI (sub) market, and the UNEP-IMF Reverse Auctions, Nominal Growth M2dotand Nominal-Redux ‘Aural K2dot’ Liquidity obtain as monetizations at intersections that represent equilibria between ‘Real’ and ‘Nominal’ Bids and Offers around NSI/’NSI-Redux’ Supply and Demand. Essentially, the Real Constituency ‘supplies’ NSIs to Nominal Capitalists in the NSI Bond market at incrementally greater appreciation in Gold prices (de facto, the price of nominal expansion) and ‘demands’ them back in the Reverse Redux auctions. The intersections of Real and Nominal Supply/Offerand Demand/Bidcurves obtain equilibrium amounts(Sectoral) Nominal Interests to monetize to Nominal M2dot in expectations of future NGDP growth, andthe equilibrium amount of residual Nominal Interests (against the PGDP baseline) to OE-Monetize to ‘Real Green Aural K2dot-Nominal Redux PV Line’ Liquidity and apply the same to pursueReal Green goals. .
Thesemonetizationsmay be envisaged thus :
NGDP Bond Annex Nominal Sectoral Interests8, NSI [Adamantine Potential Rents FV-Platinum Inefficiency Foo EV-Gold Externality Boo BV-Copper Indiligence (Start) Oo- NGDP Bond Net Return PV]
NSI Adamantine Potential Rent FV Monetize PV--->(Lauvergon Aural Economy OB Threshold-Cost of Nominal Expansion Pgdot) - Central Bank Cognizance-Indiligence Leverage Supra-Aural OC Monetize ‘Political Cycle’ PV Tranche --->‘Sectoral M2dot-’Monetary FV’Liquidity-Nominal Growth Capital ’ ---> Sectoral Growth NSI Auctions;
{NSI OC Capital Subsidy Aural Efficiency PV CC Efficiency 2 Key LQ Dividend Rent PV Nominal M2dot --->Sector Aural Efficiency Pyramid PV Distribute ---> Sectoral Growth NSI Auction Winners} - ZS – {NSI Efficiency AO DivYld Inefficiency Subsidy 2 PV Line--->(Sector DivYld Aural PV Repository)/(DivYld OC Equal Band Merge PV Oo FV key’}9
NSI Externality BV --->SGDP Aural CC Sustainability Line-OC Diligence Upgrade Key
NSI Inefficiency EV --->CC Vibes A - Innovation Sense B
NSI Foo-Boo-Oo Leverage-->Real Nominal Redux Monetize-Nominal OE Monetize---> ‘Nominal PGDP Redux KeyOui-Real Externality Mirror Monetize PV-Aural K2dot-Nominal Redux Capital-PQ Green Liquidity-LQ Nominal Mirror PV ---> Nominal U Real-Green Start;
Real Nominal Potential Redux Bakey-NSI Nominal Axe End ZS-Nominal Monetization Real Axe Bakey---->
a) Nominal OpCy E Real CC Return ---> SGDP Volatility-ZS-FMP Appreciation
b) PQ RoW Aural LQ FX Bakey Return NSI Aural Foo E Returns ---> NGDP DivYld Dividends - Havala RoW Fractal ZS – Insurance Annuity Checks;
c) OpCy Social Capital Return BV-CC Oui Returns EV ---> FD Political Return-ZS-House Democracy Return
Aural K2dot Real ToBe FV ---> Havala Global Society (Sub-aural Egalitarian Distribute)
Aural K2dot Green Lumpsum PV ---> SGDP Sustainability-Recycling Technology-CC Efficiency Technology-PQ See See Technology-LQ E See Technology-OC Externality ‘Internalization’ Technology
Aural K2dot Nominal Social BV (Lag Monetize)---> NSI Nominal Axe End ZS NSI Nominal Axe End ZS Bond ETV Aural Incremental-NSI Icing on the Fake
Aural K2dot Laissez Faire End-Enjoy-EV ---> FD - FMP - Annuities?
Thus, and if one were toconstruct a (descending)CO2-intensity-ranked global, aggregate curve from Nominal activities offered for redux by non-overlapping global sectoralconstituencies, then and given a convex, upward-sloping ‘Sustainability Cause FV’ Nominal NSI Redux Offer (Supply)curve, and a concave, upward-sloping ‘Real Cause FV-Aural Green K2dot BV-NSIRedux PV-NGDPBondEV’ Real NSI Bid (Demand)Curve10, one would obtain from their intersection (Figure), efficient allocationsof redux in sectoral economic activity across global economies, and by implication, optimal CO2 reductions for the year11, 12, 13. Nominal constituencies, voluntarily participating in this strategy,would be issued ‘Real Cause FV-Aural Green Capital PV-Sustainability BV’‘K2dot’ funds (in reality, monetization of Gold hedge upon a depreciation inGold prices that obtain for an attenuation of the Nominal14) against their bidded reductions in Sectoral NSIs15. Compensated with Aural-Green K2dot Redux PV Liquidity for curtailing economic activity in the immediate, Winners in the Reverse auctionsmay apply that capital to fresh, Climate-sustainable economic pursuits globally16.
Thus, and for example, consider a 10%, $200Billion PGDP growth in a $2 Trillion economy. Instead of being monetized as such in to a $2.2 Trillion Nominal economy accompanied by exacerbating nominal externalities that bring the World to the brink of Climate catastrophe, the proposed strategy, instead contractsthe Nominal economy to $1.7Trillion in the immediate run, butengendersthe equivalent of $500 Billion Real Redux Liquidity-based Carbon-free/Green Sustainable economy in the short to long interval. Since surrendered Nominal Sectoral Interests reflect the designs of the Privates and the Political Government, a reduction in nation-specific ‘Political-M2dot Nominal-PV liquidity’ attenuates the Nominal where most harmful environmentally, and least harmful economically17, re-directs the ‘Sustainable-Green-Nominal-redux’ capital globally, and U-turns the world economy toward sustainability18.By slowing, even reversing Nominal expansion, and nurturing a competing, green and sustainable economic paradigm in its opposite, the proposed strategyobtainsus the vital pause in externality exacerbation necessary to implement new green, renewable, and sustainable technologies, push back the Tipping point in time, and thus sustain a growth-reconfigured nominal and real expansion without costing global social and economic turmoil.
Such determination of optimal economic activity and CO2 emissions reductions, permits each sector to voluntarily determine the extent of its participation in globaleconomic attenuation apportioned at the reverse redux auctions. It is to the determination of the incidence of such activity reductions that we turn to next.
Nominal Sectoral Interests – Growth and DivYld Sub-Auctions beyond Monetization.
As indicated earlier, Nominal Sectoral Interests, the FV-Mirror of NGDP Bonds and implicitly, Sectoral PGDP expectations, that are bidded up by NGDP Bond market participants to lay claim to, both, monetary and financial opportunities in the sector, are either growth-monetized in to Nominal M2dotat the Nation’s Central Banker for their ‘Bond Monetary FV’, bidded up by Dividend Yield section of the market for their Fiscal FV, Bond-monetized by the NGDP Administrator toward the issue of new bond tranches, or, Mirror-OE Redux-Monetized at the UNEP-IMF19.
NSIs, offered in Sector Association-conducted Growth-NSI1stround auctions are bidded by growth-seeking sector firms. Winning firms monetize the Monetary FV at the Central Bank in to Fiscal-FV imbued(Sectoral) M2dot and leverage the same as their expansion capital.
Next, the Sector Association, offers the remainder of NSIs to firms that donot participate in the first-round Sectoral-Internal ‘growth auctions’ and which, hence, aredeemed ‘Dividend-Yield’ firms20. The ‘Fiscal FV-NSI Efficiency AODivYld Inefficiency Subsidy 2 PV -ZS-Merge PV Oo FV’-imbued NSIs are offeredthe group of Dividend Yield firms in exchange for a ‘Sector DivYld ETF NAV FVAnnual Appreciationkey’. Sectoral Firms, seeking to pareto-align their futures with the Society21,seekNSIs by bidding ‘Hedged Equity-Appreciation’, HEA22,to the Sector Association at Sector NSI 2ndround Auctions. Volatility-priced HEA help place Bond Fiscal-FV-imbued NSIs amongstthe most growth-assured, if not the fastest growing firms within the sector. Acting as a Group, these firms deal an ETFFV Appreciation key to the Sector Association corresponding to an expected increment in Dividends. The Group alsopermitsas muchNSIs to be re-directed toward voluntary Redux-monetizationas is consistent with NSI Efficiency PV payout, and as is necessary to limit capacity, raise prices, and increment dividends, aware falling short of the bidded Appreciation keywould trigger a Public Volatility Exploit on the ETF when that FV NAV-Appreciationis ‘Failure-hastened’ by the Sector Association23. Thus strategized, Sectoral firms self-segregate in to Growth-seeking, Dividend-seeking and Redux-seeking firms, that together obtain a Sector that is in equilibrium with other sectors, and which grows sustainably in a pareto with the market, the environment,and the society.
As indicated earlier, NSI PV Streams in NSI Sectoral 2ndround auctions are issued in a zero-sum between Efficiency Incentives and Inefficiency ‘Strictures’. Whereas the Efficiency Subsidy favors the less-efficient within the Dividend Yield group, and helps inefficient DivYld firms achieve parity with their more efficient cousins, the Inefficiency ‘Stricture’ in the form of ‘NSI OC DivYld Equal Band-Merge PVOo FV’, isa merger-inducing line distributed by the efficiency of firm operations24. The line incentivizesa more concentrated DivYld sub-sector with firms merged within their efficiency band, and eventually brings about a most efficient, monolithic Dividend Yield (a largely product-undifferentiated) Monopoly that exploits economies of scale and scope.)
The CO2-Virtuous Dividend-Yield Pyramid
The Reverse Auctions obtain optimal assignments of growth, stability,and reductions in Sectoral economic activity across their Growth, Dividend Yield and Redux constituencies in participating sectors. The periodic auctioning of economic activitiesin Reverse Auctions, and their redux, permits for a flexible and immediate means to react to economic opportunities and environmental imperatives. It offers a policy mechanism that facilitates emergency manipulation of aggregate (global) sectoral production toward obtaining acute, yet globally efficientreductions in economic activity and GHG emissions, that, in turn, help defer the triggering of the Climate Tipping point. Over longer periods, the strategy reconstitutes the Nominal paradigm globally in to a) a niche growth sector, b) extremely efficient, socially-conformable and globally-distributed monopolies, and c) a CO2-conserving Green sector, that together, distance the Climate precipice and permit new technologies to reverse the global society back toward sustainability.
CO2 Emissions from Electricity Generation
Consider the response of the Electricity generation Sector to the Reverse Redux Auctions. Offered NSIs from NGDP Bond and Redux K2dot PV from Real Reverse Auctions, the Power generation sector apportions Growth NSIs to new technology entrants who boast higher environmental and economic efficiency, DivYld NSIs to those that don’t mind operating with low returns, low PEs and efficiency-based mergers, and Redux NSIs to entities within that operate either with inefficient technology, and/or with carbon-intensive fuels. Given a relatively inelastic and positive-sloped ‘demand’ curve for CO2 Redux tons, the intersection of the Supply and Demand curvesobtain optimum Generation Redux at the auctions, and the K2dot
CO2 Emissions from Transportation
Tradable Permits, of Tietenberg fame, are one of the most flexible and cost-efficient means to obtain acute reductions in the good/bad being traded. In the context of surface transportation, particularly, personal transportation – a subsector in which decisions are individually/family-motivated as opposed to profit-oriented, one could impose, literally overnight, an Efficiency-based, Jurisdiction-specific, aggregate VMT Cap, that assigns an equal, personal VMT quota to each adult, the aggregate sum of which does not exceed the VMT Cap as ‘volunteered’ by the Jurisdiction Administrator on behalf the Citizen group, (or,as determined in Reverse auctions). Given Motor fleet average fuel economy, FAFE, measured in Km or Miles per litre/gallon, cannot be varied in the short-run, the Administrator of the jurisdiction bids reductions in aggregate VMT, AVMTCAP, as a function of Compensation offered. This aggregate cap is then distributed as per-capita VMT Cap, Pcm, and deemed tradeable.
As shown in Figure 3, optimal reductions in VMT across jurisdictions, to obtain overnight reductions in fuel consumption and emissions, vary with FAFE – (poorer) jurisdictions with lessfuel-efficient fleets willingly accepting more reductions (and obtaining more compensation) than jurisdictions with more efficient fleets. So, apportioned, the Administrator of each jurisdiction sets a jurisdictional aggregate VMT Cap, AVMTCAPj. To efficiently re-distribute the initial and equal VMT allocations, the Administrator permits intra-jurisdictionalVMT trading.Thus empowered, motorists25trade VMT over the year – regardless whether driving private vehicle, or sharing rides. The Redux Compensation obtained by the Administrator in lieu for VMT reductions could be distributed amongstparticipants in the trading scheme by subsidizing theirVMT trades, post-fact. A similar logic applies to passenger air travel, although jurisdictionaldefinitions might need to adapt to realities of inter-jurisdictional air travel.
Freight transport, on the other hand,could be clubbed two-ways: as On-road & Inland Waterway freight transportation, and as Sea-cum-Air Freight services. Reductions in Freight transportation could be bidded at the Reverse Auctions much the same as other sectors. No matter which mode of transportation, the Redux Pay-off obtained from reverse-auctions could either be distributed equally with Activity quota initially, and/orre-distributed as internal trading subsidies post trading.Such trading re-distributes the attenuation infreight volume efficiently, and obtains a sub-pareto for the sector consistent with economic priorities and environmental imperatives.
Are we willing to take this Contrarian’s bet .....Or what choice have we?
The state of the environment today - ambient CO2 concentrations above 400 ppm, exacerbated temperature rise around poles, urban heat islands, bizarre weather events, the shrinking of polar ice caps and glaciers worldwide - all point to an impendingClimate catastrophe – a run-away disaster that initiates with the tripping of the Climate Tipping Point. Long-run policies – whether Innovation and Technology-based, regulatory or policy-incentives, can only obtain environmental efficiency gains over the long-run across decades. Their effectiveness, over that period, however,is compromised by the Income effect and the Rebound Effect, both which act to reverse environmental gains almost entirely, perhaps even worsen the externality. Carbon taxes, and other similar instruments,that act at the margin, are entirely ineffective because they are too insignificant to either alter consumption patterns, or offer credible alternatives. Worse, they have turned revenue-gathering instruments, that, are subject to political winds of change, andperversely, have turned populist Governmentsdependant on their fossil fuel sectors. These factors give the lie to Government efforts directed at mitigatingClimate Change before the tripping irreversible impacts.
This proposal does not claim to solve Climate Change. It answers to a limited context – that of what could be a means to delay tripping the Climate Tipping Point. It is premised on a pessimistic outlook – one in which past anticipations and policy reactions fell short - and not by a mile, and future technological policies and options too late to avert an impending Climate disaster. The proposal re-casts a convention suggestion – that of containing economic growth in the short-run, if efficiently and globally, to push back, and eventually avert tripping the Tipping point, and give humanity a last chance to apply its frontier innovation and technology and save the peoples of our populous nations from the climate backlash of our nominal follies. To reiterate, the proposal constitutes a ‘stop-gap, interim’ monetary-financial emergency climate policy that is incremental to, and complementary with options to resolve the climate externality in the long-run. The policy will necessarily exact its cost on nominal economic growth, tax revenues, trade, subsidies, employment and investment. But, those impacts are attenuated by compensation distributions that could be applied to climate-sustainable pursuits. Those impacts could also be anticipated and attenuated within a macro-political Real-Nominal hedged strategy. By offering Capitalists an opportunity to convert their Nominal return prospects as ‘Aural K2dot’ for turning in unsustainable nominal growth, the strategy ensures voluntary participation by businesses and jurisdictions. Such participation, due the efficiency and voluntary nature of the proposal, obtains a deferment of the Climate Tipping point at minimum cost to the society. So designed and implemented, the society defers the Climate Tipping point at a much lower cost than that associated with aClimate Catastrophe tomorrow.....
Else,........Good Bye Larsen...C U Nero !
1CO2 emissions could be disaggregated in various ways. This decomposition permits easy access to data given CO2, Energy and GDP statistics.
2A fuller exposition would decompose emissions by sector and denominate it against NSIs, ie, CO2 Tons = k(CO2k/$Fuelk * $Fuelk/NSIk * NSIk)
3Nominal Sectoral Interests, NSIs, are sector-disaggregations of prospective NGDP Bonds - Bonds that would be issued with an expanding economy, and which are issued as FV Mirror Complements to purchased NGDP Bonds. Issued as sector-weighted FV-accompaniments to Bonds, they provide an instrument and a mechanism to express and trade upon expectations of sectoral economic activity. As indicators and expectations of incremental economic activity, NSIs imbue, both, future economic activity and a Monetary FV to monetize in to nominal liquidity (and/or future tranches of NGDP Bonds).
4Hedge-monetization refers to the monetization of a ‘Cause FV Repository-Aural AO Hedge’ that is maintained against Gold PV. The FV Hedge, here a Real Green FV Repository, is then PV-hastened through Real and Nominal indiligences recorded in Gold, in to Real, Green PV Liquidity in periods of a slide in Gold prices (such as when environmentally-exacerbating nominal activities are submitted in the reverse auctions for redux). The strategy ensures the creation of ‘Aural Hedge-K2dot’ liquidity against an attenuation of the Nominal, and prospectively, obtains environmental sustainability. In some sense, the creation of such liquidity permits Gold its claim of being a repository of Real PV Cognizances and Nominal FV Indiligences (and thus ensures Gold prices do not appreciate unsustainably).
5The former deriving from ‘FD Family 3G PVFV’, and the latter from the ‘House 6G Mirror FVFV’.
6That is, Nominal Sectoral Interests, NSIs from the NGDP Bond market, may be ‘Growth-PV Monetized’ by hastening the ‘Local Nominal Monetary FV’ at the nation’s Central Banker in to Sovereign Nominal PV Currency (and incremental tranches of NGDP Bonds) toward an expanding economy, or, aggregated globally and FXZS-Gold Mirrored in to ‘Real Green Aural Fiscal FV’, and then ‘FV Redux-Nominal OE PV Monetized’ as ‘Real Green Global Fiscal PV’ at the UNEP-IMF Reverse Auctions to compensate a strategic right-sizing of the global economy.
7For this reason, one’d expect Banks to seek an in-kind return for sharing their FD FV streams. This might extend to seeking negotiated amounts of PV Bonds against monetizations of incremental PV-liquidity, Gold (receipts), or even, an (equivalent) transfer of PV Currency(?).
8Due the PV-FV nature of NGDP Bonds, the PVFV that obtains from them could be decomposed in to ‘PQ 3G Monetary PV’ and ‘LQ 6G Fiscal FV’. Whereas the former may be monetized in to ‘Social Impatience Monetize-Inflation Liquidity’, the latter must be harvested from market transactions, and yields Private Rents FV-Profits PV. Given ‘Bond LQ Fiscal FV’ obtains from multi-sectoral NGDP Bonds, it is pareto with the broader economy; those possessing of it would find it opportune to align their activities to secure that pareto future.
10The concave, upward-sloping Bid (‘demand’) curve for Redux-NSIs deserves an explanation. NSIs offered for redux-nix by Nominal Capitalists in Reverse Auctions are, to Real Auction participants, akin an Inferior Giffen good. One could also argue that the OE-Monetization of UNEP-IMF FD-FMP-Annuity Mirror Aural Capital over to Green Capital, in Reverse NSI Auctions, does not impose any budget constraint on the Real participants, for which reason, they do not display the conventional negative-sloped ‘demand’ curve. (They would, however, worry about the consequences of their demand curve on the price of Gold, Pgdot).
11Such global auctioning and distribution of redux is justified given the Nominal paradigm operates and optimizes across nations, and given CO2 is a global pollutant. However, there could be consequent second-round impacts of such economic redux as aggregate national monetary-, fiscal- and labor sector adjust to economic and environmental opportunities and loopholes.
12These reductions would be incremental to those obtained from CO2-abatement programs already underway.
13One could interpret the strategy as providing a short-run and long-run option to nominal entities. Nominal firms have a choice between adopting short-run, ‘private, strategic, and voluntary’ activity redux-based strategies, and group-shared, involuntary participation in long-run strategies that abate emissions by incentivizing sustainable activities through NSI BV line to SGDP Bonds.
14Redemption of (hedged) Gold holdings post redux of nominal activity would obtain ‘K2dot’ monetary gains imbued with ‘Real Cause FV-Green Capital PV-Sustainability BV’ purpose. That is, depreciating Gold serves as a medium to hedge-monetize a Real-Green FV in to Real-Green Capital PV through the set of Real cognizances recorded in Gold and Nominal indiligences contained in the Nominal activities submitted to the reverse redux auctions.
15It is not inconceivable that ‘Green Capital PV’ be instead issued as unmonetized ‘Real Sustainability FV Bonds’ to auction participants, such as Associations representing sectoral interests at the Sustainability Bond market. These FV-Bonds could serve as Social or Environmental Capital in Nominal firms.
16 Given derived demand nature of electricity and fuel inputs, the bidded reductions in Sectoral activity (and any trading within) would subsequently impact on the volume, nature and source-destination of electricity and fuel supply. Thus, the Power and Fuel Sector need not participate directly in the auctions; however, the redux revenues obtained by the manufacturing and services economy, would, implicitly, be transferred, in part, to Power and fuel suppliers in the long-run to the extent they interrupt long-run, contractual agreements. Incidentally, this strategy obtains revenues to interrupt long contractual PPAs.
17Implicitly, the various national/global constituencies would bid their nominal activities to the auction by order of increasing employment potential and rent, while the UNEP-IMF would re-arrange them in to an intensity (CO2/GDP)-ranked NSI-supply curve. Since, both, the Supply and Demand curves are confidential and strategic, the equilibrium would be determined by auction.
18Nominal Capitalists, now endowed with Green Capital, in turn, supply the same for Real-Sustainable Green pursuits (at a marginal return equal the sum of FD and Aural returns). This strategy permits Capitalists to spread the risk of green investments socially, but obtain supra-aural private returns against an ‘Social Aural Return ZS Family FD Risk’). In effect, Gold sponsors the conversion of NSIs in to Green Capital, and assures Nominal-converted-Green Capitalists supra-aural, (even a supra-nominal?) returns, albeit for enforcing a ‘Gold Sustainability Collateral Lien’ - a hold on Green Capital investments until Sustainability goals are met. Thus, Gold shrinks its own returns (and FD increments its Risk profile) to enlarge the up-front returns to Green Capitalists, but holds the principal and/or the return in lien until the Sustainability purpose is met. (For example, Green Capitalists who turn in NSIs for redux would be issued Anchor Investor shares in Green-Capital constituted firms, albeit for the requirement they hold their investments a decade).
19Note, that redux-monetization at the UNEP-IMF, implies that the NSIs are transferred over to the reverse redux auctions prior submissions to, and at the cost of Nominal Monetization by the Central Banker, and by foregoing the Monetary and Fiscal FV as well as the incremental issue of NGDP bonds.
20As is well-known, Dividend-Yield firms are not evaluated in the equity market for their growth potential. Their share price reflects past and prospective dividends more than other dynamic considerations such as Earnings growth, or reinvested net earnings. Such firms typically trade at a much lower multiple relative growth stocks. The conversion of large swathes of firms in the economy over to the Dividend-Yield umbrella would lower aggregate market multiples and even impact the Monetary Base of the economy.
21NSIs are imbued with, both, Monetary FV and Fiscal FV. Monetization at the Central Bank extracts their Monetary FV, but leaves the Fiscal FV intact. Unmonetized conversion to NGDP Bonds nets out the polar potentials of both FVs for a low-key, balanced resolution. Hence, ZS-Capital firms prefer monetizing the Monetary FV as Sector Liquidity (to either monetizing them at the Central Bank for Nominal currency, or, to the issue of incremental NGDP Bonds), while Sector Associations, as participants in the NGDP Bond market, and EO- and Balance Capital-constituted firms aligned with those Associations, prefer harvesting the (Growth-monetized) Fiscal FV toward long-run social pareto future.
22‘Hedged Equity Appreciation’ is a strategy that permits sector firms to bid for (Fiscal FV-SGDP Pareto) growth-imbued, Sector Association-owned NSIs, by underwriting (lagged) PE-Volatility (Option) in own-firm stock at the Equity markets should the staked growth potential at the sub-auction be not realized (within an year). By forcing a bankruptcy-risking volatility as the open-ended price to pay for failure, the NSI Sectoral Sub-auctions ensure firms bid conservatively for growth they can reasonably achieve (within the sol).
23 The ‘Failure Hastening’ - running up of the ETF NAV to what is consistent with the promised, but unachieved Dividend Yield, would, short of laying a claim on retained earnings of DivYld firms, tap in to the ‘Sector DivYld Aural PV Repository’ to fund the Public Volatility Exploit. The Volatility Exploit dissuades DivYld Group firms from over-promising returns on their stocks.)
24Efficiency could be measured in financial, economic, or environmental terms, or as a weighted index of the three.
25Monitored through such Mobile apps as Google Maps, and as registered in a public VMT database through OTPs.
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