Shock therapy on the world economy

Shock therapy was the term used to describe the drastic switch from a planned publicly owned economy in the Soviet Union in 1990 to a full-blown capitalist mode of production. It was a disaster for living standards for a decade. Shock doctrine was the term used by Naomi Klein to describe the destruction of public services and the welfare state by governments from the 1980s. Now the major central banks are applying their own ‘shock therapy’ to the world economy, intent on driving up interest rates in order to control inflation, despite the growing evidence that this will lead to a global recession next year.

That’s what they say.  The Federal Reserve board member Chris Waller makes it clear “I am not considering slowing or stopping rate increases due to financial stability concerns.” So even if rising interest rates begin to crack holes in financial institutions and their speculative assets, no matter.  Similarly, Bundesbank chief Nagel is resolute, despite the Eurozone and Germany in particular already slipping into recession: “Interest rates must continue to rise – and significantly so”.  Nagel does not just want higher interest rates; he wants the ECB to cut back on its balance sheet ie not just stop buying government bonds to keep bond yields down but actually to sell bonds, leading to rising yields. 

Nagel goes on: “there is an energy price shock, the effects of which the central bank cannot change much in the short term. However, monetary policy can prevent it from leapfrogging and broadening. In this way, we are cracking the inflation dynamic and bringing the price development to our medium-term target. We have the instruments for this, especially interest rate hikes.”

All this macho talk by central bankers hides the reality.  Hiking interest rates will not work in bringing inflation rates down to target levels without a major slump.  That is because the current 40-year inflation rates have been mainly caused not by ‘excessive demand’ ie spending by households and governments, but ‘insufficient supply’, particularly in food and energy production, but also in wider manufacturing and tech products.  Supply growth has been constrained by low productivity growth in the major economies, by the supply chain blockages in production and transport that emerged during and after the COVID slump and then accelerated by the Russian invasion of Ukraine and economics sanctions imposed by Western states.

Indeed, empirical studies have confirmed that the inflation spiral has been supply-led.  In a new report, the ECB found that even the rise in core inflation, which excludes the supply factors of food and energy, was driven mainly by supply constraints. Persistent supply bottlenecks for industrial goods and input shortages, including shortages of labour due in part to the effects of the coronavirus (COVID-19) pandemic, led to a sharp increase in inflation…Components in the HICP basket that anecdotally are strongly affected by supply disruptions and bottlenecks and components that are strongly affected by the effects of reopening following the pandemic together contributed around half (2.4 percentage points) of HICPX inflation in the euro area in August 2022.”

And in its latest Trade and Development report, UNCTAD reaches a similar conclusion.  UNCTAD reckoned that every percentage point rise in the Fed’s key interest rate would lower economic output in rich countries by 0.5 percent and by 0.8 percent in poor countries over the next three years; and more drastic rises of 2 and 3 percentage points would further depress the “already stalling economic recovery” in emerging economies. In presenting the report, Richard Kozul-Wright, head of the UNCTAD team which prepared it, said: “Do you try to solve a supply-side problem with a demand-side solution? We think that’s a very dangerous approach.”  Exactly. 

Clearly, central banks do not know the causes of rising inflation.  As Fed Chair Jay Powell put it: “We understand better now how little we understand about inflation.”   But it is also an ideological approach by central bankers.  All the talk from them is fear of a wage-price spiral.  So their argument goes that, as workers try to compensate for price rises by negotiating higher wages, that will spark further prices and drive up inflation expectations. 

This theory of inflation was summed up by Martin Wolf, the Keynesian guru of the Financial Times: “What [central bankers] have to do is prevent a wage-price spiral, which would destabilise inflation expectations. Monetary policy must be tight enough to achieve this. In other words, it must create/preserve some slack in the labour market.”  So keep wages from rising and let unemployment rise.  Fed chief Jay Powell reckons that the task of the Fed is “in principle …, by moderating demand, we could … get wages down and then get inflation down without having to slow the economy and have a recession and have unemployment rise materially. So there’s a path to that.” 

As the governor of the Bank of England, Andrew Bailey put it: “I’m not saying nobody gets a pay rise, don’t get me wrong. But what I am saying is, we do need to see restraint in pay bargaining, otherwise it will get out of control”. Or take this statement from leading mainstream macro economist Jason Fulman, “When wages go up that leads prices to go up. If airline fuel or food ingredients go up in price then airlines or restaurants raise their prices. Similarly, if wages for flight attendants or servers go up then they also raise prices. This follows from basic micro & common sense.

But both this ‘basic micro’ and ‘common sense’ are false.  The theory and empirical support for wage cost-push inflation and inflation expectations theory are fallacious.  Marx answered the claim that wage rises lead automatically to price rises some 160 years ago in a debate with trade unionist Thomas Weston who claimed that wage rises were self-defeating as employers would just hike prices and workers would be back to square one.  Marx argued that (Value, Price and Profit) that “a struggle for a rise of wages follows only in the track of previous changes in prices”.  Many other things affect price changes: “the amount of production, the productive powers of labour, the value of money, fluctuations of market prices, different phases of the industrial cycle”.  

Getting wages down is the answer of the central banks.  But wages are not rising as a share of output; on the contrary it is profit share that has been increasing during and since the pandemic. 

And yet, according to the UNCTAD report, between 2020 and 2022 “an estimated 54 percent of the average price increase in the United States non-financial sector was attributable to higher profit margins, compared to only 11 percent in the previous 40 years.”  What has been driving rising inflation has been the cost of raw materials (food and energy in particular) and rising profits, not wages. But there is no talk from central banks about a profit-price spiral.

Indeed, that was another point made by Marx in the debate with Weston: “A general rise in the rate of wages will result in a fall of the general rate of profit, but not affect the prices of commodities.”  That is what really worries central bankers – a fall in profitability.

So central banks plough on with hiking interest rates and switching from quantitative easing (QE) to quantitative tightening (QT).  And they are doing this simultaneously across continents.  This ‘shock therapy’, first employed in the late 1970s by the then US Fed chair Paul Volcker, eventually led to a major global slump in 1980-2.

The way in which central banks are fighting inflation by simultaneously hiking interest rates is also putting massive stress on the global financial system, with actions in advanced economies affecting low-income countries.

What is spreading the impact of rising interest rates on the world economy is the very strong US dollar, up around 11% since the start of the year and – for the first time in two decades – reaching parity with the euro.  The dollar is strong as a safe-haven for cash from inflation, with the US interest rate up and from the impact of sanctions and war in Europe. 

A huge number of major currencies have depreciated against the dollar.  This is disastrous for many poor countries around the world.  Many countries – especially the poorest – cannot borrow in their own currency in the amount or the maturities they desire. Lenders are unwilling to assume the risk of being paid back in these borrowers’ volatile currencies. Instead, these countries usually borrow in dollars, promising to repay their debts in dollars – no matter the exchange rate. Thus, as the dollar becomes stronger relative to other currencies, these repayments become much more expensive in terms of domestic currency.

The Institute of International Finance, recently reported that, “foreign investors have pulled funds out of emerging markets for five straight months in the longest streak of withdrawals on record.” This is crucial investment capital that is flying out of EMs towards ‘safety’. 

Also as the dollar strengthens, imports become expensive (in domestic currency terms), thus forcing firms to reduce their investments or spend more on crucial imports.   The threat of debt default is mounting.

All this because of the attempt of central banks to apply ‘shock therapy’ to rising global inflation.  The reality is that central banks cannot control inflation rates with monetary policy, especially when it is supply-driven.  Rising prices have not been driven by ‘excessive demand’ from consumers for goods and services or by companies investing heavily, or even by uncontrolled government spending.  It’s not demand that is ‘excessive’, but the other side of the price equation, supply, is too weak.  And there, central banks have no traction.  They can hike policy interest rates as much as they deem, but it will have little effect on the supply squeeze, except to make it worse.  That supply squeeze is not just due to production and transport blockages, or the war in Ukraine, but even more so to an underlying long-term decline in the productivity growth of the major economies – and behind that growth in investment and profitability.

Ironically, rising interest rates will squeeze profits.  Already, forecasters have slashed their expectations for third-quarter earnings of big US companies by $34bn over the past three months, with analysts now anticipating the most feeble rise in profits since the depths of the Covid crisis.  They are expecting companies listed on the S&P 500 index to post earnings-per-share growth of 2.6 per cent in the July to September quarter, compared with the same period a year earlier, according to FactSet data. That figure has fallen from 9.8 per cent at the start of July, and if accurate would mark the weakest quarter since the July to September period in 2020, when the economy was still reeling from coronavirus lockdowns.

It’s shock therapy on the global economy but not on inflation.  Once the major economies slip into a slump, inflation will then fall as a result.

26 thoughts on “Shock therapy on the world economy

  1. The federal reserve is forced to allow interest rates to rise because they need to protect the dollar system. If the federal reserve holds down interest rates to stave off recession, which they can’t do under a gold standard, money capitalists will increase their demand for gold and the price of gold will soar. This will lead to dollar-depreciation inflation and potentially a run on the dollar unless the federal reserve allows interest rates to rise even higher to meet the higher demand for gold. A run on the dollar would bring down the foundations of the US empire. Under the contradictions of capitalism, the federal reserve is forced to allow interest rates to rise to the level that meets the supply and demand for gold, triggering a cyclical recession and stimulating gold production otherwise an even deeper crisis than otherwise will occur. This is because money must take the form of commodity (Gold) and can never be a non-commodity (e.g dollars) as Marx explained.

    1. For my part, I object to the suggestion that money has always to be a commodity, the opposite being the better. Simply a counter system.
      Relatively, a commodity serving a money purpose has no value to commodities exchanged. Absolute value, it does. Now, US no longer requires mercantilist remedy, the gold standard. Should gold exit their territory, finished products must enter in exchange and if the population were to be dexterous, such an outflow would unlikely happen, they can retain the gold and product except for surplus. But Americans are turning lazy the reason for china’s being a world Factory.
      Overall, my hint is that bygone is mercantilism and the gold standard, only effort can save the human soul for self reliance.

    2. You’re essentially correct, but it is necessary to highlight here for the rest of the readers that the gold standard (or any other metallic standard) would make the “supply shock” worse, since their production is finite and limited in relation to the rest of the commodities in existence (including here the services).

      That’s why the fiat currency system was created, and why it found its legitimacy in capitalism: it is (many times more) more flexible with amplification of production than any other commodity standard. Therefore, go back to the gold standard or a cryptocurrency standard – as many far-right ideologues propose on the internet – is not an option.

      1. “[…]the gold standard (or any other metallic standard) would make the “supply shock” worse, since their production is finite and limited in relation to the rest of the commodities in existence”.
        False. Since Gold is real money, as explained by Marx, any creation of excess dollars relative to gold will lead to dollar devaluation over the long run. The finiteness of Gold in relation to the production of commodities that you point out is precisely the crises of overproduction that is inherent to the capitalist mode of production. Attempting to overcome this contradiction by creating paper dollars in excess of gold mined and refined only leads to dollar depreciation inflation, interest rates rising higher than otherwise, and an even deeper recession than otherwise. If interest rates rise higher than the average rate of profit, the profit of enterprise will be wiped out since profit consists of interest + profit of enterprise. If profit of enterprise is wiped out, the incentive to produce surplus value by industrial capitalists will be gone and they will convert themselves to money capitalists since hoarding gold would be the most profitable in such a scenario. Capitalism cannot last for long under such a scenario.

        “That’s why the fiat currency system was created, and why it found its legitimacy in capitalism: it is (many times more) more flexible with amplification of production than any other commodity standard.”
        The paper dollar system was created in 1971 because the US empire wanted to overcome the contradictions of capitalism that I outlined above. They thought that they could issue paper dollars to prevent recessions from occurring. Since then, interest rates soared throughout the 1970s, culminating in the early 1980s with the “Volcker Shock” that helped stabilize the currency at the cost of a severe recession and the outsourcing of manufacturing jobs out of the imperialist countries into the 3rd world at a rate not seen in the history of capitalism. The price to pay for the failed experiment of the paper dollar system was the beginning of the decline of the US empire. If by ‘flexible with amplification of production’ you mean outsourcing at a level unheard of in history, then you would be correct. If, however, you mean it is better overall for capitalist production, then nothing could be further from the truth.

        “Therefore, go back to the gold standard or a cryptocurrency standard – as many far-right ideologues propose on the internet – is not an option.”
        If you mean it is impractical to return to a gold standard, then I am hoping you are correct. After all, I would like to see capitalism break down as soon as possible and a paper dollar standard would lead to that outcome far faster than an any form of a gold standard would. If the American bourgeoisie knew what I knew, they would immediately tie the US dollar to gold in order to slow down the further decay of capitalism and preserve their empire for longer than otherwise. So, yes I say. Keep the paper dollar standard. As for far-right ideologues, it is a pity that some of them are correct about the gold standard being a better system and that modern Marxists have largely fallen for the myth that money can be non-commodity. Marxists who actually read Marx should know this is a myth. Instead, many of them have fallen under the influence of Keynes. Until they correct their false Keynesian assumptions, they will be vulnerable to losing against the far-right. They must understand that money cannot be non-commodity!!!

  2. It’s revealing that Furman’s first example to come to mind is air travel. There’s a very clear-cut class division in his argument, as common air travel is the badge of the middle class (the bourgeoisie uses their private jets). He doesn’t accept the worker of the air company to receive any more wage that would harm his middle class privilege to travel by air. This was the same middle class uprising the brought down the Workers’ Party government in Brazil – they often complained to see airports and highways clogged with people and cars, because of the rising purchasing power of the working classes.

    During the Cold War, in order to counter the tide of socialism, the capitalist world had to create a middle class. This middle class gained a class consciousness, which reached its apex during the End of History (1991-2008). This strategy, albeit extremely successful in bringing down the Soviet Union on the ideological front (it convinced Gorbachev capitalism was better than socialism as he clearly had the Scandinavian model in mind with his Perestroika), created structural problems to capitalism, as it cannot survive on the middle class – it needs two classes and two classes only: the capitalist class and the working class.

    As a result of this prolonged middle class societal composition, profit rates fell sharply in the advanced capitalist nations, as they had to specialize in finance and other superfluous services in order to keep their middle class status. This international division of labor resulted, when the next structural crisis of capital came (September 2008), in the generation of a “zombie economy”, i.e. the middle class economy became a zombie economy, the petty bourgeoisie (middle class) becoming zombie capitalists. This process I’ll call here, for purposes of economy of words, zombification, that is, the historical process in which a middle class capitalist economy converts itself into a zombie capitalist economy.

    In order to solve this zombification problem, the advanced capitalist economies will have to mow down their respective middle classes, in order to try to restore at least some of their respective social profit rates. During the pandemic, we saw an attempt to do that on a limited scale, in the USA, where Amazon aggressively expanded and automated its warehouses around the American territory, thus wiping out the suburban petty bourgeoisie; in Europe, this process will be much more complicated, as its petty bourgeoisie is, proportionally, much stronger and much more important politically (the whole “European artisanship” and the “preservation of the European brand” thing).

    1. Spot on, mate. Great parallel here with the 1930’s, when the impoverished middle class turned to fascism in fear of losing their petty privileges and falling back to being proletarians again. We see them now again increasingly embracing the fascist parties election after election across Europe and the US. Fascism was always a middle class phenomenon

      1. It appears the impoverished working class is heading in the same direction. Something very unique in the United States is not just a lack of class consciousness (the sine qua non of class identification and solidarity) but the illusion held by almost everyone except the ruling class that you are all middle class. By peddling the American Dream from cradle to grave, the self identifying middle class in the rust belts suffering from alcoholism, addiction, family violence and suicide blame themselves for their tragic predicament – maybe they just didn’t try hard enough.

        Understandably, they feel disenfranchised by virtue of having no agency in their own daily lives and thereby become ripe for the plucking by reactionary demagoguery. Liberalism is a handmaiden to this process. The huge mass of the white working poor resent being told they are privileged. Mainstream media, television in particular, and movie fare gives them the feeling everyone else is getting a leg up but them.

        Daniel is right about pointing to the historical role of the middle class in the rise of fascism, by and large in the leadership. What about the toughs and shock troops for terror and enforcement who came from ranks of the lumpenproletariat. We are faced with a much larger force lacking even a scintilla of working class consciousness, not as low as Marx’s “social scum or rotting mass”, rather a quasi-lumpenproletariat which by virtue of numbers pose a greater threat.

    2. Yes, this is basically on the right track. But note that the “old” advanced capitalist countries such as Britain and France already had extensive petit bourgeoises prior to the post WW2 era. Others who industrialized somewhat later such as the USA, already had, like France, extensive “pre-industrial” petit-bourgeoisies in the shape of the American settler-farmers (whose Midwestern branch made great consumers) or French well-to-do peasants, both of which were the mass basis of their respective regimes.

      The difference the WW2 post war made was the extension of middle class privilege to sectors of the working class in the so-called advanced countries. This was the ballyhooed “Golden Age of Capitalism” that fell into crisis in the 1970’s. It was this social democratic “experiment” that caused the crisis of profitability in the 1970s; moreover these petit bourgeois social democratic privileges strengthened the social power of the working class in the process of their own social reproduction as a class, meaning capitalist counteroffensives had to go beyond attacks at the point of production, and extend the reaction to society as a whole as comprehensive policy, aka “neo-liberalism”. Which is not “liberal” at all, but is profoundly anti-liberal and anti-democratic and, spilling over from economics into politics, finds its ideal expression in the rise of Far Right and neo-Fascist movements – as mentioned, a mobilization of the non-working class petit bourgeoisie to the side of capital.

      But make no mistake, Far Right “authoritarianism” is where Big Capital is headed, the liberals have already begun the pivot. Hence there is no independent “middle class” class consciousness that is fundamentally different from that of Big Capital. This direct assault by central banking on the working class, probably knowing full well that it will not address the supply-side cause of inflation – indeed it will exacerbate the supply problem if Roberts is correct – is simply fuel that Big Capital adds to the Far Right fire.

      1. Rigorously, both neoliberalism and fascism are liberalisms.

        As Losurdo demonstrated convincingly in his book about liberalism (which I think is also called “Liberalism” in English), liberalism first arose in History as a pro-slavery, anti-serfdom ideology, with all of its consequences and collateral effects (including, of course, colonialism and racism). That’s why, for example, the Confederate elite of the USA compared themselves with Ancient Athens and, therefore, freer than their Unionist counterpart.

        If you think about European History in 1914-1939, what you have is two late colonialist empires – Italy and Germany – in an effort to get into the colonialist game (and, therefore, to revive it, as it was already declining), created an ideology – Fascism – in order to justify and legitimate the revival of the colonial system, where they would both be new players. In this sense, Fascism is a form of paleoliberalism, in the sense that the original liberalism (“classical liberalism”) died with a boom in 1914-1918.

        Neoliberalism can also be thought as either a form of paleoliberalism (i.e. the return of the liberals; the purification of liberalism from its socialist [social-democratic] elements) or, more precisely in my opinion, as a true form of Late Liberalism. That is the case because, contrary to fascism and its modern version, alt-rightism/libertarianism/white supremacism/far-rightism/neofascism, neoliberalism found no significant obstacles to become the dominant doctrine in the capitalist world once it got going in the 1980s. Neoliberalism is definitely a form of liberalism (as the name indicates), but adapted to the reality of their time, where finance was the key and the dominant factor to fight back socialism in the world (led and represented by the Soviet Union).

  3. Although “Shelter” is included in the CPI basket, I haven’t seen much discussion about the inflationary pressure of hefty rent increases following the “Covid freeze”. Rent in Canada’s large cities consume 30% of the ordinary worker’s pay packet. Further, home owners mortgage payments have risen along with the interest rates. Why is this not included in discussions such as the one here?

  4. The Bureau of Economic Analysis, BEA.gov, Table 6.16D, Corporate Profits by Industry, shows profit jumped between Q1 2020 to Q2 2022 from $1.29 trillion to $2.23 trillion, increasing 73%. Personal Income, Table 2.1, the savings rate shot up for 12 months, Q 2 2020 to Q2 2021, it averaged over 19% when the previous ten years it hung out around 7%. Then for 3 quarters it fell to normal range, and the last 2 quarters it’s been at 4.3% and now 3.4%, very low. Presently the savings rate is very low, the profits are very high. What does that mean? The year of maximum savings set up a surge when the Covid emergency lessened, but why has it dropped so far? The home mortgage rates were very low for that year, and now they are edging up to 7%, causing housing prices to fall after surging upwards by 35%. In California the median house was priced at $790,000, curiously. I’m not sure what income can buy a normal house. But housing prices have dipped by maybe 10% since peak. I think about a third of mortgage holders refinanced in the US. over past 2 years. During 2005 to 2007 the savings rate had fallen to 2.9% in 2005, 3.6% in 2006, and 3.3% in 2007. Cutting prices, which by definition is reducing inflation, will not increase sales, and profits, when households are already spending down to the last penny. Perhaps we are looking at a really bad outcome.

    1. When examining the savings rate we should bear in mind it is not a real number but a balancing item needed to equalise the two sides of the T Account the income and expenditure side. That is why a rise in investment is associated with a rise in the saving rate. Also the T accounts do not include the effect of a rise or fall in credit.

    2. In finance, you can account for land price regardless if it is saleable at that price as some kind of income, therefore use it both to put your financial firm back on the black and to use it as leverage.

      The category of use value is still valid here. Only houses that are used for living are houses; houses used for financial speculation are not houses, but financial assets. René Magritte’s famous painting is as true today as it was true in his time.

      Houses/land make good financial assets and are separated from normal inflation calculations because, technically, they are unique (like a work of art): the concept of location makes their prices, ultimately, subjective, as capitalism cannot create space.

  5. “What has been driving rising inflation has been the cost of raw materials (food and energy in particular) and rising profits, not wages.”
    I disagree. Just as it is incorrect to say that wage increases drive inflation (they only change relative prices), it is incorrect to say that profit growth is inflationary. It is that the price of a commodity IS DIVIDED into wages and profits (business profit, interest, rent, etc.). Otherwise, we would fall into A. Smith’s idea that the labor law of value only operates in a simple mercantile economy, but does not operate under the capitalist mode of production. That is, the idea that the price of the commodity is THE SUM of wages and profits. If profits as a share of the product rise, it is simply because wages as a share of the product fall.

  6. “Indeed, that was another point made by Marx in the debate with Weston: “A general rise in the rate of wages will result in a fall of the general rate of profit, but not affect the prices of commodities.” That is what really worries central bankers – a fall in profitability.”

    So, how do you lower wages to increase the rate of profit while maintaining the mystery of who produces the wealth?

    One way is to lower the purchasing power of a unit of currency. If wages are $15/hour in 2020 and $15/hour in 2022 while the price of the commodities labour produces goes up by 14% et voila! The bourgeoisie are putting downward pressure on the price of labour power.

  7. I think what is shocking is how quickly central bankers U-turn when the financial system seizes up. I point to the Bank of England and the Australian Central Bank. In the UK the BOE has intensified its intervention, now £10 billion daily because the contagion has spread to the residential mortgage market and commercial property. Soon the rubber boats will be heading from Britain to France the way things are going.

    But the same processes are in play everywhere. The banking system is based on borrowing short to lend long which is why the inversion between short and long term rates is critical. Also the previous low interest rates necessarily led to a rise in leverage everywhere and not only in London, and not only in the Mortgage sector. All Truss has done is catalyse a process that was well under way. Bless her.

  8. Fall in EPS also masks the factor of share buybacks by major corporations which enhance EPS and the buoyancy of stock markets.In other words every last drop of profit is being taken before the great collapse.Deskilling,austerity and low wages together with price gouging hedge fund speculation have been brought sharply into focus by supply side shortages .

  9. I’m sorry but the imperialist strategy is not just about inflation fighting/attacking the working class. It also includes the war on Russia, a phase in World War III, a hybrid world war to be sure, but world war nonetheless in my best judgment. And like its predecessors it is madness impelled by systemic failure in imperialist world economy, again in my best judgment. The new spoils are to resolve all the dilemmas, they seem to think.

    1. I don’t know that imperialism has a “strategy,” as opposed to a set of needs, compulsions, and inevitabilities “but world war nonetheless”– is absolutely correct.

      1. Strategy in the sense John W. Hinckley had a strategy of winning Jodie Foster’s love by shooting Reagan.

  10. not related to this post, but do you have any data supporting (or disproving) the tendency of the rate of profit to equalize among different sectors as proposed by Marx?

    thanks in advance.

  11. I am impressed with the disruption between the virtual and the real in recent years, for example, there is a lot of talk about the energy problem in the coming years, however no one wonders why there is no investment in the sector to solve the problem.
    The problem is simple, but no one dares to speak up.
    The first world went into paranoia on the energy issue, that is, the European Community for environmental reasons will simply ban in 2035 (or 2030) the production of internal combustion engines, that is, the end of the oil companies is already dated, after this date, which is less than 20 years old, they will start to lose market and profitability at that moment.
    On the other hand, to solve the problem of supply for consumption, investment must be made in researching new oil fields, transport, construction of refineries and distribution.
    No CEO of an oil company will propose investments of this type that, due to environmental restrictions, will be doomed to bankruptcy, that is, within a cost/benefit logic, nothing will be done.
    With that, the market logic will take the price of fossil fuels to the skies.
    The goals of reducing greenhouse gas emissions will be achieved at the cost of more deaths from hunger and misery than from climate change, especially since, together with the increase in fossil fuel prices, there will be a loss of fertilizer production capacity and the consequent decrease in production and increase in food prices.
    The fight against climate change will save millions of deaths from the climate and kill billions from hunger.

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