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@adam_tooze:person {full_name: "Adam Tooze", role: "Economic historian, author of the Chartbook series"}
@jake_sullivan:person {full_name: "Jake Sullivan", role: "U.S. National Security Advisor"}
@john_paul_koning:person {full_name: "John Paul Koning", role: "Twitter analyst"}
@ajmal_ahmady:person {full_name: "Ajmal Ahmady", role: "Former Governor of Da Afghanistan Bank"}
@zabihullah_mujahid:person {full_name: "Zabihullah Mujahid", role: "Taliban spokesperson"}
@nick_mulder:person {full_name: "Nick Mulder", role: "Historian, author of *Sanctions: A History*"}
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@trade_deficit_2020:concept {description: "Afghanistan’s 2020 trade deficit of $5.69 bn"}
@foreign_aid:concept {description: "Aid flows that financed Afghanistan’s budget and import bill"}
@currency_depreciation:concept {description: "Fall in the value of the Afghani against the dollar"}
@inflation:concept {description: "General rise in price levels"}
@price_index:concept {description: "Statistical measure of inflation"}
@price_controls:concept {description: "Government measures to cap prices"}
@capital_controls:concept {description: "Restrictions on capital flows"}
@remittances:concept {description: "Money sent home by the Afghan diaspora"}
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@sudden_stop:concept {description: "Abrupt halt of external financing"}
@neo_keynesian:concept {description: "Contemporary school of Keynesian economics"}
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@oil_price:concept {description: "World price of crude oil"}
@chartbook_35:document {title: "Chartbook #35 – It's not the fall that kills you …", creator: @adam_tooze, date: @date_2021_08_28}
@chartbook_42:document {title: "Chartbook #42 – The Great Inflation Debate", creator: @adam_tooze, date: @date_2021_10_05}
@chartbook_32:document {title: "Chartbook #32 – Biden's foreign policy for the middle class, climate and OPEC", creator: @adam_tooze, date: @date_2021_08_14}
@sanctions_history_book:document {title: "Sanctions: A History", author: @nick_mulder, publisher: "Yale University Press"}
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@adam_tooze -> authored -> @chartbook_35
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@chartbook_35 -> discusses -> @afghanistan {topic: "political, humanitarian and economic crises"}
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@chartbook_35 -> mentions -> @g7
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@john_paul_koning -> tweeted_about -> @gold {content: "Afghanistan's central bank holds 703,005 ounces of gold at the Federal Reserve"}
@ajmal_ahmady -> tweeted_about -> @afghanistan_bank {content: "International reserves are held abroad; US dollars are frozen"}
@ajmal_ahmady -> predicted -> @currency_depreciation {probability: "high"}
@ajmal_ahmady -> predicted -> @inflation {reason: "limited dollar access"}
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<p>A lecture in which I tried to pull together some thoughts about history and critical macrofinance. </p><div id="youtube2-36bfqHZtSiU" class="youtube-wrap" data-attrs="{"videoId":"36bfqHZtSiU","startTime":"279s","endTime":null}" data-component-name="Youtube2ToDOM"><div class="youtube-inner"><iframe src="https://www.youtube-nocookie.com/embed/36bfqHZtSiU?start=279s&rel=0&autoplay=0&showinfo=0&enablejsapi=0" frameborder="0" loading="lazy" gesture="media" allow="autoplay; fullscreen" allowautoplay="true" allowfullscreen="true" width="728" height="409"></iframe></div></div><p>For purpose of reference, I have excerpted the text portion of my slides below. The result is a rather stenographic presentation. But it may make it easier to follow:</p><p>Slide 1:</p><p>It makes sense to link financial crises and broader historical transformations.</p><p>Money and finances are crucial instruments of power in the most general sense i.e. the capacity to make things happen. </p><p>But, more than that, they are also symbolic orders, orders of authority, orders of trust, of mutual obligation. </p><p>Devaluations and bankruptcies are a rupture of that order. They are threatening to the status quo and open the door to transformation. </p><p>They are also practically significant in changing what we can and cannot do. </p><p>Slide 2</p><p>Back at least to the 17th century - prototypically in the great 18th century revolutions = public debt crises were the products of wars. </p><p>They generated political confrontations up to and including revolution. </p><p>Not for nothing, Kant included a limitation of public debt as part of the conditions of his Perpetual Peace. </p><p>Slide 3</p><p>Financial crises also take place of course, within the private sector, as a result of speculation, overinvestment and lending, boom-bust cycles, bank failures. </p><p>That is of course a historically relative statement. It is conditioned by historical development of the public-private distinction. Or, more relevantly for us, our theory about that. </p><p>To put it crudely, do you see capitalism as emerging out of class relations in English agriculture, in which case, finance is relatively subordinate.</p><p>Or do you see capitalism’s origins in far flung commercial and mercantile exchanges across Mediterranean or Indian Ocean, in which case it is central from the start. </p><p>Entire philosophies of history are anchored on the type of answer that you give to the question of how financial crises do or do not drive historical transformation. </p><p>Slide 4</p><p>Trade shocks – sudden shift in global division of labour; Keynesian recessions; Supply shocks - e.g. interruptions to supply of energy, or COVID-style shutdowns; Class conflict; Economic warfare </p><p>All have specific logics, velocities, impact patterns.</p><p>Financial crises are distinct. </p><p>A physiological comparison may be useful. </p><p>A classic financial crisis is like a heart attack. </p><p>It is not the most profound sort of problem an economy can suffer from, but it can cause sudden death. It can leave you debilitated. No amount of exercise, superfood, or mental training will help, if your heart stops. </p><p>Slide 5 </p><p>Thinkers of macrofinance: Minsky, Tobias Adrian, Hyung-Song Shin, Daniela Gabor</p><p>Slide 6</p><p>The thirteen indigestible proposition of critical macrofinance: </p><p>1.Money matters. </p><p>2.Availability of credit money shapes capital accumulation & distribution of power in the economy</p><p>3.Credit shapes economic history in a genuine sense. Not merely as compulsive repetition.</p><p>4.Credit money is endogenously generated</p><p>5.… by oligopolistic financial institutions – banks, funds, trusts (shadow banks)</p><p>6.Credit-creation is pro-cyclical and crisis-prone -> amplifies upswings and downswings</p><p>7.Credit-creation operates transnationally. It pre-dates nation states and repeatedly escapes their efforts at regulation -> national, macroeconomic accounting frameworks are only contingently successful as mappings of actual economic functioning.</p><p>8.At same time, credit-creation has,. since its first emergence, lived in an incestuous relationship of mutual interdependence with the state (not necessarily the nation-state).</p><p>9.Credit is an inherently unstable relationship and needs backstopping by an authority.</p><p>10.States themselves issue money and raise taxes, but also need credit. At same time, as sovereigns, they have a creditworthiness problem – original sin problem -> problem of public credit is generative of political change.</p><p>11.Credit creation is intertwined not just with “a” state, but with the state system. One of the principal things that states want credit for, is paying for wars.</p><p>12.The state system is historically dynamic – credit plays a key role in its dynamics. At times it takes on an intensely hierarchical quality -> today the dollar is king. WWI AND JPMorgan have something to do with that. </p><p>13.The default state of this entire “system” is that of dynamic, historical change. Equilibrium is not inconceivable, but it is a rare and contingent historically conditioned achievement. Creative destruction is the norm. To repeat: the credit system drives genuine historical change, not mere compulsive repetition. </p><p>Slide 7</p><p>This is a conceptual toolbox designed to enable us to get to grips with 2008, Eurozone and aftermath.</p><p>Explains why the expected “China crisis” was a non-event.</p><p>Explains the crisis that did happen and why conventional macroeconomics did not predict it.</p><p>Helps frame how private credit crisis could become politicized. </p><p>Debunks exclusive Eurozone emphasis on public debt.</p><p>Explains the lethal danger of ECB-Berlin policies 2010-2015 and their “transformative” impact on European “periphery”.</p><p>Explains how a private credit crisis in Europe could entangle the central bank of the United States and the US Treasury.</p><p>Explains why it would be surprising if a credit crisis in Eastern Europe had not transformed, or at least altered, power relations between the EU and Russia. </p><p>Slide 8/9 </p><p>Even after you have accepted that financial crises happen and are significant, it does not follow that you think of them as transformational. </p><p>Financial crises are typically one of the areas of non-transformational economic thinking. </p><p>History is reduced to banalities about market psychology. </p><p>Tulip mania is the classic case. </p><p>The moral of the story is that it was a lot of fuss about “nothing”. </p><p>Slide 10/14</p><p>The sensation of 2008/9 Reinhart and Rogoff: “Our basic message is simple: We have been here before. No matter how different the latest financial frenzy or crisis always appears, there are usually remarkable similarities with past experience from other countries and from history.”</p><p>Non-transformational crisis: </p><p>“… financial crises follow a rhythm of boom and bust through the ages. Countries, institutions, and financial instruments may change across time, but human nature does not.” </p><p>“the most commonly repeated and most expensive investment advice ever given … stems from the perception that ‘this time is different”. … financial professionals and, all too often, government leaders explain that we are doing things better than before, we are smarter, and we have learned from past mistakes. Each time, society convinces itself that the current boom, unlike the many booms that preceded catastrophic collapse in the past, is built on sound fundamentals, structural reforms, technological innovation, and good policy.” </p><p>“We hope that the weight of evidence in this book will give future policy makers and investors a bit more pause before next they declare, “This time is different.” It almost never is.”</p><p>Tulips, imperial investments, railroads, the 1st age of financial capital, radios and electrification, the oil shock, the end of Communism and Russia, the tech boom and American real estate are …. (when viewed as financial events) … All the same! </p><p>Slide 15, 16, 17, 18</p><p>This kind of flat psychologism does not apply to all business-cycle theories. </p><p>Speaking to you in Vienna one thinks above all of the Austrian school. </p><p>They move from account of financial system to account of capital allocation/misallocation. </p><p>It was Schumpeter who tied a theory of finance-driven business-cycle to a concrete, historical vision of technological development and transformation. </p><p>In current generation, it is significant I think that Schumpeter is less influential than Hyman Minsky</p><p>Minsky is a theory of financial crises and of transformation but, above all, within the financial system not within the economy at large. </p><p>His background is Keynesian -> more interested in aggregate demand than in question allocation/misallocation of capital in real economy. </p><p></p><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!2VOC!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F97a6cd87-0f04-44d9-a068-f468c5da2d35_2174x1226.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!2VOC!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F97a6cd87-0f04-44d9-a068-f468c5da2d35_2174x1226.png 424w, https://substackcdn.com/image/fetch/$s_!2VOC!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F97a6cd87-0f04-44d9-a068-f468c5da2d35_2174x1226.png 848w, 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data-attrs="{"src":"https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/97a6cd87-0f04-44d9-a068-f468c5da2d35_2174x1226.png","srcNoWatermark":null,"fullscreen":null,"imageSize":null,"height":821,"width":1456,"resizeWidth":null,"bytes":633345,"alt":null,"title":null,"type":"image/png","href":null,"belowTheFold":true,"topImage":false,"internalRedirect":null,"isProcessing":false,"align":null,"offset":false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!2VOC!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F97a6cd87-0f04-44d9-a068-f468c5da2d35_2174x1226.png 424w, https://substackcdn.com/image/fetch/$s_!2VOC!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F97a6cd87-0f04-44d9-a068-f468c5da2d35_2174x1226.png 848w, https://substackcdn.com/image/fetch/$s_!2VOC!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F97a6cd87-0f04-44d9-a068-f468c5da2d35_2174x1226.png 1272w, https://substackcdn.com/image/fetch/$s_!2VOC!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F97a6cd87-0f04-44d9-a068-f468c5da2d35_2174x1226.png 1456w" sizes="100vw" loading="lazy"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><div class="pencraft pc-reset icon-container restack-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-refresh-cw"><path d="M3 12a9 9 0 0 1 9-9 9.75 9.75 0 0 1 6.74 2.74L21 8"></path><path d="M21 3v5h-5"></path><path d="M21 12a9 9 0 0 1-9 9 9.75 9.75 0 0 1-6.74-2.74L3 16"></path><path d="M8 16H3v5"></path></svg></div><div class="pencraft pc-reset icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></div></div></div></div></a></figure></div><p>Slide 19-21</p><p>Minsky is the godfather of historicized models of neoliberal financialization</p><p>Institutional Supercycles: An Evolutionary Macro-Finance Approach, by Yannis Dafermos, Daniela Gabor, and Jo Michell (2020)</p><p>“In a new working paper, we draw on under-exploited insights from Minsky to provide a structured analysis of the evolution of the macrofinancial system over the last 70 years. Minsky called institutional structures that aim to stabilise the macrofinancial system ‘thwarting mechanisms’. These put a floor on depressive tendencies (such as weak economic activity), a ceiling on expansionary tendencies (such as high inflation) or both, over what Minsky called the ‘supercycle’: a long-run process of institutional and political change over which the effectiveness of institutional structures wax and wane.” </p><p>https://www.rebuildingmacroeconomics.ac.uk/managing-supercycles</p><p>Endogenizing institutional change to account for shift from the industrial capitalism supercycle to financial globalization.</p><p>Our of order slightly - skip to this bit for sake of clarity: </p><p>Critical microfinance is a highly sophisticated literature. It is linked to theorizing about transformation of the state. By way of central bank balance sheets.</p><p>That in turn has given rise to a very important literature on the relationship between inequality, financial innovation and the state. </p><p>Central bank interventions are structurally selective (Jessop)</p><p>But the Minskyian literature is also making an exorbitant claim. </p><p>Financialization IS the transformation. . </p><p>This brings it within striking distance of metahistorical models like that of Wallerstein/Arrighi for whom the advent of an age of financialization is a harbinger of a moment of hegemonic transition. </p><p>Financialization in question:</p><p>1.Is it helpful to characterize an entire epoch in terms of one limited dimension of capitalist development i.e. financialization? Rather than seeing financialization as one vector of capitalist transformation amongst many? </p><p>2.Clearly, we should reject the hype around financial engineering. But why associate financialization with ”declining”, waning power. Why see financialization as a “morbid symptom”? Why not see it in less dramatic terms as another stage of symbolic economic manipulation? </p><p>3.Why associate industrialism – as opposed to service sector activity - with vigor?</p><p>4.This isn’t to say that there aren’t moment of decline or morbidity. But lets be more open-minded about what we associate them with! Is the SUV or the F-150 not a morbid symptom? </p><p>5.Why treat deindustrialization in Europe and the US as indicating a general shift away from industrialism? 1970s have seen advent of the largest industrial revolution ever, not in West but in East Asia, which has emerged as the new hub of global capitalism. </p><p>Why place the last half century of US economic transformation under the sign of financialization?</p><p>There are, after all, other synecdoche available. </p><p>Tech or surveillance capitalism</p><p>Globalized manufacturing supply chains</p><p>The new global energy economy</p><p>The “age” of biology/big pharma </p><p>Big ag and the feeding of 7.9 billion meat-eating, milk-drinking humans</p><p>Great acceleration 2.0</p><p>Rather than thinking of capitalism as captured in any given period by one faction, we should think of it as constitutively complex and plural. </p><p>Rather than assigning priority to finance shouldn’t we be examining on a case by case base its interrelationships with other transformations. </p><p>No doubt finance has a key role. And a financial crisis could be fatal. But so too could a tech meltdown, or, as we now know, a failure of the biomedical complex. </p><p></p><!--
{
"post_id": "39933736.adam-tooze-top-links-10-climate-policy",
"post_date": "2021-08-12T16:28:36.350Z",
"is_published": true,
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"type": "newsletter",
"audience": "only_free",
"title": "Adam Tooze Top Links #10 Climate policy and a bunch of other good stuff - an invitation to subscribe",
"subtitle": "Do you like Lenin? Rusting money and the fine art of cannabis cultivation. "
}
-->
<p class="button-wrapper" data-attrs="{"url":"https://adamtooze.substack.com/subscribe?","text":"Subscribe now","action":null,"class":null}" data-component-name="ButtonCreateButton"><a class="button primary" href="https://adamtooze.substack.com/subscribe?"><span>Subscribe now</span></a></p><p>A bunch of us are trying to raise the heat on climate policy commensurate with the crisis we face. </p><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!rzZn!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F4c59ff15-1165-4588-bc09-b8a65d648cc5_724x676.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!rzZn!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F4c59ff15-1165-4588-bc09-b8a65d648cc5_724x676.png 424w, https://substackcdn.com/image/fetch/$s_!rzZn!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F4c59ff15-1165-4588-bc09-b8a65d648cc5_724x676.png 848w, https://substackcdn.com/image/fetch/$s_!rzZn!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F4c59ff15-1165-4588-bc09-b8a65d648cc5_724x676.png 1272w, https://substackcdn.com/image/fetch/$s_!rzZn!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F4c59ff15-1165-4588-bc09-b8a65d648cc5_724x676.png 1456w" sizes="100vw"><img src="https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/4c59ff15-1165-4588-bc09-b8a65d648cc5_724x676.png" width="724" height="676" data-attrs="{"src":"https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/4c59ff15-1165-4588-bc09-b8a65d648cc5_724x676.png","srcNoWatermark":null,"fullscreen":null,"imageSize":null,"height":676,"width":724,"resizeWidth":null,"bytes":381819,"alt":null,"title":null,"type":"image/png","href":null,"belowTheFold":false,"topImage":true,"internalRedirect":null,"isProcessing":false,"align":null,"offset":false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!rzZn!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F4c59ff15-1165-4588-bc09-b8a65d648cc5_724x676.png 424w, https://substackcdn.com/image/fetch/$s_!rzZn!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F4c59ff15-1165-4588-bc09-b8a65d648cc5_724x676.png 848w, https://substackcdn.com/image/fetch/$s_!rzZn!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F4c59ff15-1165-4588-bc09-b8a65d648cc5_724x676.png 1272w, https://substackcdn.com/image/fetch/$s_!rzZn!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F4c59ff15-1165-4588-bc09-b8a65d648cc5_724x676.png 1456w" sizes="100vw" fetchpriority="high"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><div class="pencraft pc-reset icon-container restack-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-refresh-cw"><path d="M3 12a9 9 0 0 1 9-9 9.75 9.75 0 0 1 6.74 2.74L21 8"></path><path d="M21 3v5h-5"></path><path d="M21 12a9 9 0 0 1-9 9 9.75 9.75 0 0 1-6.74-2.74L3 16"></path><path d="M8 16H3v5"></path></svg></div><div class="pencraft pc-reset icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></div></div></div></div></a></figure></div><p>I took issue with NSA Sullivan’s intervention on OPEC oil production in the <a href="https://www.theguardian.com/commentisfree/2021/aug/12/pushing-oil-production-us-joe-biden-killing-climate-pledges">Guardian</a>.</p><p>Kate Aronoff in the <em><a href="https://newrepublic.com/article/163205/playing-nice-fossil-fuel-industry-climate-denial">New Republic</a></em> insists on the need for more radical action. </p><p>The issue of planning is raised here in the pages of the <em><a href="https://www.ft.com/content/54237547-4e83-471c-8dd1-8a8dcebc0382">FT</a></em>, by Max Krahé one of the interesting younger folks associated with the think tank <a href="https://dezernatzukunft.org/">Dezernat Zukunft</a>. </p><p>Then there is the usual cocktail. </p><p><strong>Churchill, summer 1920</strong></p><p><strong>Hipster anti-trust goes to Washington</strong></p><p><strong>What is inflation? </strong></p><h3><strong>How do you get the full Top Links?</strong></h3><p>All you need to do is to pick one of the paying subscription options.</p><p class="button-wrapper" data-attrs="{"url":"https://adamtooze.substack.com/subscribe?","text":"Subscribe now","action":null,"class":null}" data-component-name="ButtonCreateButton"><a class="button primary" href="https://adamtooze.substack.com/subscribe?"><span>Subscribe now</span></a></p><p>There are three options:</p><ol><li><p>The <strong>annual subscription: $50 annually</strong></p></li><li><p>The <strong>standard monthly subscription: $5 monthly -</strong> which gives you a bit more flexibility.</p></li><li><p><strong>Founders club:$ 120 annua</strong>lly, or another amount at your discretion - for those who really love Chartbook Newsletter, or read it in a professional setting in which you regularly pay for subscriptions, please consider signing up for the <strong>Founders Club</strong>.</p></li></ol><p class="button-wrapper" data-attrs="{"url":"https://adamtooze.substack.com/subscribe?","text":"Subscribe now","action":null,"class":null}" data-component-name="ButtonCreateButton"><a class="button primary" href="https://adamtooze.substack.com/subscribe?"><span>Subscribe now</span></a></p><p>Other stuff in # 10 includes:</p><p><strong>The legacy of California’s Emerald Triangle</strong></p><p><strong>Red Sea Policy for the US</strong></p><p><strong>Do you like Lenin?</strong></p><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!qRSC!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fc94f1bd5-33b9-4f84-9f80-5f820bd36a3e_460x690.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!qRSC!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fc94f1bd5-33b9-4f84-9f80-5f820bd36a3e_460x690.png 424w, https://substackcdn.com/image/fetch/$s_!qRSC!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fc94f1bd5-33b9-4f84-9f80-5f820bd36a3e_460x690.png 848w, https://substackcdn.com/image/fetch/$s_!qRSC!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fc94f1bd5-33b9-4f84-9f80-5f820bd36a3e_460x690.png 1272w, https://substackcdn.com/image/fetch/$s_!qRSC!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fc94f1bd5-33b9-4f84-9f80-5f820bd36a3e_460x690.png 1456w" sizes="100vw"><img src="https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/c94f1bd5-33b9-4f84-9f80-5f820bd36a3e_460x690.png" width="460" height="690" data-attrs="{"src":"https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/c94f1bd5-33b9-4f84-9f80-5f820bd36a3e_460x690.png","srcNoWatermark":null,"fullscreen":null,"imageSize":null,"height":690,"width":460,"resizeWidth":null,"bytes":542063,"alt":null,"title":null,"type":"image/png","href":null,"belowTheFold":true,"topImage":false,"internalRedirect":null,"isProcessing":false,"align":null,"offset":false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!qRSC!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fc94f1bd5-33b9-4f84-9f80-5f820bd36a3e_460x690.png 424w, https://substackcdn.com/image/fetch/$s_!qRSC!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fc94f1bd5-33b9-4f84-9f80-5f820bd36a3e_460x690.png 848w, https://substackcdn.com/image/fetch/$s_!qRSC!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fc94f1bd5-33b9-4f84-9f80-5f820bd36a3e_460x690.png 1272w, https://substackcdn.com/image/fetch/$s_!qRSC!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fc94f1bd5-33b9-4f84-9f80-5f820bd36a3e_460x690.png 1456w" sizes="100vw" loading="lazy"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><div class="pencraft pc-reset icon-container restack-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-refresh-cw"><path d="M3 12a9 9 0 0 1 9-9 9.75 9.75 0 0 1 6.74 2.74L21 8"></path><path d="M21 3v5h-5"></path><path d="M21 12a9 9 0 0 1-9 9 9.75 9.75 0 0 1-6.74-2.74L3 16"></path><path d="M8 16H3v5"></path></svg></div><div class="pencraft pc-reset icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></div></div></div></div></a></figure></div><p><strong>Perishable money </strong></p><p><strong>Spending Together … is the slogan</strong></p><p><strong>Weirdness from around the web</strong></p><p>Karl Marx University primer for budding journalists on deductive and inductive logic. "Manual of journalistic methodology". From: <a href="http://@daily_hegel">Daily Hegel</a></p><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!1Yqw!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fffc5e9d1-15d7-4c98-b711-b6ce5e373c90_1416x1344.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!1Yqw!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fffc5e9d1-15d7-4c98-b711-b6ce5e373c90_1416x1344.png 424w, https://substackcdn.com/image/fetch/$s_!1Yqw!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fffc5e9d1-15d7-4c98-b711-b6ce5e373c90_1416x1344.png 848w, https://substackcdn.com/image/fetch/$s_!1Yqw!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fffc5e9d1-15d7-4c98-b711-b6ce5e373c90_1416x1344.png 1272w, https://substackcdn.com/image/fetch/$s_!1Yqw!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fffc5e9d1-15d7-4c98-b711-b6ce5e373c90_1416x1344.png 1456w" sizes="100vw"><img src="https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/ffc5e9d1-15d7-4c98-b711-b6ce5e373c90_1416x1344.png" width="1416" height="1344" data-attrs="{"src":"https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/ffc5e9d1-15d7-4c98-b711-b6ce5e373c90_1416x1344.png","srcNoWatermark":null,"fullscreen":null,"imageSize":null,"height":1344,"width":1416,"resizeWidth":null,"bytes":2697407,"alt":null,"title":null,"type":"image/png","href":null,"belowTheFold":true,"topImage":false,"internalRedirect":null,"isProcessing":false,"align":null,"offset":false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!1Yqw!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fffc5e9d1-15d7-4c98-b711-b6ce5e373c90_1416x1344.png 424w, https://substackcdn.com/image/fetch/$s_!1Yqw!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fffc5e9d1-15d7-4c98-b711-b6ce5e373c90_1416x1344.png 848w, https://substackcdn.com/image/fetch/$s_!1Yqw!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fffc5e9d1-15d7-4c98-b711-b6ce5e373c90_1416x1344.png 1272w, https://substackcdn.com/image/fetch/$s_!1Yqw!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fffc5e9d1-15d7-4c98-b711-b6ce5e373c90_1416x1344.png 1456w" sizes="100vw" loading="lazy"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><div class="pencraft pc-reset icon-container restack-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-refresh-cw"><path d="M3 12a9 9 0 0 1 9-9 9.75 9.75 0 0 1 6.74 2.74L21 8"></path><path d="M21 3v5h-5"></path><path d="M21 12a9 9 0 0 1-9 9 9.75 9.75 0 0 1-6.74-2.74L3 16"></path><path d="M8 16H3v5"></path></svg></div><div class="pencraft pc-reset icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></div></div></div></div></a></figure></div><p class="button-wrapper" data-attrs="{"url":"https://adamtooze.substack.com/p/adam-tooze-top-links-10-climate-policy?utm_source=substack&utm_medium=email&utm_content=share&action=share","text":"Share","action":null,"class":null}" data-component-name="ButtonCreateButton"><a class="button primary" href="https://adamtooze.substack.com/p/adam-tooze-top-links-10-climate-policy?utm_source=substack&utm_medium=email&utm_content=share&action=share"><span>Share</span></a></p><p></p><!--
{
"post_id": "39966957.chartbook-32-bidens-foreign-policy",
"post_date": "2021-08-14T14:40:24.283Z",
"is_published": true,
"email_sent_at": "2021-08-14T14:40:24.306Z",
"inbox_sent_at": "2021-08-14T14:40:24.306Z",
"type": "newsletter",
"audience": "everyone",
"title": "Chartbook #32 Biden's foreign policy for the middle class, climate and OPEC",
"subtitle": "... deciphering cognitive dissonance. "
}
-->
<p class="button-wrapper" data-attrs="{"url":"https://adamtooze.substack.com/subscribe?","text":"Subscribe now","action":null,"class":null}" data-component-name="ButtonCreateButton"><a class="button primary" href="https://adamtooze.substack.com/subscribe?"><span>Subscribe now</span></a></p><p>On Wednesday National Security Advisor Jake Sullivan made the following <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2021/08/11/statement-by-national-security-advisor-jake-sullivan-on-the-need-for-reliable-and-stable-global-energy-markets/">statement</a>:</p><p></p><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!hcjY!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F506ba861-5d6c-44b8-a6e7-715debb15b37_898x1068.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!hcjY!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F506ba861-5d6c-44b8-a6e7-715debb15b37_898x1068.png 424w, https://substackcdn.com/image/fetch/$s_!hcjY!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F506ba861-5d6c-44b8-a6e7-715debb15b37_898x1068.png 848w, https://substackcdn.com/image/fetch/$s_!hcjY!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F506ba861-5d6c-44b8-a6e7-715debb15b37_898x1068.png 1272w, https://substackcdn.com/image/fetch/$s_!hcjY!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F506ba861-5d6c-44b8-a6e7-715debb15b37_898x1068.png 1456w" sizes="100vw"><img src="https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/506ba861-5d6c-44b8-a6e7-715debb15b37_898x1068.png" width="898" height="1068" data-attrs="{"src":"https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/506ba861-5d6c-44b8-a6e7-715debb15b37_898x1068.png","srcNoWatermark":null,"fullscreen":null,"imageSize":null,"height":1068,"width":898,"resizeWidth":null,"bytes":194528,"alt":null,"title":null,"type":"image/png","href":null,"belowTheFold":false,"topImage":true,"internalRedirect":null,"isProcessing":false,"align":null,"offset":false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!hcjY!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F506ba861-5d6c-44b8-a6e7-715debb15b37_898x1068.png 424w, https://substackcdn.com/image/fetch/$s_!hcjY!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F506ba861-5d6c-44b8-a6e7-715debb15b37_898x1068.png 848w, https://substackcdn.com/image/fetch/$s_!hcjY!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F506ba861-5d6c-44b8-a6e7-715debb15b37_898x1068.png 1272w, https://substackcdn.com/image/fetch/$s_!hcjY!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F506ba861-5d6c-44b8-a6e7-715debb15b37_898x1068.png 1456w" sizes="100vw" fetchpriority="high"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><div class="pencraft pc-reset icon-container restack-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-refresh-cw"><path d="M3 12a9 9 0 0 1 9-9 9.75 9.75 0 0 1 6.74 2.74L21 8"></path><path d="M21 3v5h-5"></path><path d="M21 12a9 9 0 0 1-9 9 9.75 9.75 0 0 1-6.74-2.74L3 16"></path><path d="M8 16H3v5"></path></svg></div><div class="pencraft pc-reset icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></div></div></div></div></a></figure></div><p>The climate policy powerhouse that goes by the handle Albert Pinto aka <a href="https://twitter.com/70sBachchan?s=20">@70sBachchan</a> circulated the statement within minutes. If this newsletter causes a few folks to follow his twitter account, it will have been worthwhile. His assessment was bleak: </p><p></p><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!ECn7!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F24447bb3-2644-423a-8492-592f329ebc50_634x498.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!ECn7!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F24447bb3-2644-423a-8492-592f329ebc50_634x498.png 424w, https://substackcdn.com/image/fetch/$s_!ECn7!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F24447bb3-2644-423a-8492-592f329ebc50_634x498.png 848w, https://substackcdn.com/image/fetch/$s_!ECn7!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F24447bb3-2644-423a-8492-592f329ebc50_634x498.png 1272w, https://substackcdn.com/image/fetch/$s_!ECn7!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F24447bb3-2644-423a-8492-592f329ebc50_634x498.png 1456w" sizes="100vw"><img src="https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/24447bb3-2644-423a-8492-592f329ebc50_634x498.png" width="634" height="498" data-attrs="{"src":"https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/24447bb3-2644-423a-8492-592f329ebc50_634x498.png","srcNoWatermark":null,"fullscreen":null,"imageSize":null,"height":498,"width":634,"resizeWidth":null,"bytes":91472,"alt":null,"title":null,"type":"image/png","href":null,"belowTheFold":false,"topImage":false,"internalRedirect":null,"isProcessing":false,"align":null,"offset":false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!ECn7!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F24447bb3-2644-423a-8492-592f329ebc50_634x498.png 424w, https://substackcdn.com/image/fetch/$s_!ECn7!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F24447bb3-2644-423a-8492-592f329ebc50_634x498.png 848w, https://substackcdn.com/image/fetch/$s_!ECn7!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F24447bb3-2644-423a-8492-592f329ebc50_634x498.png 1272w, https://substackcdn.com/image/fetch/$s_!ECn7!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F24447bb3-2644-423a-8492-592f329ebc50_634x498.png 1456w" sizes="100vw"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><div class="pencraft pc-reset icon-container restack-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-refresh-cw"><path d="M3 12a9 9 0 0 1 9-9 9.75 9.75 0 0 1 6.74 2.74L21 8"></path><path d="M21 3v5h-5"></path><path d="M21 12a9 9 0 0 1-9 9 9.75 9.75 0 0 1-6.74-2.74L3 16"></path><path d="M8 16H3v5"></path></svg></div><div class="pencraft pc-reset icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></div></div></div></div></a></figure></div><p>“RIP Climate Policy”. Depressed as I was, I would not go as far as that. But I do think that Sullivan’s interventions reflects deep and disabling tensions in the Biden administration’s climate policy. I fired off my own response to the <em><a href="https://www.theguardian.com/commentisfree/2021/aug/12/pushing-oil-production-us-joe-biden-killing-climate-pledges">Guardian</a></em> that afternoon. </p><div data-component-name="Twitter2ToDOM" class="tweet" data-attrs="{"url":"https://twitter.com/adam_tooze/status/1426521968539578370?s=20","full_text":"By pushing for more oil production, the US is killing its climate pledges | Adam Tooze ","username":"adam_tooze","name":"Adam Tooze","date":"Sat Aug 14 12:31:55 +0000 2021","photos":[],"quoted_tweet":{},"retweet_count":0,"like_count":0,"expanded_url":{"url":"https://www.theguardian.com/commentisfree/2021/aug/12/pushing-oil-production-us-joe-biden-killing-climate-pledges","image":"https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/b2dff5a5-e1be-4eb5-b302-b559d28273cb_1200x630.jpeg","title":"By pushing for more oil production, the US is killing its climate pledges | Adam Tooze","description":"Joe Biden must use his country’s leverage to curb fossil fuels, not boost them, says professor of history Adam Tooze","domain":"theguardian.com"},"video_url":null,"belowTheFold":false}"><a class="tweet-link-top" href="https://twitter.com/adam_tooze/status/1426521968539578370?s=20" target="_blank"><div class="tweet-header"><img class="tweet-header-avatar" src="https://substackcdn.com/image/twitter_name/w_96/adam_tooze.jpg" alt="Twitter avatar for @adam_tooze"><div class="tweet-header-text"><span class="tweet-author-name">Adam Tooze </span><span class="tweet-author-handle">@adam_tooze</span></div></div><div class="tweet-text">By pushing for more oil production, the US is killing its climate pledges | Adam Tooze </div><a class="expanded-link" href="https://www.theguardian.com/commentisfree/2021/aug/12/pushing-oil-production-us-joe-biden-killing-climate-pledges" target="_blank"><img src="https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/b2dff5a5-e1be-4eb5-b302-b559d28273cb_1200x630.jpeg" class="expanded-link-img"><div class="expanded-link-bottom"><span class="expanded-link-domain">theguardian.com</span><span class="expanded-link-title">By pushing for more oil production, the US is killing its climate pledges | Adam Tooze</span><span class="expanded-link-description">Joe Biden must use his country’s leverage to curb fossil fuels, not boost them, says professor of history Adam Tooze</span></div></a></a><a class="tweet-link-bottom" href="https://twitter.com/adam_tooze/status/1426521968539578370?s=20" target="_blank"><div class="tweet-footer"><span class="tweet-date">12:31 PM ∙ Aug 14, 2021</span></div></a></div><p>I was quick off the mark because I was primed. I’ve been worrying about Biden and OPEC for a while. But, before we get into this, a brief note about <em>Chartbook</em>.</p><p>******</p><p>I enjoy putting <em>Chartbook</em> together. I hope you find it interesting. I know that <em>Chartbook</em> is read by folks in many walks of life, all over the world. I am delighted that it goes out free to many readers.</p><p>But, assembling all this material takes a lot of work. So, if you appreciate the <em>Chartbook</em> content and can afford to chip-in, please consider signing up for one of the paying subscriptions. You will be supporting the mission, earning great karma and some goodies too.</p><p class="button-wrapper" data-attrs="{"url":"https://adamtooze.substack.com/subscribe?","text":"Subscribe now","action":null,"class":null}" data-component-name="ButtonCreateButton"><a class="button primary" href="https://adamtooze.substack.com/subscribe?"><span>Subscribe now</span></a></p><p>There are three <strong>options</strong>:</p><ol><li><p>The <strong>annual subscription: $50 annually</strong></p></li><li><p>The <strong>standard monthly subscription: $5 monthly -</strong> which gives you a bit more flexibility.</p></li><li><p><strong>Founders club: $120 annua</strong>lly (or another amount at your discretion) - for those who really love Chartbook Newsletter, or read it in a professional setting in which you regularly pay for subscriptions.</p></li></ol><p>As a thank you, paying subscribers receive regular emails with links to some of the most interesting, intriguing and unusual material I come across, around the web. Check out Top Links <a href="https://adamtooze.substack.com/p/adam-tooze-chartbook-top-links-5">here</a>.</p><p><strong>Shutdown sessions:</strong></p><p>Following the release of <em>Shutdown</em> in <a href="https://www.amazon.com/Shutdown-Covid-Shook-Worlds-Economy-ebook/dp/B08WK1WL23/ref=sr_1_3?dchild=1&keywords=tooze+shutdown&qid=1628419334&sr=8-3">September,</a> subscribers will be invited, in the fall, to a series of seminars I will be hosting to discuss the book. Details tba.</p><p class="button-wrapper" data-attrs="{"url":"https://adamtooze.substack.com/subscribe?","text":"Subscribe now","action":null,"class":null}" data-component-name="ButtonCreateButton"><a class="button primary" href="https://adamtooze.substack.com/subscribe?"><span>Subscribe now</span></a></p><p>**********</p><p>For the last few months, I have been worrying about OPEC price policy and the Biden administration. As the world economy recovers from COVID, oil prices have picked up. Earlier in the summer, before the Delta variant rocked expectations, there was talk of oil at $100 per barrel. OPEC has been debating its response. There had been rumors of US intervention in favor of higher production. Back on July 4, I was already fretting: </p><div data-component-name="Twitter2ToDOM" class="tweet" data-attrs="{"url":"https://twitter.com/adam_tooze/status/1411681693870825472?s=20","full_text":"Critical test for Biden’s climate policy. Will White House pressure OPEC to raise production and curb a rise of oil prices towards $100? \n<a class=\"tweet-url\" href=\"https://www.ft.com/content/6f0580d8-5374-49b2-b5dc-8a8f0939a9e5\">ft.com/content/6f0580…</a> ","username":"adam_tooze","name":"Adam Tooze","date":"Sun Jul 04 13:41:58 +0000 2021","photos":[{"img_url":"https://pbs.substack.com/media/E5dMeNkX0AMInI5.png","link_url":"https://t.co/sgwx6NDF2c","alt_text":null}],"quoted_tweet":{},"retweet_count":16,"like_count":39,"expanded_url":{},"video_url":null,"belowTheFold":true}"><a class="tweet-link-top" href="https://twitter.com/adam_tooze/status/1411681693870825472?s=20" target="_blank"><div class="tweet-header"><img class="tweet-header-avatar" src="https://substackcdn.com/image/twitter_name/w_96/adam_tooze.jpg" alt="Twitter avatar for @adam_tooze" loading="lazy"><div class="tweet-header-text"><span class="tweet-author-name">Adam Tooze </span><span class="tweet-author-handle">@adam_tooze</span></div></div><div class="tweet-text">Critical test for Biden’s climate policy. Will White House pressure OPEC to raise production and curb a rise of oil prices towards $100?
<a class="tweet-url" href="https://www.ft.com/content/6f0580d8-5374-49b2-b5dc-8a8f0939a9e5" target="_blank">ft.com/content/6f0580…</a> </div><div class="tweet-photos-container one"><div class="tweet-photo-wrapper "><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!h--m!,w_600,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fpbs.substack.com%2Fmedia%2FE5dMeNkX0AMInI5.png"><img class="tweet-photo" src="https://pbs.substack.com/media/E5dMeNkX0AMInI5.png" alt="Image" loading="lazy"></picture></div></div></a><a class="tweet-link-bottom" href="https://twitter.com/adam_tooze/status/1411681693870825472?s=20" target="_blank"><div class="tweet-footer"><span class="tweet-date">1:41 PM ∙ Jul 4, 2021</span><hr><div class="tweet-ufi"><span href="https://twitter.com/adam_tooze/status/1411681693870825472?s=20/likes" class="likes"><span class="like-count">39</span>Likes</span><span href="https://twitter.com/adam_tooze/status/1411681693870825472?s=20/retweets" class="retweets"><span class="rt-count">16</span>Retweets</span></div></div></a></div><p>Whilst walking Ruby the dog that holiday morning, I remember regaling Dana with my concern that the administration was going to flinch. </p><p>If we are in the business of decarbonization, higher prices for oil should not be bad news. Of course, if you consider the politics - and the Biden administration must - it is is more complicated. It was a significant moment in gauging the kind of risk that the administration is willing to take in pursuit of its climate goals. </p><p>Sullivan’s blunt statement confirmed the suspicion that in key regards the Biden administration is committed to a thoroughly conventional and, thus, thoroughly disastrous policy of growthmanship in pursuit of the endless promise of the “American way of life”. Affirming the responsibility of the US government to muscle OPEC for the sake of cheap gas for American consumers, is business as usual. And that is precisely the problem. It activates the wrong muscle-memory. </p><p>Jake Sullivan is not someone who is oblivious to the <a href="https://www.centeronnationalsecurity.org/vi-1-jacob-sullivan">climate problem</a>. But the idea to which he and his key advisors have hitched their band wagon is “<em><a href="https://carnegieendowment.org/specialprojects/usforeignpolicyforthemiddleclass/">foreign policy for the middle class</a></em>”. In the final lines of his statement, Sullivan alludes to the need for “competitive markets”. No coincidence that at the same moment Biden’s National Economic Council has ordered FTC to look into price rigging in <a href="https://www.usatoday.com/story/news/politics/2021/08/11/gas-prices-biden-calls-probe-into-illegal-activity/5536090001/">US petrol markets</a>. Breaking cartels, demanding the best prices for consumers, it’s old school politics. It also reinforces old school consumption habits. It focuses on making the status quo more affordable, not on transforming it. We can no longer afford to do that. It is a recipe for disaster. </p><p>If the aim is to help folks in America on middle to low incomes, the priority should clearly be Biden’s Jobs Plan, the Families Plan and giant investment. If energy poverty is a problem, let there be targeted support for low-income households. The tragedy of the eviscerated infrastructure bill, is that until there are affordable, low carbon alternatives, the doom loop between economic growth, electoral support and climate destruction remains in place. </p><p>If your instinct is to say, well in the short-run the Biden administration needs to get through the mid-terms in 2022 , I know where you are coming from. I have made a similar <a href="https://greencentralbanking.com/2021/07/26/adam-tooze-federal-reserve-climate/">tactical argument</a> about the need to reappoint Jay Powell to the Fed despite his checkered record on climate policy. Seven major environmental groups, including the <a href="https://www.bloomberg.com/news/articles/2021-08-13/climate-movement-keeping-close-eye-on-biden-fed-chair-nomination?sref=wOrDP8KX">Sierra Club</a>, disagree with me. </p><p>For me the difference between the Fed chair question and Sullivan’s statement, is that the former is a relatively indirect influence on climate policy, whereas Sullivan is directly aiding and abetting fossil fuel addiction. As much as I think central banks ought to <a href="https://foreignpolicy.com/2019/07/20/why-central-banks-need-to-step-up-on-global-warming/">join the climate push</a>, they are not as important as oil markets, OPEC and Biden’s National Security policy. Fed staff will find ways to gee up Powell on the climate issue. A GOP backlash against a “green Fed chair” would be a truly unnecessary distraction in 2022. A senior member of the Biden team urging the oil oligarchs to ramp up production is a far more immediate and serious problem. </p><p>What we have to wrap our heads around is that the climate crisis is no longer a long-run issue. The oil consumption of the next twelve months will make an appreciable impact on what is left of the global carbon budget. What the IPCC, the IEA and every other report is telling us is that the distinction between the short-run and the long-run has collapsed. The movements of the business-cycle, sudden surges in energy demand and energy prices, they all matter, as does each new temperature record. If our eyes are fixed on targets in 2030, then the first two years of the Biden administration are one fifth of the time available to us. That too is a compelling imperative. </p><p>Of course, these trade offs do not apply only to the United States. Around the world this summer the news is dispiriting. The G7 couldn’t agree on an <a href="https://www.nytimes.com/2021/06/13/us/politics/G7-climate-Biden.html">endpoint for coal</a>. The G20 environment ministers couldn’t agree on <a href="https://www.dw.com/en/g20-ministers-fail-to-agree-tougher-climate-goals/a-58620631">anything</a>. The UK is hosting COP26 in Glasgow, but its political parties are <a href="https://www.theguardian.com/environment/2021/aug/13/uk-political-factions-in-the-battle-against-the-climate-crisis">fragmented </a>on the issues. The German Greens have fallen off their opinion poll highs and this is not simply due to the weakness of Baerbock as a candidate. Petrol prices are a <a href="https://www.cleanenergywire.org/news/german-election-primer-parties-split-raising-national-co2-price">big deal</a> in Germany too.</p><p>Compared to the spring, the shift in the mood is dramatic. Earlier in the year there was as sense that fossil fuels were on the run. Shell was instructed by a Dutch court to up its targets for decarbonization. Exxon was humbled by activist shareholders. The German constitutional court lectured the German government on the need to ramp up its climate effort. The IEA, the organization created in the 1970s to represent oil consumers against OPEC, came out with an aggressive net zero scenario.</p><p>In a matter of months the mood has shifted dramatically. </p><p>My worry is that this reflects not just the shifting winds of politics, but also the economic cycle and the movement of energy prices. When the economy is slowing and demand is collapsing, the fossil fuel industry has little bargaining power. Low prices squeeze profits. The game changes when the business-cycle picks up. Back in May, smart oil market folks on twitter were expressing their disbelief that Green campaigners could be celebrating given what was happening in the markets. After the horrible shock of 2020, oil was clawing its way back towards $70, there was <a href="https://www.ft.com/content/b27ac2bb-69c9-4e06-94e5-f7373b4de5ba">talk</a> of $100 within the next 12 months.</p><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!Ml6O!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F836b0999-9cd9-4d7f-a9b5-ce4492582a79_2670x928.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!Ml6O!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F836b0999-9cd9-4d7f-a9b5-ce4492582a79_2670x928.png 424w, https://substackcdn.com/image/fetch/$s_!Ml6O!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F836b0999-9cd9-4d7f-a9b5-ce4492582a79_2670x928.png 848w, https://substackcdn.com/image/fetch/$s_!Ml6O!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F836b0999-9cd9-4d7f-a9b5-ce4492582a79_2670x928.png 1272w, https://substackcdn.com/image/fetch/$s_!Ml6O!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F836b0999-9cd9-4d7f-a9b5-ce4492582a79_2670x928.png 1456w" sizes="100vw"><img src="https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/836b0999-9cd9-4d7f-a9b5-ce4492582a79_2670x928.png" width="1456" height="506" data-attrs="{"src":"https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/836b0999-9cd9-4d7f-a9b5-ce4492582a79_2670x928.png","srcNoWatermark":null,"fullscreen":null,"imageSize":null,"height":506,"width":1456,"resizeWidth":null,"bytes":205058,"alt":null,"title":null,"type":"image/png","href":null,"belowTheFold":true,"topImage":false,"internalRedirect":null,"isProcessing":false,"align":null,"offset":false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!Ml6O!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F836b0999-9cd9-4d7f-a9b5-ce4492582a79_2670x928.png 424w, https://substackcdn.com/image/fetch/$s_!Ml6O!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F836b0999-9cd9-4d7f-a9b5-ce4492582a79_2670x928.png 848w, https://substackcdn.com/image/fetch/$s_!Ml6O!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F836b0999-9cd9-4d7f-a9b5-ce4492582a79_2670x928.png 1272w, https://substackcdn.com/image/fetch/$s_!Ml6O!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F836b0999-9cd9-4d7f-a9b5-ce4492582a79_2670x928.png 1456w" sizes="100vw" loading="lazy"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><div class="pencraft pc-reset icon-container restack-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-refresh-cw"><path d="M3 12a9 9 0 0 1 9-9 9.75 9.75 0 0 1 6.74 2.74L21 8"></path><path d="M21 3v5h-5"></path><path d="M21 12a9 9 0 0 1-9 9 9.75 9.75 0 0 1-6.74-2.74L3 16"></path><path d="M8 16H3v5"></path></svg></div><div class="pencraft pc-reset icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></div></div></div></div></a></figure></div><p>Source: Koyfin</p><p>I tried to capture that ambiguity in a <a href="https://foreignpolicy.com/2021/06/03/can-elites-start-the-climate-revolution/">Foreign Policy</a> piece in early June. EXXON’s management was no doubt having a bad time, but the industry itself was bouncing back. </p><p>The IEA, which with one face was saying that we need to end new development of fossil fuel projects immediately, was, with another face, saying we need to raise production.</p><div data-component-name="Twitter2ToDOM" class="tweet" data-attrs="{"url":"https://twitter.com/adam_tooze/status/1409841675623714819?s=20","full_text":"Cognitive Dissonance 2021:\nTo hit net zero, even <span class=\"tweet-fake-link\"><span class=\"tweet-fake-link\">@IEA</span></span> says: we have to end all new oil development NOW\nFaced with Econ recovery, same <span class=\"tweet-fake-link\"><span class=\"tweet-fake-link\">@IEA</span></span> calls for “taps open” -&gt;\n<span class=\"tweet-fake-link\">@FTLex</span> worries that oil majors not investing ENOUGH! \nOne for <span class=\"tweet-fake-link\">@70sBachchan</span> <span class=\"tweet-fake-link\">@HelenHet20</span>\n<a class=\"tweet-url\" href=\"https://www.ft.com/content/d728b9ee-6803-4770-85ca-0256d9bd8507\">ft.com/content/d728b9…</a> ","username":"adam_tooze","name":"Adam Tooze","date":"Tue Jun 29 11:50:23 +0000 2021","photos":[{"img_url":"https://pbs.substack.com/media/E5DDVGXWYAI92No.jpg","link_url":"https://t.co/XjAgVtYFXF","alt_text":null}],"quoted_tweet":{},"retweet_count":25,"like_count":75,"expanded_url":{},"video_url":null,"belowTheFold":true}"><a class="tweet-link-top" href="https://twitter.com/adam_tooze/status/1409841675623714819?s=20" target="_blank"><div class="tweet-header"><img class="tweet-header-avatar" src="https://substackcdn.com/image/twitter_name/w_96/adam_tooze.jpg" alt="Twitter avatar for @adam_tooze" loading="lazy"><div class="tweet-header-text"><span class="tweet-author-name">Adam Tooze </span><span class="tweet-author-handle">@adam_tooze</span></div></div><div class="tweet-text">Cognitive Dissonance 2021:
To hit net zero, even <span class="tweet-fake-link"><span class="tweet-fake-link">@IEA</span></span> says: we have to end all new oil development NOW
Faced with Econ recovery, same <span class="tweet-fake-link"><span class="tweet-fake-link">@IEA</span></span> calls for “taps open” ->
<span class="tweet-fake-link">@FTLex</span> worries that oil majors not investing ENOUGH!
One for <span class="tweet-fake-link">@70sBachchan</span> <span class="tweet-fake-link">@HelenHet20</span>
<a class="tweet-url" href="https://www.ft.com/content/d728b9ee-6803-4770-85ca-0256d9bd8507" target="_blank">ft.com/content/d728b9…</a> </div><div class="tweet-photos-container one"><div class="tweet-photo-wrapper "><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!ah7q!,w_600,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fpbs.substack.com%2Fmedia%2FE5DDVGXWYAI92No.jpg"><img class="tweet-photo" src="https://pbs.substack.com/media/E5DDVGXWYAI92No.jpg" alt="Image" loading="lazy"></picture></div></div></a><a class="tweet-link-bottom" href="https://twitter.com/adam_tooze/status/1409841675623714819?s=20" target="_blank"><div class="tweet-footer"><span class="tweet-date">11:50 AM ∙ Jun 29, 2021</span><hr><div class="tweet-ufi"><span href="https://twitter.com/adam_tooze/status/1409841675623714819?s=20/likes" class="likes"><span class="like-count">75</span>Likes</span><span href="https://twitter.com/adam_tooze/status/1409841675623714819?s=20/retweets" class="retweets"><span class="rt-count">25</span>Retweets</span></div></div></a></div><p> </p><p>Whereas Shell was under pressure to speed up its decarbonization timeline, Saudi Aramco, the world’s largest oil producer by far, announced that it was planning not just a temporary increase in output, but major investment in new capacity to raise its production to 13 million barrels a day. As an Aramco spokesman <a href="https://www.ft.com/content/54635a4b-55b5-4b5a-8b84-d0b732586694">remarked</a>: “Seeing that there is a lot of under-investment in [oil] supply it’s a great opportunity for us. We are diligently working to increase capacity.”</p><p>Meanwhile, in 2021 US shale producers are biding their time. One of reasons that global oil prices are going up, is that unlike in previous cycles the American shale firms have not plunged into <a href="https://www.ft.com/content/76d3f824-ee8a-4987-9c4d-f2ee337b333a">capacity expansion</a>. For once, Wall Street is demanding some of its cash back and they are delivering dividends. </p><p>Nor is this only happening in oil. David Sheppard in the FT has pointed to the same dynamic in the <a href="https://www.ft.com/content/7bf23d64-4891-44d2-8c02-16df432193d2">gas industry</a>. Faced with a deluge of climate talk, there is something akin to a capital strike in oil and gas. With inelastic supply, facing surging demand, we must prepare for rising prices. </p><p>The knee jerk response is the one we have seen from the Biden administration. Increase production to relieve the pressure on consumers. That is to reinforce the fossil fuel status quo. </p><p>None of this is to say that for the US to be talking to OPEC is a bad thing. On the contrary, it is essential. But what we need to be talking about is not lowering prices ahead of the midterms, but the low carbon future. Kate Aronoff in the <em><a href="https://newrepublic.com/article/161558/america-should-join-opec-fossil-fuels">New Republic</a></em> has even suggested, somewhat tongue in cheek, that the US should join OPEC. It could serve as a useful forum to coordinate policy. </p><p>As folks like <a href="https://www.e-ir.info/author/michael-dobson/">Michael Dobson</a> have pointed out, it is possible that major players in OPEC, chief amongst them Saudi Arabia, might be won over as partners in <a href="https://twitter.com/michaeldobsonNY/status/1426230739302068226?s=20">global decarbonization. </a>Their long run future as oil and gas producers is, in fact, fairly secure According to predictions by agencies such as the <a href="https://www.iea.org/reports/net-zero-by-2050">IEA</a>, it will be the powerful Gulf oil and gas suppliers who will still be in the oil and gas business, even in a net zero scenario. </p><p>To understand how that works, the key is the “net” in “net zero”. Most scenarios for decarbonization assume that we will deploy substantial capacity for carbon capture and storage (a technology still in its infancy). That will enable us to continue a minimum level of oil and gas consumption even at net zero, for things like air travel and long-range ocean cargo shipping. The suppliers of choice will be the low-cost high-quality producers in the Gulf. </p><p>The only thing that will guarantee that we get to that point, however, is if the main consumer economies - China, US, EU - can organize a systematic and sustained repression of demand. That is the side of the equation that climate policy can control. The question to be discussed with OPEC is how hard the producers may seek to push back against this rundown of their industry, for instance, with aggressive pricing and production strategies. </p><p>It is not just a simple problem of maximization. It is a field in which the optimal strategy for each player on both the demand and supply side depends on the strategies adopted by all the others. It is a field, therefore, for diplomacy. Crucial in any such game is the question of commitment, which is why Sullivan’s intervention is so dismaying. Watching Biden’s National Security Advisor in action who could be blamed for betting against the credibility of decarbonization? The message it sends is that the party supposedly committed to decarbonization will flinch at the slightest sign of pressure. Instead, the US should be deploying its unique heft as a geopolitical actor, as a giant energy market and an energy producer in the opposite direction. </p><p>It is not enough to send John Kerry to COP26 and meetings of environment ministers. A United States that aspired to be a true leader on the climate issue would pursue a climate diplomacy that incorporates and subsumes the entire field of geopolitics and energy. </p><p><a href="https://foreignpolicy.com/2020/10/05/climate-geopolitics-petrostates-russia-china/">Jason Bordoff</a>, ex of the Obama administration and now my colleague at Columbia has argued for taking a holistic view on energy policy. In a far more radical way, Kate Aronoff’s OPEC essay pushes in this direction. The advocates of the Global Green New Deal argue along the same lines, as described in this excellent review by <a href="https://foreignpolicy.com/2020/01/11/green-new-deal-climate-planet-to-win-book-review/">Quinn Slobodian</a>. A while back, I had this piece in <em><a href="https://foreignpolicy.com/2020/10/17/great-power-competition-climate-china-europe-japan/">Foreign Policy</a></em>. </p><p>Not that negotiating a global green energy strategy with OPEC is a simple proposition. </p><p>The Gulf oil producers may have a long-term future, but they have a precarious domestic balance to strike. They have huge public spending to fund, lifestyles to maintain and investments they need to make in diversification. Even amongst the Gulf oil producers, <a href="https://www.ft.com/content/a380d0d8-6d95-49c0-b008-62087f22a9e6">divisions</a> have emerged over production and price policy. UAE, normally a loyal follower of Saudi, arguably America’s most active ally in the region, favors a strategy of flat-out production to maximize revenue before global demand collapses. It risked a clash with Saudi over this issue. When Sullivan argues for more production, he is, I think, taking the UAEs side. This stuff is very opaque. Others may know better.</p><p>Amongst the Gulf producers, Saudi, UAE and Kuwait are the most privileged. OPEC also has many members who are far more stretched in budgetary terms. Iraq is a case in point. It needs to maximize revenue, simply to pay salaries to civil servants. </p><p>OPEC also has members that are both poor and high-cost producers - Nigeria and Angola, for instance. They are extremely vulnerable to a decarbonization push that shrinks investment and picks off the highest cost producers. It is the elite not the broader population that has benefited from oil in both those economies, so the politics go to the very heart of power and privilege. As Nick Mulder and I argued <a href="https://foreignpolicy.com/2020/04/23/the-coronavirus-oil-shock-is-just-getting-started/">back in 2020</a>, a top priority should be to offer adequately funded off ramps for these producers. The same goes for Venezuela and Ecuador.</p><p>In his statement, Sullivan alluded to OPEC+. The plus sign is Russia, potentially the greatest obstacle to comprehensive decarbonization - a nuclear superpower, which is heavily dependent on oil and gas. It is also a country that is immediately and severely affected by climate change. Putin has expressed concern, but at the moment even the readers of <a href="https://www.statista.com/statistics/1063254/poll-fear-of-climate-change-in-russia/">Kommersant</a> are by no means convinced of the urgency of the issue. In 2019 16.5% thought climate change would benefit Russia. 18% thought it was a problem for the distant future. 24.7 % thought it was fabricated. Only 41% considered it an immediate and serious threat. More recent data gathered by <a href="https://www.csis.org/analysis/russian-political-forces-meet-climate-change">Andrei Semenov</a> confirm the impression that there is no powerful constituency in Russia for aggressive action on decarbonization, other than for investment in renewables. </p><p>And then there is the United States itself. Since the early 2010s, the great swing variable in the global energy market has been US shale. The risk facing OPEC and Russia if they push for a high price strategy is that this draws more shale producers into the market. It was to deal a death blow to shale that Russia in March 2020 pushed for an all out price war helping to precipitate not just the oil price slump, but the broader financial turmoil of that month. It was to redress the collapse in the market and rescue shale, that Trump breached a taboo and entered into direct negotiations with OPEC+ about restricting output.</p><p>Yes, you read that right. Last year it was the Trump administration that bullied OPEC into restricting production so as to raise prices so as to save America’s oil producers. Now it is the Biden administration, supposedly committed to climate, that is bullying OPEC into raising production to reduce prices so that American consumers can afford more petrol. </p><p>It was also the <a href="https://apps.publicintegrity.org/blowout/us-energy-dominance/">Obama administration</a> in 2015, only days after it celebrated the Paris climate accord, that lifted the decades-old ban on the export of US oil, thus bringing US production fully into play in world markets. The <a href="https://newrepublic.com/article/156580/obamas-climate-legacy-lie-energy-independence">Obama administration</a> touted US shale gas, as a triple win: for the US economy, for the climate (because gas is lower carbon than either coal or oil) and for democracy (because American gas, unlike Russian gas is made of “<a href="https://www.forbes.com/sites/jamesellsmoor/2019/05/30/trump-administration-rebrands-carbon-dioxide-as-molecules-of-u-s-freedom/">molecules of freedom</a>”). </p><p>There are countries in the world that can make the case that fossil fuel exports are essential to their economic and social development. The United States is not one of them. If Green industrial policy is popular right now in Washington, the counterpart should be ending support for fossil fuel exports. Kate Aronoff and David Adler <a href="https://www.dataforprogress.org/blog/2019/12/11/good-cop-bad-bad">argued back in 201</a>9 for reimposing the oil export ban. That makes perfect sense, but it would hand a huge win to Russia and OPEC, for which the US would need to extract major concessions. And it seems unthinkable in political terms. It would presumably scupper any chances the Democrats might have in Texas. If an outright ban is impractical, at the very least support in all other forms for US fossil fuel exports, should be wound down, as quickly as possible. </p><p>The difficulty of reversing the decision in 2015 to turn the US into an energy exporters, demonstrates the ratchet effects that operates in fossil fuel political economy. Sullivan’s intervention this week is further evidence of how hard it is to reverse that structural dependence. </p><p>And let us be clear, that is what we need to do. If climate is merely an “add on”, a vote winning issue for the College-educated. If it is not repositioned at the core of the agenda, as a “middle class” issue - in Biden-speak - the outlook for US climate policy is grim. </p><p class="button-wrapper" data-attrs="{"url":"https://adamtooze.substack.com/subscribe?","text":"Subscribe now","action":null,"class":null}" data-component-name="ButtonCreateButton"><a class="button primary" href="https://adamtooze.substack.com/subscribe?"><span>Subscribe now</span></a></p><p></p><!--
{
"post_id": "40215219.top-links-13-financing-afghanistans",
"post_date": "2021-08-20T11:17:29.166Z",
"is_published": true,
"email_sent_at": "2021-08-20T11:17:29.189Z",
"inbox_sent_at": "2021-08-20T11:17:29.189Z",
"type": "newsletter",
"audience": "everyone",
"title": "Top Links #13 Financing Afghanistan's new regime and the struggle over its national exchange reserve.",
"subtitle": "The Taliban, a central banker and the problem of money. "
}
-->
<p class="button-wrapper" data-attrs="{"url":"https://adamtooze.substack.com/subscribe?","text":"Subscribe now","action":null,"class":null}" data-component-name="ButtonCreateButton"><a class="button primary" href="https://adamtooze.substack.com/subscribe?"><span>Subscribe now</span></a></p><p>As the Taliban establish their grip on power in Kabul, the question of finances rears its head. This matters so much, because the Afghan state has, in the recent past, been heavily dependent on foreign aid. The aid pays not just for government spending. Even more importantly it pays Afghanistan’s import bill. </p><p><strong>Foreign exchange & the central bank reserves</strong></p><p>Covering the import bill is more urgent, because with enough men with guns behind it, a state can tax its population and solve the problem of state finance. The Afghan Army is currently paid for largely by foreign donors. We do not doubt that the Taliban will find ways of maintaining its fighting force in being. It cannot use those same method to pay for foreign imports. And Afghanistan has an appetite for imports far in excess of what its exports pay for. </p><p></p><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!4wB6!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F38aeadef-d85a-4239-b5ad-d06f9299491f_722x430.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!4wB6!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F38aeadef-d85a-4239-b5ad-d06f9299491f_722x430.png 424w, https://substackcdn.com/image/fetch/$s_!4wB6!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F38aeadef-d85a-4239-b5ad-d06f9299491f_722x430.png 848w, https://substackcdn.com/image/fetch/$s_!4wB6!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F38aeadef-d85a-4239-b5ad-d06f9299491f_722x430.png 1272w, https://substackcdn.com/image/fetch/$s_!4wB6!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F38aeadef-d85a-4239-b5ad-d06f9299491f_722x430.png 1456w" sizes="100vw"><img src="https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/38aeadef-d85a-4239-b5ad-d06f9299491f_722x430.png" width="722" height="430" data-attrs="{"src":"https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/38aeadef-d85a-4239-b5ad-d06f9299491f_722x430.png","srcNoWatermark":null,"fullscreen":null,"imageSize":null,"height":430,"width":722,"resizeWidth":null,"bytes":41110,"alt":null,"title":null,"type":"image/png","href":null,"belowTheFold":false,"topImage":true,"internalRedirect":null,"isProcessing":false,"align":null,"offset":false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!4wB6!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F38aeadef-d85a-4239-b5ad-d06f9299491f_722x430.png 424w, https://substackcdn.com/image/fetch/$s_!4wB6!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F38aeadef-d85a-4239-b5ad-d06f9299491f_722x430.png 848w, https://substackcdn.com/image/fetch/$s_!4wB6!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F38aeadef-d85a-4239-b5ad-d06f9299491f_722x430.png 1272w, https://substackcdn.com/image/fetch/$s_!4wB6!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F38aeadef-d85a-4239-b5ad-d06f9299491f_722x430.png 1456w" sizes="100vw" fetchpriority="high"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><div class="pencraft pc-reset icon-container restack-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-refresh-cw"><path d="M3 12a9 9 0 0 1 9-9 9.75 9.75 0 0 1 6.74 2.74L21 8"></path><path d="M21 3v5h-5"></path><path d="M21 12a9 9 0 0 1-9 9 9.75 9.75 0 0 1-6.74-2.74L3 16"></path><path d="M8 16H3v5"></path></svg></div><div class="pencraft pc-reset icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></div></div></div></div></a></figure></div><p></p><p>To pay for imports you need hard currency. The most obvious way an economy generates hard currency is through exports (NB: this is a short hand. Actually, businesses generate hard currency through foreign sales, which they may or may not wish to exchange for local currency, but lets not get into the complexities of this at this point). Alternatively you can borrow the foreign exchange, or, if you are a poor country, receive it in aid. Relative to its exports Afghanistan’s trade deficit has been huge. The gap has been closed by aid. Under Taliban rule, far less aid is likely to flow to Afghanistan. </p><p>It is this gap, which makes the question of who controls the reserves of the Afghan central bank and its holdings of foreign currency and gold so critical. Before we get to that a personal message about Chartbook. </p><p><strong>An invitation</strong></p><p>I love putting Chartbook together. But it takes a lot of work. I am delighted that it goes out free to many readers, but if you can afford to pitch in please consider doing so. </p><p>What do you get in return? Great karma and some goodies. </p><p>Top Links normally goes out in the full version only to paying subscribers. If you are enjoying this and would like to get the full emails regularly, sign up for one of the paying options.</p><p>There are three types of subscription:</p><ol><li><p>The <strong>annual subscription: $50 annually</strong></p></li><li><p>The <strong>standard monthly subscription: $5 monthly -</strong> which gives you a bit more flexibility.</p></li><li><p><strong>Founders club:$ 120 annua</strong>lly, or another amount at your discretion - for those who really love Chartbook Newsletter, or read it in a professional setting in which you regularly pay for subscriptions, please consider signing up for the <strong>Founders Club</strong>.</p></li></ol><p class="button-wrapper" data-attrs="{"url":"https://adamtooze.substack.com/subscribe?","text":"Subscribe now","action":null,"class":null}" data-component-name="ButtonCreateButton"><a class="button primary" href="https://adamtooze.substack.com/subscribe?"><span>Subscribe now</span></a></p><p>Other benefits will include a series of reading group sessions I will be organizing with subscribers following the release of <em>Shutdown</em> in the fall.</p><div class="captioned-image-container"><figure><a class="image-link image2" target="_blank" href="https://substackcdn.com/image/fetch/$s_!40vy!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F497a99ee-3aa7-4ca4-a3ff-18b5b4b64ff2_566x854.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!40vy!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F497a99ee-3aa7-4ca4-a3ff-18b5b4b64ff2_566x854.png 424w, https://substackcdn.com/image/fetch/$s_!40vy!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F497a99ee-3aa7-4ca4-a3ff-18b5b4b64ff2_566x854.png 848w, https://substackcdn.com/image/fetch/$s_!40vy!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F497a99ee-3aa7-4ca4-a3ff-18b5b4b64ff2_566x854.png 1272w, https://substackcdn.com/image/fetch/$s_!40vy!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F497a99ee-3aa7-4ca4-a3ff-18b5b4b64ff2_566x854.png 1456w" sizes="100vw"><img src="https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/497a99ee-3aa7-4ca4-a3ff-18b5b4b64ff2_566x854.png" data-attrs="{"src":"https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/497a99ee-3aa7-4ca4-a3ff-18b5b4b64ff2_566x854.png","srcNoWatermark":null,"fullscreen":null,"imageSize":null,"height":null,"width":null,"resizeWidth":null,"bytes":546745,"alt":null,"title":null,"type":"image/png","href":null,"belowTheFold":true,"topImage":false,"internalRedirect":null,"isProcessing":false,"align":null,"offset":false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!40vy!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F497a99ee-3aa7-4ca4-a3ff-18b5b4b64ff2_566x854.png 424w, https://substackcdn.com/image/fetch/$s_!40vy!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F497a99ee-3aa7-4ca4-a3ff-18b5b4b64ff2_566x854.png 848w, https://substackcdn.com/image/fetch/$s_!40vy!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F497a99ee-3aa7-4ca4-a3ff-18b5b4b64ff2_566x854.png 1272w, https://substackcdn.com/image/fetch/$s_!40vy!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F497a99ee-3aa7-4ca4-a3ff-18b5b4b64ff2_566x854.png 1456w" sizes="100vw" loading="lazy"></picture><div></div></div></a></figure></div><p>Back to business</p><p><strong>The Afghan exchange reserves</strong></p><p>As the <em><a href="https://www.washingtonpost.com/us-policy/2021/08/17/treasury-taliban-money-afghanistan/">Washington Post</a></em> reports: “The Afghanistan central bank held $9.4 billion in reserve assets as of April, according to the International Monetary Fund. That amounts to roughly one-third of the country’s annual economic output. The vast majority of those reserves are not currently held in Afghanistan, one of the people familiar with the matter said. Among those, billions of dollars are kept in the United States, although the precise amount is unclear.”</p><p>An urgent conversation about the whereabouts of the $9.4 billion unfolded on twitter in recent days. </p><div data-component-name="Twitter2ToDOM" class="tweet" data-attrs="{"url":"https://twitter.com/jp_koning/status/1427657102630301696","full_text":"Afghanistan's central bank, da Afghanistan Bank, holds 703,005 ounces of gold, all deposited at the Federal Reserve Bank of New York. That's worth US$1.25 billion. It's a safe guess that with the Taliban taking over this gold will be frozen.\n\nSource: <a class=\"tweet-url\" href=\"https://dab.gov.af/sites/default/files/2021-04/DA%20AFGHANISTAN%20BANK%20CONSOLIDATED%20FINANCIAL%20STATEMENTS%20FOR%20THE%20YEAR%20ENDED%20QAWS%20301399%20%28DECEMBER%20202020%29final.pdf\">dab.gov.af/sites/default/…</a> ","username":"jp_koning","name":"John Paul Koning","date":"Tue Aug 17 15:42:32 +0000 2021","photos":[{"img_url":"https://pbs.substack.com/media/E9AOcUzXEAE6QcZ.png","link_url":"https://t.co/xxqImhtCeJ","alt_text":null}],"quoted_tweet":{},"retweet_count":15,"like_count":50,"expanded_url":{},"video_url":null,"belowTheFold":true}"><a class="tweet-link-top" href="https://twitter.com/jp_koning/status/1427657102630301696" target="_blank"><div class="tweet-header"><img class="tweet-header-avatar" src="https://substackcdn.com/image/twitter_name/w_96/jp_koning.jpg" alt="Twitter avatar for @jp_koning" loading="lazy"><div class="tweet-header-text"><span class="tweet-author-name">John Paul Koning </span><span class="tweet-author-handle">@jp_koning</span></div></div><div class="tweet-text">Afghanistan's central bank, da Afghanistan Bank, holds 703,005 ounces of gold, all deposited at the Federal Reserve Bank of New York. That's worth US$1.25 billion. It's a safe guess that with the Taliban taking over this gold will be frozen.
Source: <a class="tweet-url" href="https://dab.gov.af/sites/default/files/2021-04/DA%20AFGHANISTAN%20BANK%20CONSOLIDATED%20FINANCIAL%20STATEMENTS%20FOR%20THE%20YEAR%20ENDED%20QAWS%20301399%20%28DECEMBER%20202020%29final.pdf" target="_blank">dab.gov.af/sites/default/…</a> </div><div class="tweet-photos-container one"><div class="tweet-photo-wrapper "><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!euIF!,w_600,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fpbs.substack.com%2Fmedia%2FE9AOcUzXEAE6QcZ.png"><img class="tweet-photo" src="https://pbs.substack.com/media/E9AOcUzXEAE6QcZ.png" alt="Image" loading="lazy"></picture></div></div></a><a class="tweet-link-bottom" href="https://twitter.com/jp_koning/status/1427657102630301696" target="_blank"><div class="tweet-footer"><span class="tweet-date">3:42 PM ∙ Aug 17, 2021</span><hr><div class="tweet-ufi"><span href="https://twitter.com/jp_koning/status/1427657102630301696/likes" class="likes"><span class="like-count">50</span>Likes</span><span href="https://twitter.com/jp_koning/status/1427657102630301696/retweets" class="retweets"><span class="rt-count">15</span>Retweets</span></div></div></a></div><p>Afghan’s former central bank boss, Ajmal Ahmady, whose escape from Kabul we followed by way of twitter earlier this week, was interviewed by phone by the <em>FT</em> and he confirmed that the reserves were held outside the country. </p><div data-component-name="Twitter2ToDOM" class="tweet" data-attrs="{"url":"https://twitter.com/aahmady/status/1427883009164955649?s=20","full_text":"This thread is to clarify the location of DAB (Central Bank of Afghanistan) international reserves\n\nI am writing this because I have been told Taliban are asking DAB staff about location of assets\n\nIf this is true - it is clear they urgently need to add an economist on their team","username":"aahmady","name":"Ajmal Ahmady","date":"Wed Aug 18 06:40:12 +0000 2021","photos":[],"quoted_tweet":{},"retweet_count":3374,"like_count":8736,"expanded_url":{},"video_url":null,"belowTheFold":true}"><a class="tweet-link-top" href="https://twitter.com/aahmady/status/1427883009164955649?s=20" target="_blank"><div class="tweet-header"><img class="tweet-header-avatar" src="https://substackcdn.com/image/twitter_name/w_96/aahmady.jpg" alt="Twitter avatar for @aahmady" loading="lazy"><div class="tweet-header-text"><span class="tweet-author-name">Ajmal Ahmady </span><span class="tweet-author-handle">@aahmady</span></div></div><div class="tweet-text">This thread is to clarify the location of DAB (Central Bank of Afghanistan) international reserves
I am writing this because I have been told Taliban are asking DAB staff about location of assets
If this is true - it is clear they urgently need to add an economist on their team</div></a><a class="tweet-link-bottom" href="https://twitter.com/aahmady/status/1427883009164955649?s=20" target="_blank"><div class="tweet-footer"><span class="tweet-date">6:40 AM ∙ Aug 18, 2021</span><hr><div class="tweet-ufi"><span href="https://twitter.com/aahmady/status/1427883009164955649?s=20/likes" class="likes"><span class="like-count">8,736</span>Likes</span><span href="https://twitter.com/aahmady/status/1427883009164955649?s=20/retweets" class="retweets"><span class="rt-count">3,374</span>Retweets</span></div></div></a></div><p>As Ahmady concluded his <a href="https://twitter.com/aahmady/status/1427883026256736256?s=20">summary</a>:</p><p>“Therefore, my base case would be the following: - Treasury freezes assets - Taliban have to implement capital controls and limit dollar access - Currency will depreciate - Inflation will rise as currency pass through is very high - This will hurt the poor as food prices increase.”</p><p><strong>If you find Chartbook valuable, why not share with a friend:</strong></p><p class="button-wrapper" data-attrs="{"url":"https://adamtooze.substack.com/?utm_source=substack&utm_medium=email&utm_content=share&action=share","text":"Share Chartbook","action":null,"class":null}" data-component-name="ButtonCreateButton"><a class="button primary" href="https://adamtooze.substack.com/?utm_source=substack&utm_medium=email&utm_content=share&action=share"><span>Share Chartbook</span></a></p><p><strong>Depreciation</strong></p><p>According to <a href="https://www.cnn.com/2021/08/18/business/afghanistan-currency-taliban/index.html">CNN</a>, the Afghani has been trading at a deep discount to the dollar, falling to as low as 100 to the dollar on Saturday before settling around 86.</p><p>At the end of 2020, as this <a href="https://www.cnn.com/2021/08/18/business/afghanistan-currency-taliban/index.html">Bloomberg graphic</a> shows, it was trading around 77 to the dollar. This is clearly a steep depreciation, but not yet a collapse. </p><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!BDU1!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F524c83ba-12bb-495d-b9da-efff0dda33f6_1376x832.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!BDU1!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F524c83ba-12bb-495d-b9da-efff0dda33f6_1376x832.png 424w, https://substackcdn.com/image/fetch/$s_!BDU1!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F524c83ba-12bb-495d-b9da-efff0dda33f6_1376x832.png 848w, https://substackcdn.com/image/fetch/$s_!BDU1!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F524c83ba-12bb-495d-b9da-efff0dda33f6_1376x832.png 1272w, https://substackcdn.com/image/fetch/$s_!BDU1!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F524c83ba-12bb-495d-b9da-efff0dda33f6_1376x832.png 1456w" sizes="100vw"><img src="https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/524c83ba-12bb-495d-b9da-efff0dda33f6_1376x832.png" width="1376" height="832" data-attrs="{"src":"https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/524c83ba-12bb-495d-b9da-efff0dda33f6_1376x832.png","srcNoWatermark":null,"fullscreen":null,"imageSize":null,"height":832,"width":1376,"resizeWidth":null,"bytes":402393,"alt":null,"title":null,"type":"image/png","href":null,"belowTheFold":true,"topImage":false,"internalRedirect":null,"isProcessing":false,"align":null,"offset":false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!BDU1!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F524c83ba-12bb-495d-b9da-efff0dda33f6_1376x832.png 424w, https://substackcdn.com/image/fetch/$s_!BDU1!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F524c83ba-12bb-495d-b9da-efff0dda33f6_1376x832.png 848w, https://substackcdn.com/image/fetch/$s_!BDU1!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F524c83ba-12bb-495d-b9da-efff0dda33f6_1376x832.png 1272w, https://substackcdn.com/image/fetch/$s_!BDU1!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F524c83ba-12bb-495d-b9da-efff0dda33f6_1376x832.png 1456w" sizes="100vw" loading="lazy"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><div class="pencraft pc-reset icon-container restack-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-refresh-cw"><path d="M3 12a9 9 0 0 1 9-9 9.75 9.75 0 0 1 6.74 2.74L21 8"></path><path d="M21 3v5h-5"></path><path d="M21 12a9 9 0 0 1-9 9 9.75 9.75 0 0 1-6.74-2.74L3 16"></path><path d="M8 16H3v5"></path></svg></div><div class="pencraft pc-reset icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></div></div></div></div></a></figure></div><p><strong>Cutting off the dollars</strong></p><p>“Mr. Ahmady”, of the Afghan central bank told the <a href="https://www.wsj.com/articles/u-s-halted-dollar-shipments-to-afghanistan-to-keep-cash-out-of-talibans-hands-11629233621">WSJ</a>, “that bank officials began reducing the amount of cash, including U.S. dollars, held at bank branches in provincial centers earlier this month amid concerns over the Taliban’s advance. By the time the first major provincial capital fell to the Taliban nearly two weeks ago, nearly all U.S. dollars had been repatriated, he said. “During this entire period, no dollars fell into the hands of Taliban before Kabul fell,” Mr. Ahmady said. “All of it was secured.”</p><p>Now the US administration is working to prevent the new power holders in Kabul benefiting from a $450 million issuance of Special Drawing Rights, which the IMF is preparing in the coming days. </p><p><strong>Planeloads of cash:</strong></p><p>This from <a href="http://Afghanistan's previous government, we have to say it was never flush, but it did regularly receive planeloads of cash from the US government and it was used to pay salaries of officials and keep the wheels of government just turning. There were bulk shipments of dollars expected as late as last Sunday, but it never arrived. How important is hard currency? Will the end of that infusion of cash be a big shock for Afghanistan's economy?">Brookings:</a></p><p>“Afghanistan's previous government, we have to say it was never flush, but it did regularly receive planeloads of cash from the US government and it was used to pay salaries of officials and keep the wheels of government just turning. There were bulk shipments of dollars expected as late as last Sunday, but it never arrived.”</p><p><strong>Ajmal Ahmady - a rejected central bank governor </strong></p><p>The tweets by Afghan central banker Ahmady have made him into something of a celebrity witness to the collapse of the Ghani regime. What is less often noted is Ahmady’s own position. He is reputed to be engaged to ex-President Ghani’s daughter. His appointment by Ghani went hand in hand with what appeared to be a politically motivated purge of the central bank and in December 2020 Ahmady’s nomination was rejected by a large majority of the Afghan parliament. </p><p>This report from <em><a href="https://www.centralbanking.com/central-banks/governance/7720661/is-the-integrity-of-afghanistans-central-bank-under-threat">Central Banking</a></em> is a fascinating source, also on the last time that the Taliban were in charge at the Afghan central bank. </p><p>Obviously, Afghanistan is rife with corruption and its politics is bitterly factional. It is a society in which accusations of corruption are easily instrumentalized. Ahmady came into the central bank wielding massive allegations of corruption against senior staff that took many by surprise. <em>Central Banking</em> is a serious source and they are are unable to arbitrate the issue to their satisfaction. In any case, if you want to have some idea of whose commentary you are following on twitter, the piece in <em>Central Banking</em> is an extraordinary mine of information. </p><p><strong>Remittances and Western Union </strong></p><p>Apart from official reserves and exports, another important source of foreign exchange are remittances from the Afghan diaspora. <strong>Remittances amount to nearly 4% of Afghanistan’s gross domestic product. But how does the money reach Afghanistan? </strong></p><p>Afghanistan has a famous network of informal money changers. But as far as western banking agencies are concerned, Afghanistan is now a no go area. <a href="https://www.marketwatch.com/story/how-to-help-people-in-afghanistan-as-western-union-suspends-money-transfers-into-the-country-11629225525">Western Union</a> ceased services to Afghanistan earlier in the week.</p><p class="button-wrapper" data-attrs="{"url":"https://adamtooze.substack.com/subscribe?","text":"Subscribe now","action":null,"class":null}" data-component-name="ButtonCreateButton"><a class="button primary" href="https://adamtooze.substack.com/subscribe?"><span>Subscribe now</span></a></p><p><strong>China & India</strong></p><p>One possible source of support could be China. It will be interesting to see how long it takes before finance begins to be an issue in relations between Kabul and Beijing.</p><p>One American reading is that China may be principally concerned with the $282 billion that it has <a href="https://www.washingtonpost.com/business/energy/how-afghanistan-snagschina-ina-282-billion-creditor-trap/2021/08/18/0a5995b4-007d-11ec-87e0-7e07bd9ce270_story.html">invested in the One Belt One Road projects</a> that span Afghanistan and are anchored in Pakistan.</p><p>In neighboring India there is already <a href="https://www.business-standard.com/article/international/with-taliban-in-power-china-eyes-lucrative-rare-earth-mines-in-afghanistan-121081900984_1.html">fevered speculation</a> about possible investment deals </p><p><strong>Taliban tolls</strong></p><p>Foreign currency is likely to be a serious issue for the Taliban regime, but as far as domestic taxation is concerned, the Taliban have a considerable track record. </p><p>This <a href="https://www.economist.com/asia/2019/05/18/why-afghanistans-government-is-losing-the-war-with-the-taliban">Economist</a> article gives a vivid description of their system of transport tolls. </p><p><strong>Taliban economics</strong></p><p>This <a href="https://l4p.odi.org/assets/images/L4P-Nimroz-study_main-report-13.08.21.pdf">remarkable report</a> by David Mansfield and Graeme Smith published by the ODI think tank gives a deep insight into the way in which the Taliban have recently been taxing the local economy in one Iranian border region. As you can see, its revenue flow is dominated not by illegal drugs but by trade in fuel and border transit. </p><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!zZ1b!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Ffdf3675f-00d1-44a9-8a21-38cae72471be_740x820.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!zZ1b!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Ffdf3675f-00d1-44a9-8a21-38cae72471be_740x820.png 424w, https://substackcdn.com/image/fetch/$s_!zZ1b!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Ffdf3675f-00d1-44a9-8a21-38cae72471be_740x820.png 848w, https://substackcdn.com/image/fetch/$s_!zZ1b!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Ffdf3675f-00d1-44a9-8a21-38cae72471be_740x820.png 1272w, https://substackcdn.com/image/fetch/$s_!zZ1b!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Ffdf3675f-00d1-44a9-8a21-38cae72471be_740x820.png 1456w" sizes="100vw"><img src="https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/fdf3675f-00d1-44a9-8a21-38cae72471be_740x820.png" width="740" height="820" data-attrs="{"src":"https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/fdf3675f-00d1-44a9-8a21-38cae72471be_740x820.png","srcNoWatermark":null,"fullscreen":null,"imageSize":null,"height":820,"width":740,"resizeWidth":null,"bytes":92977,"alt":null,"title":null,"type":"image/png","href":null,"belowTheFold":true,"topImage":false,"internalRedirect":null,"isProcessing":false,"align":null,"offset":false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!zZ1b!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Ffdf3675f-00d1-44a9-8a21-38cae72471be_740x820.png 424w, https://substackcdn.com/image/fetch/$s_!zZ1b!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Ffdf3675f-00d1-44a9-8a21-38cae72471be_740x820.png 848w, https://substackcdn.com/image/fetch/$s_!zZ1b!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Ffdf3675f-00d1-44a9-8a21-38cae72471be_740x820.png 1272w, https://substackcdn.com/image/fetch/$s_!zZ1b!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Ffdf3675f-00d1-44a9-8a21-38cae72471be_740x820.png 1456w" sizes="100vw" loading="lazy"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><div class="pencraft pc-reset icon-container restack-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-refresh-cw"><path d="M3 12a9 9 0 0 1 9-9 9.75 9.75 0 0 1 6.74 2.74L21 8"></path><path d="M21 3v5h-5"></path><path d="M21 12a9 9 0 0 1-9 9 9.75 9.75 0 0 1-6.74-2.74L3 16"></path><path d="M8 16H3v5"></path></svg></div><div class="pencraft pc-reset icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></div></div></div></div></a></figure></div><p></p><p><a href="https://twitter.com/mansfieldintinc?s=20">David Mansfield</a> is a great source to follow on the Afghanistan situation.</p><p>As the <a href="https://www.ft.com/content/25b48967-2d8c-4acd-8699-e0cbdf164cb8">FT reports</a>, the Taliban are attempting to present themselves as a force for narcotic suppression: “Speaking this week at a press conference, Taliban spokesperson Zabihullah Mujahid insisted the movement wanted to eschew drugs and “revive our economy”. “Afghanistan will from now on be a narcotics-free country but it needs international assistance. The international community should help us so that we can have alternative crops,” he said on Tuesday.”</p><p class="button-wrapper" data-attrs="{"url":"https://adamtooze.substack.com/subscribe?","text":"Subscribe now","action":null,"class":null}" data-component-name="ButtonCreateButton"><a class="button primary" href="https://adamtooze.substack.com/subscribe?"><span>Subscribe now</span></a></p><p><strong>Afghanistan 1979</strong></p><p>If you are looking for a glimpse of Afghanistan before it was wrenched into the violent dynamic of the Cold War in 1979, this is a remarkable documentary:</p><div id="youtube2-fHPrU7R8L2Y" class="youtube-wrap" data-attrs="{"videoId":"fHPrU7R8L2Y","startTime":null,"endTime":null}" data-component-name="Youtube2ToDOM"><div class="youtube-inner"><iframe src="https://www.youtube-nocookie.com/embed/fHPrU7R8L2Y?rel=0&autoplay=0&showinfo=0&enablejsapi=0" frameborder="0" loading="lazy" gesture="media" allow="autoplay; fullscreen" allowautoplay="true" allowfullscreen="true" width="728" height="409"></iframe></div></div><p>For the remarkable story of a Afghan film-making and the women archivists who are trying to preserve it this story in the Indian magazine The Wire is fascinating and moving.</p><div data-component-name="Twitter2ToDOM" class="tweet" data-attrs="{"url":"https://twitter.com/thewire_in/status/1427597328081473547","full_text":"It has never been easy to be an Afghan filmmaker.\n\nThe Afghan archivists had managed to save 7,000 movies totalling up to 32,000 hours of 16mm film and 8,000 hours of 35mm film. | <span class=\"tweet-fake-link\">@Plebeian42</span> \n\n","username":"thewire_in","name":"The Wire","date":"Tue Aug 17 11:45:01 +0000 2021","photos":[],"quoted_tweet":{},"retweet_count":19,"like_count":74,"expanded_url":{"url":"https://thewire.in/film/afghan-filmmakers-fear-for-their-lives-and-for-the-safety-of-the-archives","image":"https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/b1c1762f-086f-4823-9254-f866d3aa9972_800x400.jpeg","title":"Afghan Filmmakers Fear For Their Lives – and for the Safety of the Archives","description":"Some of them had attended preservation workshops in India and were cautiously hopeful about the future.","domain":"thewire.in"},"video_url":null,"belowTheFold":true}"><a class="tweet-link-top" href="https://twitter.com/thewire_in/status/1427597328081473547" target="_blank"><div class="tweet-header"><img class="tweet-header-avatar" src="https://substackcdn.com/image/twitter_name/w_96/thewire_in.jpg" alt="Twitter avatar for @thewire_in" loading="lazy"><div class="tweet-header-text"><span class="tweet-author-name">The Wire </span><span class="tweet-author-handle">@thewire_in</span></div></div><div class="tweet-text">It has never been easy to be an Afghan filmmaker.
The Afghan archivists had managed to save 7,000 movies totalling up to 32,000 hours of 16mm film and 8,000 hours of 35mm film. | <span class="tweet-fake-link">@Plebeian42</span>
</div><a class="expanded-link" href="https://thewire.in/film/afghan-filmmakers-fear-for-their-lives-and-for-the-safety-of-the-archives" target="_blank"><img src="https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/b1c1762f-086f-4823-9254-f866d3aa9972_800x400.jpeg" class="expanded-link-img" loading="lazy"><div class="expanded-link-bottom"><span class="expanded-link-domain">thewire.in</span><span class="expanded-link-title">Afghan Filmmakers Fear For Their Lives – and for the Safety of the Archives</span><span class="expanded-link-description">Some of them had attended preservation workshops in India and were cautiously hopeful about the future.</span></div></a></a><a class="tweet-link-bottom" href="https://twitter.com/thewire_in/status/1427597328081473547" target="_blank"><div class="tweet-footer"><span class="tweet-date">11:45 AM ∙ Aug 17, 2021</span><hr><div class="tweet-ufi"><span href="https://twitter.com/thewire_in/status/1427597328081473547/likes" class="likes"><span class="like-count">74</span>Likes</span><span href="https://twitter.com/thewire_in/status/1427597328081473547/retweets" class="retweets"><span class="rt-count">19</span>Retweets</span></div></div></a></div><p></p><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!sQur!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F94f01399-33b0-452f-98ff-41573b6b2467_772x1022.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!sQur!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F94f01399-33b0-452f-98ff-41573b6b2467_772x1022.png 424w, https://substackcdn.com/image/fetch/$s_!sQur!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F94f01399-33b0-452f-98ff-41573b6b2467_772x1022.png 848w, https://substackcdn.com/image/fetch/$s_!sQur!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F94f01399-33b0-452f-98ff-41573b6b2467_772x1022.png 1272w, https://substackcdn.com/image/fetch/$s_!sQur!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F94f01399-33b0-452f-98ff-41573b6b2467_772x1022.png 1456w" sizes="100vw"><img src="https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/94f01399-33b0-452f-98ff-41573b6b2467_772x1022.png" width="772" height="1022" data-attrs="{"src":"https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/94f01399-33b0-452f-98ff-41573b6b2467_772x1022.png","srcNoWatermark":null,"fullscreen":null,"imageSize":null,"height":1022,"width":772,"resizeWidth":null,"bytes":1368823,"alt":null,"title":null,"type":"image/png","href":null,"belowTheFold":true,"topImage":false,"internalRedirect":null,"isProcessing":false,"align":null,"offset":false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!sQur!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F94f01399-33b0-452f-98ff-41573b6b2467_772x1022.png 424w, https://substackcdn.com/image/fetch/$s_!sQur!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F94f01399-33b0-452f-98ff-41573b6b2467_772x1022.png 848w, https://substackcdn.com/image/fetch/$s_!sQur!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F94f01399-33b0-452f-98ff-41573b6b2467_772x1022.png 1272w, https://substackcdn.com/image/fetch/$s_!sQur!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F94f01399-33b0-452f-98ff-41573b6b2467_772x1022.png 1456w" sizes="100vw" loading="lazy"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><div class="pencraft pc-reset icon-container restack-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-refresh-cw"><path d="M3 12a9 9 0 0 1 9-9 9.75 9.75 0 0 1 6.74 2.74L21 8"></path><path d="M21 3v5h-5"></path><path d="M21 12a9 9 0 0 1-9 9 9.75 9.75 0 0 1-6.74-2.74L3 16"></path><path d="M8 16H3v5"></path></svg></div><div class="pencraft pc-reset icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></div></div></div></div></a></figure></div><p class="button-wrapper" data-attrs="{"url":"https://adamtooze.substack.com/p/top-links-13-financing-afghanistans?utm_source=substack&utm_medium=email&utm_content=share&action=share","text":"Share","action":null,"class":null}" data-component-name="ButtonCreateButton"><a class="button primary" href="https://adamtooze.substack.com/p/top-links-13-financing-afghanistans?utm_source=substack&utm_medium=email&utm_content=share&action=share"><span>Share</span></a></p><p></p><!--
{
"post_id": "40252038.adam-tooze-tl-13-can-afghan-cover",
"post_date": "2021-08-20T11:24:01.489Z",
"is_published": true,
"email_sent_at": "2021-08-20T11:24:01.515Z",
"inbox_sent_at": "2021-08-20T11:24:01.515Z",
"type": "newsletter",
"audience": "only_free",
"title": "Adam Tooze TL #13 Can Afghan cover its trade deficit? .... and more on the politics of Afghanistan's central bank. ",
"subtitle": "An invitation to the unsubscribed. "
}
-->
<p></p><p class="button-wrapper" data-attrs="{"url":"https://adamtooze.substack.com/subscribe?","text":"Subscribe now","action":null,"class":null}" data-component-name="ButtonCreateButton"><a class="button primary" href="https://adamtooze.substack.com/subscribe?"><span>Subscribe now</span></a></p><p>As the Taliban establish their grip on power in Kabul, the question of finances rears its head. This matters so much, because the Afghan state has, in the recent past, been heavily dependent on foreign aid. The aid pays not just for government spending. Even more importantly it pays Afghanistan’s import bill. </p><p><strong>Foreign exchange & the central bank reserves</strong></p><p>Covering the import bill is more urgent, because with enough men with guns behind it, a state can tax its population and solve the problem of state finance. The Afghan Army is currently paid for largely by foreign donors. We do not doubt that the Taliban will find ways of maintaining its fighting force in being. It cannot use those same method to pay for foreign imports. And Afghanistan has an appetite for imports far in excess of what its exports pay for. </p><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!or77!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F92d9fc8a-8d3d-4067-aa77-77ed494161de_720x428.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!or77!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F92d9fc8a-8d3d-4067-aa77-77ed494161de_720x428.png 424w, https://substackcdn.com/image/fetch/$s_!or77!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F92d9fc8a-8d3d-4067-aa77-77ed494161de_720x428.png 848w, https://substackcdn.com/image/fetch/$s_!or77!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F92d9fc8a-8d3d-4067-aa77-77ed494161de_720x428.png 1272w, https://substackcdn.com/image/fetch/$s_!or77!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F92d9fc8a-8d3d-4067-aa77-77ed494161de_720x428.png 1456w" sizes="100vw"><img src="https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/92d9fc8a-8d3d-4067-aa77-77ed494161de_720x428.png" width="720" height="428" data-attrs="{"src":"https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/92d9fc8a-8d3d-4067-aa77-77ed494161de_720x428.png","srcNoWatermark":null,"fullscreen":null,"imageSize":null,"height":428,"width":720,"resizeWidth":null,"bytes":42505,"alt":null,"title":null,"type":"image/png","href":null,"belowTheFold":false,"topImage":true,"internalRedirect":null,"isProcessing":false,"align":null,"offset":false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!or77!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F92d9fc8a-8d3d-4067-aa77-77ed494161de_720x428.png 424w, https://substackcdn.com/image/fetch/$s_!or77!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F92d9fc8a-8d3d-4067-aa77-77ed494161de_720x428.png 848w, https://substackcdn.com/image/fetch/$s_!or77!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F92d9fc8a-8d3d-4067-aa77-77ed494161de_720x428.png 1272w, https://substackcdn.com/image/fetch/$s_!or77!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F92d9fc8a-8d3d-4067-aa77-77ed494161de_720x428.png 1456w" sizes="100vw" fetchpriority="high"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><div class="pencraft pc-reset icon-container restack-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-refresh-cw"><path d="M3 12a9 9 0 0 1 9-9 9.75 9.75 0 0 1 6.74 2.74L21 8"></path><path d="M21 3v5h-5"></path><path d="M21 12a9 9 0 0 1-9 9 9.75 9.75 0 0 1-6.74-2.74L3 16"></path><path d="M8 16H3v5"></path></svg></div><div class="pencraft pc-reset icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></div></div></div></div></a></figure></div><p>In round figures, Afghanistan’s trade deficit in 2020 came to $5.69 billion. Its GDP in the same year was c. $20 billion. Its deficit was more than a quarter of GDP! </p><p>To pay for imports you need hard currency. The most obvious way an economy generates hard currency is through exports (NB: this is a short hand. Actually, businesses generate hard currency through foreign sales, which they may or may not wish to exchange for local currency, but lets not get into the complexities of this at this point). Alternatively you can borrow the foreign exchange, or, if you are a poor country, receive it in aid. Relative to its exports Afghanistan’s trade deficit has been huge. The gap has been closed by aid. Under Taliban rule, far less aid is likely to flow to Afghanistan. </p><p>It is this gap, which makes the question of who controls the reserves of the Afghan central bank and its holdings of foreign currency and gold so critical. </p><p><strong>An invitation </strong></p><p>Top Links normally goes out in the full version only to paying subscribers. If you are enjoying this and would like to get the full emails regularly, sign up for one of the paying options.</p><p>There are three types of subscription:</p><ol><li><p>The <strong>annual subscription: $50 annually</strong></p></li><li><p>The <strong>standard monthly subscription: $5 monthly -</strong> which gives you a bit more flexibility.</p></li><li><p><strong>Founders club:$ 120 annua</strong>lly, or another amount at your discretion - for those who really love Chartbook Newsletter, or read it in a professional setting in which you regularly pay for subscriptions, please consider signing up for the <strong>Founders Club</strong>.</p></li></ol><p class="button-wrapper" data-attrs="{"url":"https://adamtooze.substack.com/subscribe?","text":"Subscribe now","action":null,"class":null}" data-component-name="ButtonCreateButton"><a class="button primary" href="https://adamtooze.substack.com/subscribe?"><span>Subscribe now</span></a></p><p>Other benefits will include a series of reading group sessions I will be organizing with subscribers following the release of <em>Shutdown</em> in the fall.</p><p></p><div class="captioned-image-container"><figure><a class="image-link image2" target="_blank" href="https://substackcdn.com/image/fetch/$s_!40vy!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F497a99ee-3aa7-4ca4-a3ff-18b5b4b64ff2_566x854.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!40vy!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F497a99ee-3aa7-4ca4-a3ff-18b5b4b64ff2_566x854.png 424w, https://substackcdn.com/image/fetch/$s_!40vy!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F497a99ee-3aa7-4ca4-a3ff-18b5b4b64ff2_566x854.png 848w, https://substackcdn.com/image/fetch/$s_!40vy!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F497a99ee-3aa7-4ca4-a3ff-18b5b4b64ff2_566x854.png 1272w, https://substackcdn.com/image/fetch/$s_!40vy!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F497a99ee-3aa7-4ca4-a3ff-18b5b4b64ff2_566x854.png 1456w" sizes="100vw"><img src="https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/497a99ee-3aa7-4ca4-a3ff-18b5b4b64ff2_566x854.png" data-attrs="{"src":"https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/497a99ee-3aa7-4ca4-a3ff-18b5b4b64ff2_566x854.png","srcNoWatermark":null,"fullscreen":null,"imageSize":null,"height":null,"width":null,"resizeWidth":null,"bytes":546745,"alt":null,"title":null,"type":"image/png","href":null,"belowTheFold":true,"topImage":false,"internalRedirect":null,"isProcessing":false,"align":null,"offset":false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!40vy!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F497a99ee-3aa7-4ca4-a3ff-18b5b4b64ff2_566x854.png 424w, https://substackcdn.com/image/fetch/$s_!40vy!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F497a99ee-3aa7-4ca4-a3ff-18b5b4b64ff2_566x854.png 848w, https://substackcdn.com/image/fetch/$s_!40vy!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F497a99ee-3aa7-4ca4-a3ff-18b5b4b64ff2_566x854.png 1272w, https://substackcdn.com/image/fetch/$s_!40vy!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F497a99ee-3aa7-4ca4-a3ff-18b5b4b64ff2_566x854.png 1456w" sizes="100vw" loading="lazy"></picture><div></div></div></a></figure></div><p><strong>The Afghan Reserves</strong></p><p>As the <em><a href="https://www.washingtonpost.com/us-policy/2021/08/17/treasury-taliban-money-afghanistan/">Washington Post</a></em> reports: “The Afghanistan central bank held $9.4 billion in reserve assets as of April, according to the International Monetary Fund. That amounts to roughly one-third of the country’s annual economic output. The vast majority of those reserves are not currently held in Afghanistan, one of the people familiar with the matter said. Among those, billions of dollars are kept in the United States, although the precise amount is unclear.”</p><p>An urgent conversation about the whereabouts of the $9.4 billion unfolded on twitter in recent days. </p><div data-component-name="Twitter2ToDOM" class="tweet" data-attrs="{"url":"https://twitter.com/jp_koning/status/1427657102630301696","full_text":"Afghanistan's central bank, da Afghanistan Bank, holds 703,005 ounces of gold, all deposited at the Federal Reserve Bank of New York. That's worth US$1.25 billion. It's a safe guess that with the Taliban taking over this gold will be frozen.\n\nSource: <a class=\"tweet-url\" href=\"https://dab.gov.af/sites/default/files/2021-04/DA%20AFGHANISTAN%20BANK%20CONSOLIDATED%20FINANCIAL%20STATEMENTS%20FOR%20THE%20YEAR%20ENDED%20QAWS%20301399%20%28DECEMBER%20202020%29final.pdf\">dab.gov.af/sites/default/…</a> ","username":"jp_koning","name":"John Paul Koning","date":"Tue Aug 17 15:42:32 +0000 2021","photos":[{"img_url":"https://pbs.substack.com/media/E9AOcUzXEAE6QcZ.png","link_url":"https://t.co/xxqImhtCeJ","alt_text":null}],"quoted_tweet":{},"retweet_count":15,"like_count":50,"expanded_url":{},"video_url":null,"belowTheFold":true}"><a class="tweet-link-top" href="https://twitter.com/jp_koning/status/1427657102630301696" target="_blank"><div class="tweet-header"><img class="tweet-header-avatar" src="https://substackcdn.com/image/twitter_name/w_96/jp_koning.jpg" alt="Twitter avatar for @jp_koning" loading="lazy"><div class="tweet-header-text"><span class="tweet-author-name">John Paul Koning </span><span class="tweet-author-handle">@jp_koning</span></div></div><div class="tweet-text">Afghanistan's central bank, da Afghanistan Bank, holds 703,005 ounces of gold, all deposited at the Federal Reserve Bank of New York. That's worth US$1.25 billion. It's a safe guess that with the Taliban taking over this gold will be frozen.
Source: <a class="tweet-url" href="https://dab.gov.af/sites/default/files/2021-04/DA%20AFGHANISTAN%20BANK%20CONSOLIDATED%20FINANCIAL%20STATEMENTS%20FOR%20THE%20YEAR%20ENDED%20QAWS%20301399%20%28DECEMBER%20202020%29final.pdf" target="_blank">dab.gov.af/sites/default/…</a> </div><div class="tweet-photos-container one"><div class="tweet-photo-wrapper "><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!euIF!,w_600,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fpbs.substack.com%2Fmedia%2FE9AOcUzXEAE6QcZ.png"><img class="tweet-photo" src="https://pbs.substack.com/media/E9AOcUzXEAE6QcZ.png" alt="Image" loading="lazy"></picture></div></div></a><a class="tweet-link-bottom" href="https://twitter.com/jp_koning/status/1427657102630301696" target="_blank"><div class="tweet-footer"><span class="tweet-date">3:42 PM ∙ Aug 17, 2021</span><hr><div class="tweet-ufi"><span href="https://twitter.com/jp_koning/status/1427657102630301696/likes" class="likes"><span class="like-count">50</span>Likes</span><span href="https://twitter.com/jp_koning/status/1427657102630301696/retweets" class="retweets"><span class="rt-count">15</span>Retweets</span></div></div></a></div><p>Afghan’s former central bank boss, Ajmal Ahmady, whose escape from Kabul we followed by way of twitter earlier this week, was interviewed by phone by the <em>FT</em> and he confirmed that the reserves were held outside the country. </p><div data-component-name="Twitter2ToDOM" class="tweet" data-attrs="{"url":"https://twitter.com/aahmady/status/1427883009164955649?s=20","full_text":"This thread is to clarify the location of DAB (Central Bank of Afghanistan) international reserves\n\nI am writing this because I have been told Taliban are asking DAB staff about location of assets\n\nIf this is true - it is clear they urgently need to add an economist on their team","username":"aahmady","name":"Ajmal Ahmady","date":"Wed Aug 18 06:40:12 +0000 2021","photos":[],"quoted_tweet":{},"retweet_count":3374,"like_count":8736,"expanded_url":{},"video_url":null,"belowTheFold":true}"><a class="tweet-link-top" href="https://twitter.com/aahmady/status/1427883009164955649?s=20" target="_blank"><div class="tweet-header"><img class="tweet-header-avatar" src="https://substackcdn.com/image/twitter_name/w_96/aahmady.jpg" alt="Twitter avatar for @aahmady" loading="lazy"><div class="tweet-header-text"><span class="tweet-author-name">Ajmal Ahmady </span><span class="tweet-author-handle">@aahmady</span></div></div><div class="tweet-text">This thread is to clarify the location of DAB (Central Bank of Afghanistan) international reserves
I am writing this because I have been told Taliban are asking DAB staff about location of assets
If this is true - it is clear they urgently need to add an economist on their team</div></a><a class="tweet-link-bottom" href="https://twitter.com/aahmady/status/1427883009164955649?s=20" target="_blank"><div class="tweet-footer"><span class="tweet-date">6:40 AM ∙ Aug 18, 2021</span><hr><div class="tweet-ufi"><span href="https://twitter.com/aahmady/status/1427883009164955649?s=20/likes" class="likes"><span class="like-count">8,736</span>Likes</span><span href="https://twitter.com/aahmady/status/1427883009164955649?s=20/retweets" class="retweets"><span class="rt-count">3,374</span>Retweets</span></div></div></a></div><p>As Ahmady concluded his <a href="https://twitter.com/aahmady/status/1427883026256736256?s=20">summary</a>:</p><p>“Therefore, my base case would be the following: - Treasury freezes assets - Taliban have to implement capital controls and limit dollar access - Currency will depreciate - Inflation will rise as currency pass through is very high - This will hurt the poor as food prices increase.”</p><p><strong>Depreciation</strong></p><p>According to <a href="https://www.cnn.com/2021/08/18/business/afghanistan-currency-taliban/index.html">CNN</a>, the Afghani has been trading at a deep discount to the dollar, falling to as low as 100 to the dollar on Saturday before settling around 86.</p><p>At the end of 2020, as this <a href="https://www.cnn.com/2021/08/18/business/afghanistan-currency-taliban/index.html">Bloomberg graphic</a> shows, it was trading around 77 to the dollar. This is clearly a steep depreciation, but not yet a collapse. </p><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!BDU1!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F524c83ba-12bb-495d-b9da-efff0dda33f6_1376x832.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!BDU1!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F524c83ba-12bb-495d-b9da-efff0dda33f6_1376x832.png 424w, https://substackcdn.com/image/fetch/$s_!BDU1!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F524c83ba-12bb-495d-b9da-efff0dda33f6_1376x832.png 848w, https://substackcdn.com/image/fetch/$s_!BDU1!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F524c83ba-12bb-495d-b9da-efff0dda33f6_1376x832.png 1272w, https://substackcdn.com/image/fetch/$s_!BDU1!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F524c83ba-12bb-495d-b9da-efff0dda33f6_1376x832.png 1456w" sizes="100vw"><img src="https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/524c83ba-12bb-495d-b9da-efff0dda33f6_1376x832.png" width="1376" height="832" data-attrs="{"src":"https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/524c83ba-12bb-495d-b9da-efff0dda33f6_1376x832.png","srcNoWatermark":null,"fullscreen":null,"imageSize":null,"height":832,"width":1376,"resizeWidth":null,"bytes":402393,"alt":null,"title":null,"type":"image/png","href":null,"belowTheFold":true,"topImage":false,"internalRedirect":null,"isProcessing":false,"align":null,"offset":false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!BDU1!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F524c83ba-12bb-495d-b9da-efff0dda33f6_1376x832.png 424w, https://substackcdn.com/image/fetch/$s_!BDU1!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F524c83ba-12bb-495d-b9da-efff0dda33f6_1376x832.png 848w, https://substackcdn.com/image/fetch/$s_!BDU1!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F524c83ba-12bb-495d-b9da-efff0dda33f6_1376x832.png 1272w, https://substackcdn.com/image/fetch/$s_!BDU1!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F524c83ba-12bb-495d-b9da-efff0dda33f6_1376x832.png 1456w" sizes="100vw" loading="lazy"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><div class="pencraft pc-reset icon-container restack-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-refresh-cw"><path d="M3 12a9 9 0 0 1 9-9 9.75 9.75 0 0 1 6.74 2.74L21 8"></path><path d="M21 3v5h-5"></path><path d="M21 12a9 9 0 0 1-9 9 9.75 9.75 0 0 1-6.74-2.74L3 16"></path><path d="M8 16H3v5"></path></svg></div><div class="pencraft pc-reset icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></div></div></div></div></a></figure></div><p class="button-wrapper" data-attrs="{"url":"https://adamtooze.substack.com/subscribe?","text":"Subscribe now","action":null,"class":null}" data-component-name="ButtonCreateButton"><a class="button primary" href="https://adamtooze.substack.com/subscribe?"><span>Subscribe now</span></a></p><p><strong>Cutting off the dollars</strong></p><p>“Mr. Ahmady”, of the Afghan central bank told the <a href="https://www.wsj.com/articles/u-s-halted-dollar-shipments-to-afghanistan-to-keep-cash-out-of-talibans-hands-11629233621">WSJ</a>, “that bank officials began reducing the amount of cash, including U.S. dollars, held at bank branches in provincial centers earlier this month amid concerns over the Taliban’s advance. By the time the first major provincial capital fell to the Taliban nearly two weeks ago, nearly all U.S. dollars had been repatriated, he said. “During this entire period, no dollars fell into the hands of Taliban before Kabul fell,” Mr. Ahmady said. “All of it was secured.”</p><p>Now the US administration is working to prevent the new power holders in Kabul benefiting from a $450 million issuance of Special Drawing Rights, which the IMF is preparing in the coming days. </p><p><strong>Planeloads of cash:</strong></p><p>This from </p><p>Brookings:</p><p>“Afghanistan's previous government, we have to say it was never flush, but it did regularly receive planeloads of cash from the US government and it was used to pay salaries of officials and keep the wheels of government just turning. There were bulk shipments of dollars expected as late as last Sunday, but it never arrived.”</p><p><strong>Ajmal Ahmady - a rejected central bank governor </strong></p><p>The tweets by Afghan central banker Ahmady have made him into something of a celebrity witness to the collapse of the Ghani regime. What is less often noted is Ahmady’s own position. He is reputed to be engaged to ex-President Ghani’s daughter. His appointment by Ghani went hand in hand with what appeared to be a politically motivated purge of the central bank and in December 2020 Ahmady’s nomination was rejected by a large majority of the Afghan parliament. </p><p>This report from <em><a href="https://www.centralbanking.com/central-banks/governance/7720661/is-the-integrity-of-afghanistans-central-bank-under-threat">Central Banking</a></em> is a fascinating source, also on the last time that the Taliban were in charge at the Afghan central bank. </p><p>Obviously, Afghanistan is rife with corruption and its politics is bitterly factional. It is a society in which accusations of corruption are easily instrumentalized. Ahmady came into the central bank wielding massive allegations of corruption against senior staff that took many by surprise. <em>Central Banking</em> is a serious source and they are are unable to arbitrate the issue to their satisfaction. In any case, if you want to have some idea of whose commentary you are following on twitter, the piece in <em>Central Banking</em> is an extraordinary mine of information. </p><p><strong>Remittances and Western Union </strong></p><p>Apart from official reserves and exports, another important source of foreign exchange are remittances from the Afghan diaspora. <strong>Remittances amount to nearly 4% of Afghanistan’s gross domestic product. But how does the money reach Afghanistan? </strong></p><p>Afghanistan has a famous network of informal money changers. But as far as western banking agencies are concerned, Afghanistan is now a no go area. <a href="https://www.marketwatch.com/story/how-to-help-people-in-afghanistan-as-western-union-suspends-money-transfers-into-the-country-11629225525">Western Union</a> ceased services to Afghanistan earlier in the week.</p><p class="button-wrapper" data-attrs="{"url":"https://adamtooze.substack.com/subscribe?","text":"Subscribe now","action":null,"class":null}" data-component-name="ButtonCreateButton"><a class="button primary" href="https://adamtooze.substack.com/subscribe?"><span>Subscribe now</span></a></p><p><strong>China & India</strong></p><p>One possible source of support could be China. It will be interesting to see how long it takes before finance begins to be an issue in relations between Kabul and Beijing.</p><p>One American reading is that China may be principally concerned with the $282 billion that it has <a href="https://www.washingtonpost.com/business/energy/how-afghanistan-snagschina-ina-282-billion-creditor-trap/2021/08/18/0a5995b4-007d-11ec-87e0-7e07bd9ce270_story.html">invested in the One Belt One Road projects</a> that span Afghanistan and are anchored in Pakistan.</p><p>In neighboring India there is already <a href="https://www.business-standard.com/article/international/with-taliban-in-power-china-eyes-lucrative-rare-earth-mines-in-afghanistan-121081900984_1.html">fevered speculation</a> about possible investment deals </p><p><strong>Taliban tolls</strong></p><p>Foreign currency is likely to be a serious issue for the Taliban regime, but as far as domestic taxation is concerned, the Taliban have a considerable track record. </p><p>This <a href="https://www.economist.com/asia/2019/05/18/why-afghanistans-government-is-losing-the-war-with-the-taliban">Economist</a> article gives a vivid description of their system of transport tolls. </p><p><strong>Taliban economics</strong></p><p>This <a href="https://l4p.odi.org/assets/images/L4P-Nimroz-study_main-report-13.08.21.pdf">remarkable report</a> by David Mansfield and Graeme Smith published by the ODI think tank gives a deep insight into the way in which the Taliban have recently been taxing the local economy in one Iranian border region. As you can see, its revenue flow is dominated not by illegal drugs but by trade in fuel and border transit. </p><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!zZ1b!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Ffdf3675f-00d1-44a9-8a21-38cae72471be_740x820.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!zZ1b!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Ffdf3675f-00d1-44a9-8a21-38cae72471be_740x820.png 424w, https://substackcdn.com/image/fetch/$s_!zZ1b!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Ffdf3675f-00d1-44a9-8a21-38cae72471be_740x820.png 848w, https://substackcdn.com/image/fetch/$s_!zZ1b!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Ffdf3675f-00d1-44a9-8a21-38cae72471be_740x820.png 1272w, https://substackcdn.com/image/fetch/$s_!zZ1b!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Ffdf3675f-00d1-44a9-8a21-38cae72471be_740x820.png 1456w" sizes="100vw"><img src="https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/fdf3675f-00d1-44a9-8a21-38cae72471be_740x820.png" width="740" height="820" data-attrs="{"src":"https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/fdf3675f-00d1-44a9-8a21-38cae72471be_740x820.png","srcNoWatermark":null,"fullscreen":null,"imageSize":null,"height":820,"width":740,"resizeWidth":null,"bytes":92977,"alt":null,"title":null,"type":"image/png","href":null,"belowTheFold":true,"topImage":false,"internalRedirect":null,"isProcessing":false,"align":null,"offset":false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!zZ1b!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Ffdf3675f-00d1-44a9-8a21-38cae72471be_740x820.png 424w, https://substackcdn.com/image/fetch/$s_!zZ1b!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Ffdf3675f-00d1-44a9-8a21-38cae72471be_740x820.png 848w, https://substackcdn.com/image/fetch/$s_!zZ1b!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Ffdf3675f-00d1-44a9-8a21-38cae72471be_740x820.png 1272w, https://substackcdn.com/image/fetch/$s_!zZ1b!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Ffdf3675f-00d1-44a9-8a21-38cae72471be_740x820.png 1456w" sizes="100vw" loading="lazy"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><div class="pencraft pc-reset icon-container restack-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-refresh-cw"><path d="M3 12a9 9 0 0 1 9-9 9.75 9.75 0 0 1 6.74 2.74L21 8"></path><path d="M21 3v5h-5"></path><path d="M21 12a9 9 0 0 1-9 9 9.75 9.75 0 0 1-6.74-2.74L3 16"></path><path d="M8 16H3v5"></path></svg></div><div class="pencraft pc-reset icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></div></div></div></div></a></figure></div><p><a href="https://twitter.com/mansfieldintinc?s=20">David Mansfield</a> is a great source to follow on the Afghanistan situation.</p><p>As the <a href="https://www.ft.com/content/25b48967-2d8c-4acd-8699-e0cbdf164cb8">FT reports</a>, the Taliban are attempting to present themselves as a force for narcotic suppression: “Speaking this week at a press conference, Taliban spokesperson Zabihullah Mujahid insisted the movement wanted to eschew drugs and “revive our economy”. “Afghanistan will from now on be a narcotics-free country but it needs international assistance. The international community should help us so that we can have alternative crops,” he said on Tuesday.”</p><p><strong>Afghanistan 1979</strong></p><p>If you are looking for a glimpse of Afghanistan before it was wrenched into the violent dynamic of the Cold War in 1979, this is a remarkable documentary:</p><div id="youtube2-fHPrU7R8L2Y" class="youtube-wrap" data-attrs="{"videoId":"fHPrU7R8L2Y","startTime":null,"endTime":null}" data-component-name="Youtube2ToDOM"><div class="youtube-inner"><iframe src="https://www.youtube-nocookie.com/embed/fHPrU7R8L2Y?rel=0&autoplay=0&showinfo=0&enablejsapi=0" frameborder="0" loading="lazy" gesture="media" allow="autoplay; fullscreen" allowautoplay="true" allowfullscreen="true" width="728" height="409"></iframe></div></div><p>For the remarkable story of a Afghan film-making and the women archivists who are trying to preserve it this story in the Indian magazine The Wire is fascinating and moving.</p><div data-component-name="Twitter2ToDOM" class="tweet" data-attrs="{"url":"https://twitter.com/thewire_in/status/1427597328081473547","full_text":"It has never been easy to be an Afghan filmmaker.\n\nThe Afghan archivists had managed to save 7,000 movies totalling up to 32,000 hours of 16mm film and 8,000 hours of 35mm film. | <span class=\"tweet-fake-link\">@Plebeian42</span> \n\n","username":"thewire_in","name":"The Wire","date":"Tue Aug 17 11:45:01 +0000 2021","photos":[],"quoted_tweet":{},"retweet_count":19,"like_count":74,"expanded_url":{"url":"https://thewire.in/film/afghan-filmmakers-fear-for-their-lives-and-for-the-safety-of-the-archives","image":"https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/b1c1762f-086f-4823-9254-f866d3aa9972_800x400.jpeg","title":"Afghan Filmmakers Fear For Their Lives – and for the Safety of the Archives","description":"Some of them had attended preservation workshops in India and were cautiously hopeful about the future.","domain":"thewire.in"},"video_url":null,"belowTheFold":true}"><a class="tweet-link-top" href="https://twitter.com/thewire_in/status/1427597328081473547" target="_blank"><div class="tweet-header"><img class="tweet-header-avatar" src="https://substackcdn.com/image/twitter_name/w_96/thewire_in.jpg" alt="Twitter avatar for @thewire_in" loading="lazy"><div class="tweet-header-text"><span class="tweet-author-name">The Wire </span><span class="tweet-author-handle">@thewire_in</span></div></div><div class="tweet-text">It has never been easy to be an Afghan filmmaker.
The Afghan archivists had managed to save 7,000 movies totalling up to 32,000 hours of 16mm film and 8,000 hours of 35mm film. | <span class="tweet-fake-link">@Plebeian42</span>
</div><a class="expanded-link" href="https://thewire.in/film/afghan-filmmakers-fear-for-their-lives-and-for-the-safety-of-the-archives" target="_blank"><img src="https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/b1c1762f-086f-4823-9254-f866d3aa9972_800x400.jpeg" class="expanded-link-img" loading="lazy"><div class="expanded-link-bottom"><span class="expanded-link-domain">thewire.in</span><span class="expanded-link-title">Afghan Filmmakers Fear For Their Lives – and for the Safety of the Archives</span><span class="expanded-link-description">Some of them had attended preservation workshops in India and were cautiously hopeful about the future.</span></div></a></a><a class="tweet-link-bottom" href="https://twitter.com/thewire_in/status/1427597328081473547" target="_blank"><div class="tweet-footer"><span class="tweet-date">11:45 AM ∙ Aug 17, 2021</span><hr><div class="tweet-ufi"><span href="https://twitter.com/thewire_in/status/1427597328081473547/likes" class="likes"><span class="like-count">74</span>Likes</span><span href="https://twitter.com/thewire_in/status/1427597328081473547/retweets" class="retweets"><span class="rt-count">19</span>Retweets</span></div></div></a></div><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!sQur!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F94f01399-33b0-452f-98ff-41573b6b2467_772x1022.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!sQur!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F94f01399-33b0-452f-98ff-41573b6b2467_772x1022.png 424w, https://substackcdn.com/image/fetch/$s_!sQur!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F94f01399-33b0-452f-98ff-41573b6b2467_772x1022.png 848w, https://substackcdn.com/image/fetch/$s_!sQur!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F94f01399-33b0-452f-98ff-41573b6b2467_772x1022.png 1272w, https://substackcdn.com/image/fetch/$s_!sQur!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F94f01399-33b0-452f-98ff-41573b6b2467_772x1022.png 1456w" sizes="100vw"><img src="https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/94f01399-33b0-452f-98ff-41573b6b2467_772x1022.png" width="772" height="1022" data-attrs="{"src":"https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/94f01399-33b0-452f-98ff-41573b6b2467_772x1022.png","srcNoWatermark":null,"fullscreen":null,"imageSize":null,"height":1022,"width":772,"resizeWidth":null,"bytes":1368823,"alt":null,"title":null,"type":"image/png","href":null,"belowTheFold":true,"topImage":false,"internalRedirect":null,"isProcessing":false,"align":null,"offset":false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!sQur!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F94f01399-33b0-452f-98ff-41573b6b2467_772x1022.png 424w, https://substackcdn.com/image/fetch/$s_!sQur!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F94f01399-33b0-452f-98ff-41573b6b2467_772x1022.png 848w, https://substackcdn.com/image/fetch/$s_!sQur!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F94f01399-33b0-452f-98ff-41573b6b2467_772x1022.png 1272w, https://substackcdn.com/image/fetch/$s_!sQur!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F94f01399-33b0-452f-98ff-41573b6b2467_772x1022.png 1456w" sizes="100vw" loading="lazy"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><div class="pencraft pc-reset icon-container restack-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-refresh-cw"><path d="M3 12a9 9 0 0 1 9-9 9.75 9.75 0 0 1 6.74 2.74L21 8"></path><path d="M21 3v5h-5"></path><path d="M21 12a9 9 0 0 1-9 9 9.75 9.75 0 0 1-6.74-2.74L3 16"></path><path d="M8 16H3v5"></path></svg></div><div class="pencraft pc-reset icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></div></div></div></div></a><figcaption class="image-caption"></figcaption></figure></div><p class="button-wrapper" data-attrs="{"url":"https://adamtooze.substack.com/subscribe?","text":"Subscribe now","action":null,"class":null}" data-component-name="ButtonCreateButton"><a class="button primary" href="https://adamtooze.substack.com/subscribe?"><span>Subscribe now</span></a></p><p></p><!--
{
"post_id": "40330362.chartbook-42-the-great-inflation",
"post_date": "2021-10-05T14:06:54.731Z",
"is_published": true,
"email_sent_at": "2021-10-05T14:06:54.755Z",
"inbox_sent_at": "2021-10-05T14:06:54.755Z",
"type": "newsletter",
"audience": "everyone",
"title": "Chartbook #42 - The Great Inflation Debate",
"subtitle": "Watching the inflation-watchers "
}
-->
<p class="button-wrapper" data-attrs="{"url":"https://adamtooze.substack.com/subscribe?","text":"Subscribe now","action":null,"class":null}" data-component-name="ButtonCreateButton"><a class="button primary" href="https://adamtooze.substack.com/subscribe?"><span>Subscribe now</span></a></p><p></p><p><strong>Whether we are living through the beginning of a new inflation is uncertain. What is clear is that we are living through a great inflation debate. </strong></p><p>I cannot think of a period in recent memory, in which there was so little agreement on likely future trends.</p><p>The uncertainty causes real anxiety for policy-makers and the public. Does it amount to a crisis of the authority of economics? </p><p>“Nobody Really Knows How the Economy Works” ran the <em><a href="https://www.nytimes.com/2021/10/01/upshot/inflation-economy-analysis.html">New York Times</a></em> headline a few days ago. Might this be the opening for a new and better type of analysis? I would not presume to answer that question. But this is a moment to orientate ourselves. Once again, it is a moment for second-order observation, a moment to watch the inflation-watchers. <strong> </strong></p><p>Why is this moment producing so much controversy and debate? </p><p>First there are the issues with the data themselves. When economic disruptions happen, they unleash adjustments that make the disruptions hard to measure. It is a bitter irony. Precisely when you need them the most, the data get difficult. </p><p>All the evidence both quantitative and qualitative suggests that the actual state of the economy right now is hard to read. The situation is illegible because different parts of the economy are moving at different speeds and in different directions. </p><p>Add to this the fact, that even before the COVID crisis hit, central bank economists were struggling to make sense of what was then a world of lowflation. That uncertainty has carried over to the post-COVID world. If economists struggled to explain low inflation, they now struggle to explain price increases. </p><p>There are some commentators, of course, who are only too ready to offer explanations and remedies. Price adjustments are political, inflation is a boogey man with which to scare conservative constituencies. In Europe, in particular, inflation-fear is about. </p><p>And politics comes in different flavors. Another, novel component of the current landscape are a brilliant group of neo-Keynesian economists, who have built good connections in think tanks and the media and are skillfully seizing this opportunity to prize open chinks in the armor plates of orthodoxy. </p><p>It adds up to a complicated scene. And Chartbook is here to help.</p><p>********</p><p>I love putting together this newsletter and I love the fact that it goes out free to many readers. If you are enjoying the read and can afford to support the project, please consider signing up for one of the three subscription options.</p><ol><li><p>The <strong>annual subscription: $50 annually</strong></p></li><li><p>The <strong>standard monthly subscription: $5 monthly -</strong> which gives you a bit more flexibility.</p></li><li><p><strong>Founders club:$ 120 annua</strong>lly, or another amount at your discretion - for those who really love Chartbook Newsletter, or read it in a professional setting in which you regularly pay for subscriptions, please consider signing up for the <strong>Founders Club</strong>.</p><p class="button-wrapper" data-attrs="{"url":"https://adamtooze.substack.com/subscribe?","text":"Subscribe now","action":null,"class":null}" data-component-name="ButtonCreateButton"><a class="button primary" href="https://adamtooze.substack.com/subscribe?"><span>Subscribe now</span></a></p></li></ol><p>****************</p><p><strong>Data</strong> </p><p>At moments of structural change, it is the weighting schemes that are used to construct price indices that come under pressure. Price index numbers are based on the assumption that the proportion of spending on food, clothing, housing, travel etc remain relatively constant over time. As the <em><a href="https://www.ft.com/content/abad2b97-b40a-4e68-8834-6d7c17dcd404">FT</a></em><a href="https://www.ft.com/content/abad2b97-b40a-4e68-8834-6d7c17dcd404"> </a>explains, statisticians face a dilemma as to whether to hold the share of different goods in the consumption basket constant, or whether to adjust to the new circumstances. Transport spending is down, whereas other goods and services are up. Unsurprisingly, the prices for transport services are rising less fast than for everything else. If you adjust the weights to downgrade the lower level of spending on travel, you produce a higher inflation number. </p><p>This is one of the effects driving inflation above 4 percent in Germany right now. As Bloomberg <a href="https://www.bloomberg.com/news/articles/2021-09-30/german-inflation-jumps-above-4-highest-in-nearly-three-decades?sref=wOrDP8KX">explains</a>:</p><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!dDgW!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F14c60495-0993-4176-839c-19eae4958890_882x306.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!dDgW!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F14c60495-0993-4176-839c-19eae4958890_882x306.png 424w, https://substackcdn.com/image/fetch/$s_!dDgW!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F14c60495-0993-4176-839c-19eae4958890_882x306.png 848w, https://substackcdn.com/image/fetch/$s_!dDgW!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F14c60495-0993-4176-839c-19eae4958890_882x306.png 1272w, https://substackcdn.com/image/fetch/$s_!dDgW!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F14c60495-0993-4176-839c-19eae4958890_882x306.png 1456w" sizes="100vw"><img src="https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/14c60495-0993-4176-839c-19eae4958890_882x306.png" width="882" height="306" data-attrs="{"src":"https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/14c60495-0993-4176-839c-19eae4958890_882x306.png","srcNoWatermark":null,"fullscreen":null,"imageSize":null,"height":306,"width":882,"resizeWidth":null,"bytes":59385,"alt":null,"title":null,"type":"image/png","href":null,"belowTheFold":true,"topImage":false,"internalRedirect":null,"isProcessing":false,"align":null,"offset":false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!dDgW!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F14c60495-0993-4176-839c-19eae4958890_882x306.png 424w, https://substackcdn.com/image/fetch/$s_!dDgW!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F14c60495-0993-4176-839c-19eae4958890_882x306.png 848w, https://substackcdn.com/image/fetch/$s_!dDgW!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F14c60495-0993-4176-839c-19eae4958890_882x306.png 1272w, https://substackcdn.com/image/fetch/$s_!dDgW!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F14c60495-0993-4176-839c-19eae4958890_882x306.png 1456w" sizes="100vw" loading="lazy"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><div class="pencraft pc-reset icon-container restack-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-refresh-cw"><path d="M3 12a9 9 0 0 1 9-9 9.75 9.75 0 0 1 6.74 2.74L21 8"></path><path d="M21 3v5h-5"></path><path d="M21 12a9 9 0 0 1-9 9 9.75 9.75 0 0 1-6.74-2.74L3 16"></path><path d="M8 16H3v5"></path></svg></div><div class="pencraft pc-reset icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></div></div></div></div></a></figure></div><p>For some technical background check out this <a href="https://www.nber.org/papers/w27352">NBER</a> paper.</p><p>Of course, consumption patterns also vary interpersonally. We all have our own personal strategies for adjusting to COVID. To allow for this problem, the <em><a href="https://www.wsj.com/articles/inflation-rate-calculator-customize-your-own-consumer-price-index-11621503004">WSJ</a></em> offered an app that allowed its readers to calculate their own price index. </p><p>It this a historic first? America’s leading business newspaper offering us a statistical app to capture our personal “inflation truth”? </p><p><strong>Baselines</strong></p><p>A far more elementary problem with the inflation indices than the question of weighting, is the question of the baseline that we use to measure inflation. </p><p>Following a shock like 2020, using year-on-year measures of inflation produces a long-lasting echo. The exceptionally depressed level of prices in 2020 makes for remarkable inflation readings in 2021. </p><p>As <a href="https://www.ft.com/content/dcc4bd70-17f7-4289-9958-94a31db15e60">Martin Sandbu</a> points out in a typically level-headed piece, all you have to do to eliminate this effect is to take inflation readings month on month. Measured month-on-month inflation in the United States has been decelerating since the spring of 2021. </p><p><strong>General v. particular</strong> </p><p>A point that cannot be emphasized strongly enough is that the conventional “macro” view of inflation defines it as a “general increase in prices”. The emphasis is on the word “general”. </p><p>For conventional analysis this assumption is essential. </p><p>The point is to distinguish between the underlying causes of price increases. Is the increase in the index the result of a surge in oil prices, driven by the idiosyncratic politics of OPEC+? Or, is the index capturing a widespread increase in prices across the board? The latter might be more moderate in percentage terms, but it might well reflect a more fundamental imbalance in the economy. Macroeconomics - certainly the kitchen sink variety invoked in mainstream commentary - would likely attribute this to an excess of money in circulation, or an excess in aggregate demand, aka “running the economy hot”. Addressing inflation in this more general sense clearly requires a different remedy than addressing an OPEC production cap. </p><p>If we take this distinction between general and particular causes seriously, the sort of inflation that most lends itself to macroeconomic analysis is the kind in which all prices move together. A true (macroeconomic) inflation is one where the price index increases and this is attributable to roughly proportional increases across a large number of sub-components. An increase in the overall index associated with a surge in price dispersion is far harder to interpret. </p><p>The degree of co-movement or dispersion within commonly-used price indices does not attract as much attention as you might expect. But it is at the heart of our current perplexity. </p><p>On the dispersion point, this piece by <a href="https://www.macrochronicles.com/blog/prices-an-uncertain-future/">Macro Chronicles</a> is particularly instructive. It shows a considerable increase in dispersion between early 2020 and 2021. </p><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!8LKK!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F507da6c5-24a0-4481-8a64-963784098130_1344x1022.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!8LKK!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F507da6c5-24a0-4481-8a64-963784098130_1344x1022.png 424w, https://substackcdn.com/image/fetch/$s_!8LKK!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F507da6c5-24a0-4481-8a64-963784098130_1344x1022.png 848w, https://substackcdn.com/image/fetch/$s_!8LKK!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F507da6c5-24a0-4481-8a64-963784098130_1344x1022.png 1272w, https://substackcdn.com/image/fetch/$s_!8LKK!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F507da6c5-24a0-4481-8a64-963784098130_1344x1022.png 1456w" sizes="100vw"><img src="https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/507da6c5-24a0-4481-8a64-963784098130_1344x1022.png" width="502" height="381.7291666666667" data-attrs="{"src":"https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/507da6c5-24a0-4481-8a64-963784098130_1344x1022.png","srcNoWatermark":null,"fullscreen":null,"imageSize":null,"height":1022,"width":1344,"resizeWidth":502,"bytes":187195,"alt":null,"title":null,"type":"image/png","href":null,"belowTheFold":true,"topImage":false,"internalRedirect":null,"isProcessing":false,"align":null,"offset":false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!8LKK!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F507da6c5-24a0-4481-8a64-963784098130_1344x1022.png 424w, https://substackcdn.com/image/fetch/$s_!8LKK!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F507da6c5-24a0-4481-8a64-963784098130_1344x1022.png 848w, https://substackcdn.com/image/fetch/$s_!8LKK!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F507da6c5-24a0-4481-8a64-963784098130_1344x1022.png 1272w, https://substackcdn.com/image/fetch/$s_!8LKK!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F507da6c5-24a0-4481-8a64-963784098130_1344x1022.png 1456w" sizes="100vw" loading="lazy"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><div class="pencraft pc-reset icon-container restack-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-refresh-cw"><path d="M3 12a9 9 0 0 1 9-9 9.75 9.75 0 0 1 6.74 2.74L21 8"></path><path d="M21 3v5h-5"></path><path d="M21 12a9 9 0 0 1-9 9 9.75 9.75 0 0 1-6.74-2.74L3 16"></path><path d="M8 16H3v5"></path></svg></div><div class="pencraft pc-reset icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></div></div></div></div></a></figure></div><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!UWOl!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fa67b80ec-211a-4f31-80a1-792cab3a90e3_1382x1022.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!UWOl!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fa67b80ec-211a-4f31-80a1-792cab3a90e3_1382x1022.png 424w, https://substackcdn.com/image/fetch/$s_!UWOl!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fa67b80ec-211a-4f31-80a1-792cab3a90e3_1382x1022.png 848w, https://substackcdn.com/image/fetch/$s_!UWOl!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fa67b80ec-211a-4f31-80a1-792cab3a90e3_1382x1022.png 1272w, https://substackcdn.com/image/fetch/$s_!UWOl!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fa67b80ec-211a-4f31-80a1-792cab3a90e3_1382x1022.png 1456w" sizes="100vw"><img src="https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/a67b80ec-211a-4f31-80a1-792cab3a90e3_1382x1022.png" width="494" height="365.3169319826339" data-attrs="{"src":"https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/a67b80ec-211a-4f31-80a1-792cab3a90e3_1382x1022.png","srcNoWatermark":null,"fullscreen":null,"imageSize":null,"height":1022,"width":1382,"resizeWidth":494,"bytes":185889,"alt":null,"title":null,"type":"image/png","href":null,"belowTheFold":true,"topImage":false,"internalRedirect":null,"isProcessing":false,"align":null,"offset":false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!UWOl!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fa67b80ec-211a-4f31-80a1-792cab3a90e3_1382x1022.png 424w, https://substackcdn.com/image/fetch/$s_!UWOl!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fa67b80ec-211a-4f31-80a1-792cab3a90e3_1382x1022.png 848w, https://substackcdn.com/image/fetch/$s_!UWOl!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fa67b80ec-211a-4f31-80a1-792cab3a90e3_1382x1022.png 1272w, https://substackcdn.com/image/fetch/$s_!UWOl!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fa67b80ec-211a-4f31-80a1-792cab3a90e3_1382x1022.png 1456w" sizes="100vw" loading="lazy"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><div class="pencraft pc-reset icon-container restack-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-refresh-cw"><path d="M3 12a9 9 0 0 1 9-9 9.75 9.75 0 0 1 6.74 2.74L21 8"></path><path d="M21 3v5h-5"></path><path d="M21 12a9 9 0 0 1-9 9 9.75 9.75 0 0 1-6.74-2.74L3 16"></path><path d="M8 16H3v5"></path></svg></div><div class="pencraft pc-reset icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></div></div></div></div></a></figure></div><p>Not only did the average inflation rate (red dashed line) shift to the right between 2018 and 2021, but the dispersion of different inflation rates across the components of the index, as measured by standard deviation (dotted back line), increased dramatically.</p><p>There have been many excellent pieces about supply-chain obstructions, the price of lumber etc. But without doubt the most entertaining and weirdly instructive was this by Tracy Alloway on <a href="https://www.bloomberg.com/news/articles/2021-08-25/we-need-to-talk-about-the-great-mayonnaise-inflation-mystery ">Mayonnaise inflation</a>. You learn more than you may ever want to know about Mayonnaise, but much else besides. </p><p>What all these data issues add up to is a simple but important point. </p><p>Before getting too worked up about the inability of economists to read our current situation, we should recognize that it is, at least according to these measures, objectively hard to analyze.</p><p class="button-wrapper" data-attrs="{"url":"https://adamtooze.substack.com/subscribe?","text":"Subscribe now","action":null,"class":null}" data-component-name="ButtonCreateButton"><a class="button primary" href="https://adamtooze.substack.com/subscribe?"><span>Subscribe now</span></a></p><p></p><p><strong>Lowflation</strong></p><p>Even before the 2020 shock, <strong>central banks were struggling to formulate a new approach to monetary policy. </strong>First the Fed in August 2020 and then the ECB issued new policy frameworks. Both of their policy moves shifted the balance of policy-making towards a more inflationary position.</p><p>This reflected the fact that neither bank had recently had much success in achieving inflation targets of 2 percent. They had tried very loose monetary policy but with little effect. They were afraid therefore of systematically biasing towards lowflation or even deflation. </p><p>As is explained in an excellent new Substack by <a href="https://duncanweldon.substack.com/p/we-have-no-theory-of-inflation">Duncan Weldon</a>, the central bankers will admit that they do not have a good model of inflation. </p><p>To make this point, Duncan cites a recent speech by Charles Goodhart at the annual European gathering of policy-makers at Sintra. You can see the video <a href="https://www.ecb.europa.eu/pub/conferences/html/20210928_ecb_forum_on_central_banking.en.html">here</a>. </p><p>In his typically succinct style, Goodhart laid out the problem: Neither the simple monetary theory of inflation (too much money chasing too few goods), nor the Phillips curve model (too low unemployment driving excess demand) provided much insight into persistent low inflation.</p><p>The <a href="https://www.ecb.europa.eu/pub/pdf/scpops/ecb.op280~697ef44c1e.en.pdf?79cab242322776ab26ee3c012517ba80d">ECB</a> has just issued a thorough assessment of its consistent tendency to over-predict inflation.</p><p>The result, was that central bankers in practice focused less on fundamentals and more on a rather nebulous notion of inflation expectations. If businesses, consumers and workers converged on some rate of inflation that they expected, then their actions, conditioned on that belief, would likely validate that rate of inflation. So inflation control was about anchoring expectations. That in turn explains all the carefully scripted talking that central bankers do. </p><p><strong>What to expect when you are expecting (h/t </strong><a href="https://stayathomemacro.substack.com/p/what-to-expect-when-youre-expecting">Claudia Sahm</a><strong>)</strong></p><p>But how seriously should we take this somewhat circular conception of inflation as driven by inflation expectation? From inside the Fed itself it has been subject to <a href="https://www.federalreserve.gov/econres/feds/why-do-we-think-that-inflation-expectations-matter-for-Inflation-and-should-we.htm">withering criticism</a> by Jeremy Rudd. </p><p>Rudd’s paper has taken the internet and indeed the media by storm. He is skeptical that expectations can be measured in a meaningful way or that the expectations we can measure have any meaningful relationship to inflationary processes. </p><p>For an excellent appreciation of Rudd’s intervention and its politics see this post by <a href="https://stayathomemacro.substack.com/p/what-to-expect-when-youre-expecting">Claudia Sahm</a>. As Sahm points out, Rudd and his colleagues have been warning since 2014 that the Fed does not have a robust inflation model.</p><blockquote><p>“In January 2014—over seven years ago—Alan Detmeister, Jean-Philippe Laforte, and Jeremy Rudd wrote a <a href="https://www.federalreserve.gov/monetarypolicy/files/FOMC20140117memo02.pdf">memo</a> to the FOMC, delivering some bad news about inflation:</p></blockquote><blockquote><blockquote><p>The observed evolution of the empirical inflation process over time, the difficulty we [the staff] often have in explaining historical inflation developments in terms of fundamentals, and the lack of a consensus theoretical or empirical model of inflation all contribute to making our understanding of inflation dynamics—and our ability to reliably predict inflation—extremely imperfect.</p></blockquote></blockquote><blockquote><p>Fedspeak translation: We don’t know what’s driving inflation. You don’t either. The memo also discusses why inflation expectations aren’t likely a good explanation.”</p></blockquote><p>Unsurprisingly Rudd’s intervention is eliciting pushback from macroeconomists. Among the most forceful is Ricardo Reis. He offers this excellent thread on the issue. </p><div data-component-name="Twitter2ToDOM" class="tweet" data-attrs="{"url":"https://twitter.com/R2Rsquared/status/1444696271835570181","full_text":"For most surveys of expected inflation, is the median a good statistical forecaster of future inflation? Usually not. \nBut does this mean that expected inflation does not matter to understand inflation? Absolutely not. \nForecasting is not the same as understanding, or mattering.","username":"R2Rsquared","name":"Ricardo Reis","date":"Sun Oct 03 16:10:07 +0000 2021","photos":[],"quoted_tweet":{},"retweet_count":94,"like_count":359,"expanded_url":{},"video_url":null,"belowTheFold":true}"><a class="tweet-link-top" href="https://twitter.com/R2Rsquared/status/1444696271835570181" target="_blank"><div class="tweet-header"><img class="tweet-header-avatar" src="https://substackcdn.com/image/twitter_name/w_96/R2Rsquared.jpg" alt="Twitter avatar for @R2Rsquared" loading="lazy"><div class="tweet-header-text"><span class="tweet-author-name">Ricardo Reis </span><span class="tweet-author-handle">@R2Rsquared</span></div></div><div class="tweet-text">For most surveys of expected inflation, is the median a good statistical forecaster of future inflation? Usually not.
But does this mean that expected inflation does not matter to understand inflation? Absolutely not.
Forecasting is not the same as understanding, or mattering.</div></a><a class="tweet-link-bottom" href="https://twitter.com/R2Rsquared/status/1444696271835570181" target="_blank"><div class="tweet-footer"><span class="tweet-date">4:10 PM ∙ Oct 3, 2021</span><hr><div class="tweet-ufi"><span href="https://twitter.com/R2Rsquared/status/1444696271835570181/likes" class="likes"><span class="like-count">359</span>Likes</span><span href="https://twitter.com/R2Rsquared/status/1444696271835570181/retweets" class="retweets"><span class="rt-count">94</span>Retweets</span></div></div></a></div><p>The jist according to Reis: inflation expectations may not be good short-term predictors. But that is not surprising. It would be naive to suggest that this makes them unimportant. And this is particularly the case when what is at stake is a regime-shift. </p><p>Watch this space!</p><p class="button-wrapper" data-attrs="{"url":"https://adamtooze.substack.com/subscribe?","text":"Subscribe now","action":null,"class":null}" data-component-name="ButtonCreateButton"><a class="button primary" href="https://adamtooze.substack.com/subscribe?"><span>Subscribe now</span></a></p><p><strong>Inflation politics </strong></p><p>At this point, if not before, politics definitely enters the picture. We are engaged in a gigantic live experiment with an unprecedented combination of fiscal and monetary policies and a unique supply-shock. Both in the United States and Europe, the political balance is delicately poised. Unsurprisingly, passions are running high. </p><p>The message may be couched in technical language, as in this tweet, but the <a href="https://twitter.com/AEIecon/status/1445106446362808321">American Enterprise Institute</a> wants Chairman Powell to tighten policy. From the old center of the Democratic Party, Larry Summers, who once argued for a 3-4 inflation target, has been sounding the <a href="https://twitter.com/LHSummers/status/1444303042875101186">alarm</a>. </p><p>In Europe, and in Germany, in particular, the scare mongering has been so intense that it provoked the doughty <a href="https://www.ecb.europa.eu/press/key/date/2021/html/ecb.sp210913~031462fe79.en.html">Isabel Schnabel</a> into a vigorous counterattack. </p><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!CYjg!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F2e3b1192-5ef7-44fe-b08b-432c1b3525e7_1924x1070.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!CYjg!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F2e3b1192-5ef7-44fe-b08b-432c1b3525e7_1924x1070.png 424w, https://substackcdn.com/image/fetch/$s_!CYjg!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F2e3b1192-5ef7-44fe-b08b-432c1b3525e7_1924x1070.png 848w, https://substackcdn.com/image/fetch/$s_!CYjg!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F2e3b1192-5ef7-44fe-b08b-432c1b3525e7_1924x1070.png 1272w, https://substackcdn.com/image/fetch/$s_!CYjg!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F2e3b1192-5ef7-44fe-b08b-432c1b3525e7_1924x1070.png 1456w" sizes="100vw"><img src="https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/2e3b1192-5ef7-44fe-b08b-432c1b3525e7_1924x1070.png" width="1456" height="810" data-attrs="{"src":"https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/2e3b1192-5ef7-44fe-b08b-432c1b3525e7_1924x1070.png","srcNoWatermark":null,"fullscreen":null,"imageSize":null,"height":810,"width":1456,"resizeWidth":null,"bytes":1817635,"alt":null,"title":null,"type":"image/png","href":null,"belowTheFold":true,"topImage":false,"internalRedirect":null,"isProcessing":false,"align":null,"offset":false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!CYjg!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F2e3b1192-5ef7-44fe-b08b-432c1b3525e7_1924x1070.png 424w, https://substackcdn.com/image/fetch/$s_!CYjg!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F2e3b1192-5ef7-44fe-b08b-432c1b3525e7_1924x1070.png 848w, https://substackcdn.com/image/fetch/$s_!CYjg!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F2e3b1192-5ef7-44fe-b08b-432c1b3525e7_1924x1070.png 1272w, https://substackcdn.com/image/fetch/$s_!CYjg!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F2e3b1192-5ef7-44fe-b08b-432c1b3525e7_1924x1070.png 1456w" sizes="100vw" loading="lazy"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><div class="pencraft pc-reset icon-container restack-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-refresh-cw"><path d="M3 12a9 9 0 0 1 9-9 9.75 9.75 0 0 1 6.74 2.74L21 8"></path><path d="M21 3v5h-5"></path><path d="M21 12a9 9 0 0 1-9 9 9.75 9.75 0 0 1-6.74-2.74L3 16"></path><path d="M8 16H3v5"></path></svg></div><div class="pencraft pc-reset icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></div></div></div></div></a></figure></div><p>That a German central banker would ever launch a <a href="https://www.ecb.europa.eu/press/key/date/2021/html/ecb.sp210913_annex~88f2b52b3e.en.pdf">slide</a> like this, calling out not just <em>Bild</em>, but <em>Der Spiegel</em> too, would once have been unthinkable. </p><p><strong>Neo-Keynesian opportunity</strong></p><p>What makes the current moment particularly interesting is that the inflation debate is not confined to central bank economists and the mainstream of academic economics. There are powerful voices from the neo-Keynesian left-wing, who thanks to connections forged over the last ten years (we need to talk more about the Occupy moment and the New York scene) are gaining a real hearing. </p><p>The argument is particularly interesting because it calls into question what exactly inflation is. It hones in on that all-important distinction between inflation in general and price increases in particular. In this particular moment, are we in fact dealing with inflation in general at all? Or, is what we are seeing simply the result of particular causes operating across a variety of different sectors. If the latter then the application of restrictive monetary and fiscal policies to cure it would be disastrously inefficient. </p><p>J.W. Mason has spelled out the argument in an interview with Eric Levitz in <a href="https://nymag.com/intelligencer/2021/08/americas-inflation-debate-is-fundamentally-confused.html">New York</a> magazine, which I have recirculated several times, and in this more technical <a href="http://jwmason.org/slackwire/alternative-visions-of-inflation/">blogpost</a>.</p><p>One of the things that is particularly interesting about the neo-Keynesian intervention in the current situation is that they are forcing a reevaluation of the historical inflation record. </p><p><strong>Debating inflation history. </strong></p><p>For those anxious about inflation, the standard references point are the 1970s, when inflation in the US and other rich countries accelerated into the teens and was stopped after 1979 by harsh action by the Fed. But what if our current moment is more like the 1950s inflationary episode associated with the aftermath of World War II and the Korean war? </p><p>That question, believe it or not, has made it into the pages of the <em>Financial Times</em>, courtesy of the excellent column written by @rbrtrmstrng </p><p>A series of exchanges ensued in which <a href="https://www.ft.com/content/189ee652-af56-4d8b-8d1f-b4d05dbcdabf">Gabriel Mathy, Skanda Amarnath and Alex Williams</a> outlined an argument that suggested that early 1950s experience should be seen as a reason to take a relatively relaxed view to our current situation and to reevaluate the role of price controls. There was a response by Larry <a href="https://www.ft.com/content/f8378ca3-9182-4e14-9d54-9d7a213f82b0">Summers & Nouriel Roubini</a> who are not reassured by the 1950s experience. And a comeback from <a href="https://www.ft.com/content/49f2a28d-15f4-47d2-b037-d98c6bc3d124">MAW</a> </p><p>The longer former of the neo-Keynesian argument can be found at the <a href="https://employamerica.medium.com/expecting-inflation-the-case-of-the-1950s-b197c7a926e6">Employ America</a> site. </p><p>This thread from Skanda Amaranth is instructive:</p><div data-component-name="Twitter2ToDOM" class="tweet" data-attrs="{"url":"https://twitter.com/IrvingSwisher/status/1441504054388174850","full_text":"Overdue thread on the piece <span class=\"tweet-fake-link\">@rbrtrmstrng</span> kindly featured and Larry Summers hated…from <span class=\"tweet-fake-link\">@gabriel_mathy</span>, <span class=\"tweet-fake-link\">@vebaccount</span>, &amp; yours truly.\nPolicymaking is based on flaky explanations for the 70s inflation, but they look even flakier when used to explain the 50s 1/\n<a class=\"tweet-url\" href=\"https://employamerica.medium.com/expecting-inflation-the-case-of-the-1950s-b197c7a926e6\">employamerica.medium.com/expecting-infl…</a> ","username":"IrvingSwisher","name":"Skanda Amarnath ( Neoliberal Sellout )","date":"Fri Sep 24 20:45:23 +0000 2021","photos":[],"quoted_tweet":{"full_text":"anyway, @IrvingSwisher @gabriel_mathy and I have a piece up about how stories about the 1970s inflation can't explain even the inflationary episode immediately before (the 1950s), and so we should be skeptical about using the 70s to explain the present https://t.co/R93kl7vZzv","username":"vebaccount","name":"veb"},"retweet_count":13,"like_count":66,"expanded_url":{},"video_url":null,"belowTheFold":true}"><a class="tweet-link-top" href="https://twitter.com/IrvingSwisher/status/1441504054388174850" target="_blank"><div class="tweet-header"><img class="tweet-header-avatar" src="https://substackcdn.com/image/twitter_name/w_96/IrvingSwisher.jpg" alt="Twitter avatar for @IrvingSwisher" loading="lazy"><div class="tweet-header-text"><span class="tweet-author-name">Skanda Amarnath ( Neoliberal Sellout ) </span><span class="tweet-author-handle">@IrvingSwisher</span></div></div><div class="tweet-text">Overdue thread on the piece <span class="tweet-fake-link">@rbrtrmstrng</span> kindly featured and Larry Summers hated…from <span class="tweet-fake-link">@gabriel_mathy</span>, <span class="tweet-fake-link">@vebaccount</span>, & yours truly.
Policymaking is based on flaky explanations for the 70s inflation, but they look even flakier when used to explain the 50s 1/
<a class="tweet-url" href="https://employamerica.medium.com/expecting-inflation-the-case-of-the-1950s-b197c7a926e6" target="_blank">employamerica.medium.com/expecting-infl…</a> </div><div class="quote-tweet"><div class="quote-tweet-header"><img class="quote-tweet-header-avatar" src="https://substackcdn.com/image/twitter_name/w_40/vebaccount.jpg" alt="Twitter avatar for @vebaccount" loading="lazy"><div class="quote-tweet-header-text"><span class="quote-tweet-name">veb </span><span class="quote-tweet-username">@vebaccount</span></div></div>anyway, @IrvingSwisher @gabriel_mathy and I have a piece up about how stories about the 1970s inflation can't explain even the inflationary episode immediately before (the 1950s), and so we should be skeptical about using the 70s to explain the present https://t.co/R93kl7vZzv</div></a><a class="tweet-link-bottom" href="https://twitter.com/IrvingSwisher/status/1441504054388174850" target="_blank"><div class="tweet-footer"><span class="tweet-date">8:45 PM ∙ Sep 24, 2021</span><hr><div class="tweet-ufi"><span href="https://twitter.com/IrvingSwisher/status/1441504054388174850/likes" class="likes"><span class="like-count">66</span>Likes</span><span href="https://twitter.com/IrvingSwisher/status/1441504054388174850/retweets" class="retweets"><span class="rt-count">13</span>Retweets</span></div></div></a></div><p>Piling onto the debate, Tim Barker weighs in at <a href="https://history-of-the-present.ghost.io/the-1950s-and-the-1970s/">The History of the Present</a> blog on the true history of Fed policy in the 1950s. </p><div data-component-name="Twitter2ToDOM" class="tweet" data-attrs="{"url":"https://twitter.com/DavidpStein/status/1441527531832627201","full_text":"An important intervention from <span class=\"tweet-fake-link\">@_TimBarker</span> on the political economy of the 1950s. TLDR: the Fed was hawkish on inflation far before 1979. \n","username":"DavidpStein","name":"David Stein","date":"Fri Sep 24 22:18:40 +0000 2021","photos":[],"quoted_tweet":{},"retweet_count":5,"like_count":34,"expanded_url":{"url":"https://history-of-the-present.ghost.io/the-1950s-and-the-1970s/","image":"https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/6f5394b3-06d5-4f39-bec9-e3b946425c4a_546x361.png","title":"Unemployment and Inflation in the 1950s","description":"In a recent research report from Employ America,\n[https://www.employamerica.org/researchreports/expecting-inflation-the-case-of-the-1950s/] Gabriel Mathy, Skanda Amarnath, and Alex Williams look to the 1950s for yet more\nevidence against the faltering conventional view of inflation (a view always\nf…","domain":"history-of-the-present.ghost.io"},"video_url":null,"belowTheFold":true}"><a class="tweet-link-top" href="https://twitter.com/DavidpStein/status/1441527531832627201" target="_blank"><div class="tweet-header"><img class="tweet-header-avatar" src="https://substackcdn.com/image/twitter_name/w_96/DavidpStein.jpg" alt="Twitter avatar for @DavidpStein" loading="lazy"><div class="tweet-header-text"><span class="tweet-author-name">David Stein </span><span class="tweet-author-handle">@DavidpStein</span></div></div><div class="tweet-text">An important intervention from <span class="tweet-fake-link">@_TimBarker</span> on the political economy of the 1950s. TLDR: the Fed was hawkish on inflation far before 1979.
</div><a class="expanded-link" href="https://history-of-the-present.ghost.io/the-1950s-and-the-1970s/" target="_blank"><img src="https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/6f5394b3-06d5-4f39-bec9-e3b946425c4a_546x361.png" class="expanded-link-img" loading="lazy"><div class="expanded-link-bottom"><span class="expanded-link-domain">history-of-the-present.ghost.io</span><span class="expanded-link-title">Unemployment and Inflation in the 1950s</span><span class="expanded-link-description">In a recent research report from Employ America,
[https://www.employamerica.org/researchreports/expecting-inflation-the-case-of-the-1950s/] Gabriel Mathy, Skanda Amarnath, and Alex Williams look to the 1950s for yet more
evidence against the faltering conventional view of inflation (a view always
f…</span></div></a></a><a class="tweet-link-bottom" href="https://twitter.com/DavidpStein/status/1441527531832627201" target="_blank"><div class="tweet-footer"><span class="tweet-date">10:18 PM ∙ Sep 24, 2021</span><hr><div class="tweet-ufi"><span href="https://twitter.com/DavidpStein/status/1441527531832627201/likes" class="likes"><span class="like-count">34</span>Likes</span><span href="https://twitter.com/DavidpStein/status/1441527531832627201/retweets" class="retweets"><span class="rt-count">5</span>Retweets</span></div></div></a></div><p>Taking up the cause, Andrew Elrod in the <em><a href="https://bostonreview.net/class-inequality-politics/andrew-elrod-specter-inflation">Boston Review</a></em> argues: “So long as journalists and thinkers continue to imagine “inflation” as a monolithic historical experience, … a serious discussion of how to think about inflation will be impossible.”</p><p>To remedy this problem he offers a fascinating reconstruction of America’s inflation history since 1945, focusing on the episode in the 1950s and 1970s. </p><p>The upshot is that inflation is not always a matter of total excess demand. It can also result from sectoral mismatches of supply and demand. If this is the case then restricting aggregate demand is a blunt instrument with side effects that have scarred America’s political economy for the last fifty years. </p><blockquote><p>“It is under the timorous banner of price stability that liberals have acceded to conservative demands for austerity over the last forty years of neoliberal consensus, delivering decades of skyrocketing inequality, stagnant wages, and deteriorating public services.” </p></blockquote><blockquote><p>“Confronting a period of instability and rising aspirations—historically accompanied by rising prices—requires nothing less than making history. Given the sheer size and influence of the politically managed public sector of our mixed economy, there is no way to pursue economic change without risking some degree of inflation. The true culprit in the winnowing of our political imaginations over the last forty years has been a bipartisan embrace of fiscal austerity and monetary contraction as the first weapons in the pursuit of price stability. … It is the insistence on depressing activity to stabilize prices before all else that has helped to disfigure our society and political life, diminishing our capacity for shaping and guiding our society’s historical development. Until we seriously consider the record of methods for controlling inflation, a future out from under these trends will be foreclosed.”</p></blockquote><blockquote><p>As Elrod points out, “managed economies across the globe have often resorted to a variety of other tools—temporary price freezes, selective price controls, national wage policies, and targeted investments to expand supply-chain bottlenecks—to respond to rising prices while preserving commitments to more important economic goals. Both Harry Truman and Franklin Roosevelt confronted inflation without hiking rates and tightening budgets, and there is no reason governments can’t manage their economies similarly today. ….”</p></blockquote><p>How price controls help to repress inflation is clear enough. A post-Keynesian specialty is to think of investment, also, as a means of rebalancing supply and demand by easing bottlenecks in key sectors. </p><p>Meanwhile, the 1945-1950 inflation meme has spread to the UK, where Neil Shearing of Capital Economics has put out a <a href="https://www.ft.com/content/b955bd40-b750-4d1c-98a6-9b719bed0e19">paper</a> on inflation in the aftermath of World War II. Someone should do an intervention on the West German experience at the same time.</p><p><strong>Conclusion?</strong></p><p>Does all of this resolve the question of what level of inflation to expect in 2022 and 2023? Hardly.</p><p>Personally, I remain committed to the transitory view. Above all, however, it is the process itself that we should welcome and encourage. When we talk about the politics of money this is the kind of debate we should encourage. Open in empirical, theoretical and political terms. Engaged with history in every sense of the word. </p><p class="button-wrapper" data-attrs="{"url":"https://adamtooze.substack.com/subscribe?","text":"Subscribe now","action":null,"class":null}" data-component-name="ButtonCreateButton"><a class="button primary" href="https://adamtooze.substack.com/subscribe?"><span>Subscribe now</span></a></p><p></p><p></p><p></p><p></p><!--
{
"post_id": "40504935.chartbook-35-its-not-the-fall-that",
"post_date": "2021-08-28T10:39:00.957Z",
"is_published": true,
"email_sent_at": "2021-08-28T10:39:00.985Z",
"inbox_sent_at": "2021-08-28T10:39:00.985Z",
"type": "newsletter",
"audience": "everyone",
"title": "Chartbook #35: It's not the fall that kills you .... Afghanistan's looming triple crisis ",
"subtitle": "How a sudden stop threatens to compound a humanitarian and political crisis. "
}
-->
<p>“It’s not the fall that kills you. It’s the sudden stop.”</p><p class="button-wrapper" data-attrs="{"url":"https://adamtooze.substack.com/subscribe?","text":"Subscribe now","action":null,"class":null}" data-component-name="ButtonCreateButton"><a class="button primary" href="https://adamtooze.substack.com/subscribe?"><span>Subscribe now</span></a></p><p>Back in July I was drawn into the Afghan crisis by the shocking question: “What do you do if you can see the end of your world approaching? Do you flee? Do you resign yourself?”</p><p>One month on I fear that what we are watching is the lid of the coffin closing, the earth raining down on a society being buried alive. </p><p>There is the threat of draconian Taliban rule, but that is compounded by the economic and the financial situation facing Afghanistan in the wake of the foreign evacuation. </p><p>As I put it in a short piece published in <a href="https://foreignpolicy.com/2021/08/27/afghanistan-taliban-economy-aid-sanctions-united-states-west/">Foreign Policy</a> Friday: “The Taliban may threaten Afghanis’ freedom and rights, but it is the abrupt end to funding from the West that jeopardizes Afghanistan’s material survival.”</p><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!4CHe!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F700f647a-3781-4652-b6ee-234e9b5a26ad_824x520.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!4CHe!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F700f647a-3781-4652-b6ee-234e9b5a26ad_824x520.png 424w, https://substackcdn.com/image/fetch/$s_!4CHe!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F700f647a-3781-4652-b6ee-234e9b5a26ad_824x520.png 848w, https://substackcdn.com/image/fetch/$s_!4CHe!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F700f647a-3781-4652-b6ee-234e9b5a26ad_824x520.png 1272w, https://substackcdn.com/image/fetch/$s_!4CHe!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F700f647a-3781-4652-b6ee-234e9b5a26ad_824x520.png 1456w" sizes="100vw"><img src="https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/700f647a-3781-4652-b6ee-234e9b5a26ad_824x520.png" width="579" height="365.3883495145631" data-attrs="{"src":"https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/700f647a-3781-4652-b6ee-234e9b5a26ad_824x520.png","srcNoWatermark":null,"fullscreen":null,"imageSize":null,"height":520,"width":824,"resizeWidth":579,"bytes":81862,"alt":null,"title":null,"type":"image/png","href":null,"belowTheFold":false,"topImage":true,"internalRedirect":null,"isProcessing":false,"align":null,"offset":false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!4CHe!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F700f647a-3781-4652-b6ee-234e9b5a26ad_824x520.png 424w, https://substackcdn.com/image/fetch/$s_!4CHe!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F700f647a-3781-4652-b6ee-234e9b5a26ad_824x520.png 848w, https://substackcdn.com/image/fetch/$s_!4CHe!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F700f647a-3781-4652-b6ee-234e9b5a26ad_824x520.png 1272w, https://substackcdn.com/image/fetch/$s_!4CHe!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F700f647a-3781-4652-b6ee-234e9b5a26ad_824x520.png 1456w" sizes="100vw" fetchpriority="high"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><div class="pencraft pc-reset icon-container restack-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-refresh-cw"><path d="M3 12a9 9 0 0 1 9-9 9.75 9.75 0 0 1 6.74 2.74L21 8"></path><path d="M21 3v5h-5"></path><path d="M21 12a9 9 0 0 1-9 9 9.75 9.75 0 0 1-6.74-2.74L3 16"></path><path d="M8 16H3v5"></path></svg></div><div class="pencraft pc-reset icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></div></div></div></div></a></figure></div><p>The Taliban must be held responsible for their violation of human rights, but if the Western powers treat access to Afghanistan’s foreign exchange reserves and financial aid as a means of disciplining Kabul - as was recently suggested by the G7 - it is we who are putting in jeopardy the survival of the Afghan population and what is left in Afghanistan of a modern economy. </p><p>My brilliant friend Nick Mulder (Cornell) is about to publish an important book with <a href="https://yalebooks.co.uk/display.asp?k=9780300259360">Yale University Press</a> about the history and politics of sanctions. </p><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!swtv!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F9fcf6dba-73ba-4304-b028-2e3d08db0697_1004x1454.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!swtv!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F9fcf6dba-73ba-4304-b028-2e3d08db0697_1004x1454.png 424w, https://substackcdn.com/image/fetch/$s_!swtv!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F9fcf6dba-73ba-4304-b028-2e3d08db0697_1004x1454.png 848w, https://substackcdn.com/image/fetch/$s_!swtv!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F9fcf6dba-73ba-4304-b028-2e3d08db0697_1004x1454.png 1272w, https://substackcdn.com/image/fetch/$s_!swtv!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F9fcf6dba-73ba-4304-b028-2e3d08db0697_1004x1454.png 1456w" sizes="100vw"><img src="https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/9fcf6dba-73ba-4304-b028-2e3d08db0697_1004x1454.png" width="409" height="592.316733067729" data-attrs="{"src":"https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/9fcf6dba-73ba-4304-b028-2e3d08db0697_1004x1454.png","srcNoWatermark":null,"fullscreen":null,"imageSize":null,"height":1454,"width":1004,"resizeWidth":409,"bytes":1427820,"alt":null,"title":null,"type":"image/png","href":null,"belowTheFold":true,"topImage":false,"internalRedirect":null,"isProcessing":false,"align":null,"offset":false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!swtv!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F9fcf6dba-73ba-4304-b028-2e3d08db0697_1004x1454.png 424w, https://substackcdn.com/image/fetch/$s_!swtv!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F9fcf6dba-73ba-4304-b028-2e3d08db0697_1004x1454.png 848w, https://substackcdn.com/image/fetch/$s_!swtv!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F9fcf6dba-73ba-4304-b028-2e3d08db0697_1004x1454.png 1272w, https://substackcdn.com/image/fetch/$s_!swtv!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F9fcf6dba-73ba-4304-b028-2e3d08db0697_1004x1454.png 1456w" sizes="100vw" loading="lazy"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><div class="pencraft pc-reset icon-container restack-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-refresh-cw"><path d="M3 12a9 9 0 0 1 9-9 9.75 9.75 0 0 1 6.74 2.74L21 8"></path><path d="M21 3v5h-5"></path><path d="M21 12a9 9 0 0 1-9 9 9.75 9.75 0 0 1-6.74-2.74L3 16"></path><path d="M8 16H3v5"></path></svg></div><div class="pencraft pc-reset icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></div></div></div></div></a></figure></div><p>Nick’s take on the history of sanctions is highly critical. He does a brilliant job explaining the remorseless logic of liberalism’s preeminent coercive weapon. Indeed, he places it in continuity with the logic of nuclear deterrence. It is going to be a widely debated book. </p><p>Whether you are for or against the sanctions weapon, if there was ever a case that revealed the pitiless violence of liberalism’s preeminent means of international coercion, it is Afghanistan. Not only is the majority of the Afghan population intensely vulnerable. They are amongst the poorest people on the planet. But the bit of Afghan society that has seen some economic development, was reared, educated and financially animated by the US-led coalition over the course of the twenty-year intervention. Cutting off finance to Afghanistan is not like sanctioning an autonomous, free-standing, self-sustaining society. We are deliberately throttling the life support of an organism that we in large part created and remains critically dependent on us. If the Taliban’s aim is to demodernize Afghan society then we will be doing their work for them. </p><p>At their most cynical, sanctions are a deliberate attempt to trigger an ungovernable humanitarian crisis, which will undermine Taliban authority. That would be a crime against the millions who will suffer the effects including millions of children. The only circumstance under which the sanctions serve in a more measured way as a strategic tool, is if the Taliban have discovered that they do not, in fact, want to demodernize Afghanistan, but have an interest in maintaining whatever economic development has taken place. If that is the case, it is all the more perverse for us to be the force crushing the elements of modernity that we ourselves have helped to foster. </p><p>Appeals for generous funding have been made in recent days amongst others by <a href="https://www.ft.com/content/a278c39a-d7f2-4a2a-8d45-43ecf3879a0e">Saad Mohseni</a> and by <a href="https://www.ft.com/content/6395d167-3175-4332-8329-ae1478c616ca">Ajmal Ahmady</a>. We should support them. </p><p>In this newsletter I want not only to revisit some of the economic and social data that show how acutely dangerous this crisis is. I also want to make an analytical distinction between three different crises. </p><p>First there is the political crisis of Taliban conquest and seizure of power. </p><p>Then there is the looming humanitarian crisis. This results from Afghanistan’s chronic poverty compounded by war and environmental shocks. According to the <a href="https://secure.wfpusa.org/donate/save-lives-places-afghanistan-today-1?ms=2108_UNR_Afghanistan_Google_SRCH&gclid=Cj0KCQjwvaeJBhCvARIsABgTDM45AeSllOj8X9TBSxbtMmfN0puNyrfdR9VKw_nF-3vBuaUXOHukQukaAmXfEALw_wcB">World Food Program</a>, half of Afghanistan’s population is in need of assistance. Millions of children are malnourished. The harvest in 2021 has been devastated by drought. </p><p>On top of those threats, Afghanistan’s macroeconomic situation is menacing. The bit of Afghan society that was not dependent on basic agriculture or immediately reliant on foreign aid - let us call it “urban Afghanistan” for short - lives in an economy that is fueled by foreign payments. That funding is now abruptly halted and is being made into a diplomatic weapon. The idea seems to be to release it only on condition of “good behavior” by the Taliban. The consequences for urban Afghanistan will be dire. </p><p>Before getting into the nitty gritty, it is worth taking a brief detour into history. Timothy Nunan (FU Berlin), who wrote a brilliant <a href="https://www.cambridge.org/de/academic/subjects/history/global-history/humanitarian-invasion-global-development-cold-war-afghanistan?format=HB">book</a> on the history of rivalrous modernization projects in Afghanistan, has given us his historical perspective on the current crisis in an excellent essay in <a href="https://www.noemamag.com/the-end-of-nation-building/">Noema</a>. </p><p class="button-wrapper" data-attrs="{"url":"https://adamtooze.substack.com/subscribe?","text":"Subscribe now","action":null,"class":null}" data-component-name="ButtonCreateButton"><a class="button primary" href="https://adamtooze.substack.com/subscribe?"><span>Subscribe now</span></a></p><p>As Nunan points out, both the common clichés about Afghanistan - medieval and/or graveyard of empires - obscure the fact that the country has, in fact, been a laboratory of modern political experimentation. </p><blockquote><p>“Yet, the “graveyard of empires” narrative obscures as much as it illuminates. It makes Afghans bit players, rather than protagonists, to their own history. And it fails to explain why Afghanistan has been at the margins of geopolitics for much of its modern history, in particular for much of the twentieth century. The Afghans won their independence from the British in 1919, only to discover that with liberty came an end to British subsidies. New state monopolies and tariffs allowed Kabul’s rulers to gain a measure of economic self-sufficiency. Fundamentally, however, the resources inside Afghanistan’s borders could not pay for the costs of governing the space within those borders.</p></blockquote><blockquote><p>Thus was born the real pattern to modern Afghan history, namely that of Afghan elites appealing to foreigners to subsidize and build up the Afghan state. Afghanistan became a field onto which outsiders could project norms of statehood, development and modernity. Ottoman and Indian Muslim technocrats flocked to Afghanistan to shore up one of the Muslim world’s few independent states with constitutions, officer schools and printing presses. Like their German and Italian successors in Kabul, these foreigners sought not to conquer Afghanistan, but rather embed it in a coalition of states that could challenge the British-dominated interwar world order.</p></blockquote><p>This passage really struck me because this is exactly what we see in Afghanistan’s economic balance of the last thirty years. </p><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!cDcz!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F1655d107-aa2d-4688-9ab1-410a040e6b92_1294x1046.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!cDcz!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F1655d107-aa2d-4688-9ab1-410a040e6b92_1294x1046.png 424w, https://substackcdn.com/image/fetch/$s_!cDcz!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F1655d107-aa2d-4688-9ab1-410a040e6b92_1294x1046.png 848w, https://substackcdn.com/image/fetch/$s_!cDcz!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F1655d107-aa2d-4688-9ab1-410a040e6b92_1294x1046.png 1272w, https://substackcdn.com/image/fetch/$s_!cDcz!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F1655d107-aa2d-4688-9ab1-410a040e6b92_1294x1046.png 1456w" sizes="100vw"><img src="https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/1655d107-aa2d-4688-9ab1-410a040e6b92_1294x1046.png" width="1294" height="1046" data-attrs="{"src":"https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/1655d107-aa2d-4688-9ab1-410a040e6b92_1294x1046.png","srcNoWatermark":null,"fullscreen":null,"imageSize":null,"height":1046,"width":1294,"resizeWidth":null,"bytes":130023,"alt":null,"title":null,"type":"image/png","href":null,"belowTheFold":true,"topImage":false,"internalRedirect":null,"isProcessing":false,"align":null,"offset":false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!cDcz!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F1655d107-aa2d-4688-9ab1-410a040e6b92_1294x1046.png 424w, https://substackcdn.com/image/fetch/$s_!cDcz!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F1655d107-aa2d-4688-9ab1-410a040e6b92_1294x1046.png 848w, https://substackcdn.com/image/fetch/$s_!cDcz!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F1655d107-aa2d-4688-9ab1-410a040e6b92_1294x1046.png 1272w, https://substackcdn.com/image/fetch/$s_!cDcz!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F1655d107-aa2d-4688-9ab1-410a040e6b92_1294x1046.png 1456w" sizes="100vw" loading="lazy"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><div class="pencraft pc-reset icon-container restack-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-refresh-cw"><path d="M3 12a9 9 0 0 1 9-9 9.75 9.75 0 0 1 6.74 2.74L21 8"></path><path d="M21 3v5h-5"></path><path d="M21 12a9 9 0 0 1-9 9 9.75 9.75 0 0 1-6.74-2.74L3 16"></path><path d="M8 16H3v5"></path></svg></div><div class="pencraft pc-reset icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></div></div></div></div></a></figure></div><p>Source: <a href="https://documents1.worldbank.org/curated/en/682381509958023712/pdf/120906-WP-PUBLIC-AFGtradeandtransitreportFINALNovtoupload.pdf">World Bank</a></p><p>Afghanistan in the 1990s, during the period of warlord battles, habitually ran a trade deficit, but it was small . It was when a new elite was installed in power after 2001, with new foreign backers that the trade deficit blew out. One could hardly ask for a clearer demonstration of Nunan’s diagnosis. </p><p>Recently, the deficit has hovered somewhere between 25 and 30 percent of GDP. This is a huge imbalance, which creates a corresponding risk of a sudden stop. </p><p>To be clear, to run a trade deficit is not necessarily a bad thing, especially for a very poor country. We tend to think of imports as an economic “bad”, whereas exports are considered an economic “good”. Of course, there may be some imports that are frivolous or undesirable. Naturally it can be a source of pride if a country makes things or offers services that the world wants to buy. But it is not surprising that a poor country cannot offer these. If it could, it would not be poor. It is almost definitional of modernity that in a poor country the population’s wants should exceed their ability to satisfy them. In this sense having a trade deficit is a sign that life has a modern pulse. </p><p>International trade is not an Olympic sport in which the country with the biggest trade surplus wins the gold medal. If you are looking for an analogy it is better to think of the economy as a metabolism for which imports serve as the food or fuel. They are essential to preserving the society or economy in being. Cutting them off risks metabolic collapse, in other words a severe recession. That is what is threatening urban Afghanistan in the current moment. That economic shock comes on top of the gigantic humanitarian crisis of chronic malnourishment and poverty - amplified in recent years by the shocks of mounting civil war and drought. </p><p>What kind of things does Afghanistan import? </p><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!gLS1!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F4be5423f-0267-4294-8548-b605e2cbdafa_1240x1294.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!gLS1!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F4be5423f-0267-4294-8548-b605e2cbdafa_1240x1294.png 424w, https://substackcdn.com/image/fetch/$s_!gLS1!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F4be5423f-0267-4294-8548-b605e2cbdafa_1240x1294.png 848w, https://substackcdn.com/image/fetch/$s_!gLS1!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F4be5423f-0267-4294-8548-b605e2cbdafa_1240x1294.png 1272w, https://substackcdn.com/image/fetch/$s_!gLS1!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F4be5423f-0267-4294-8548-b605e2cbdafa_1240x1294.png 1456w" sizes="100vw"><img src="https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/4be5423f-0267-4294-8548-b605e2cbdafa_1240x1294.png" width="1240" height="1294" data-attrs="{"src":"https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/4be5423f-0267-4294-8548-b605e2cbdafa_1240x1294.png","srcNoWatermark":null,"fullscreen":null,"imageSize":null,"height":1294,"width":1240,"resizeWidth":null,"bytes":163115,"alt":null,"title":null,"type":"image/png","href":null,"belowTheFold":true,"topImage":false,"internalRedirect":null,"isProcessing":false,"align":null,"offset":false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!gLS1!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F4be5423f-0267-4294-8548-b605e2cbdafa_1240x1294.png 424w, https://substackcdn.com/image/fetch/$s_!gLS1!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F4be5423f-0267-4294-8548-b605e2cbdafa_1240x1294.png 848w, https://substackcdn.com/image/fetch/$s_!gLS1!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F4be5423f-0267-4294-8548-b605e2cbdafa_1240x1294.png 1272w, https://substackcdn.com/image/fetch/$s_!gLS1!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F4be5423f-0267-4294-8548-b605e2cbdafa_1240x1294.png 1456w" sizes="100vw" loading="lazy"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><div class="pencraft pc-reset icon-container restack-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-refresh-cw"><path d="M3 12a9 9 0 0 1 9-9 9.75 9.75 0 0 1 6.74 2.74L21 8"></path><path d="M21 3v5h-5"></path><path d="M21 12a9 9 0 0 1-9 9 9.75 9.75 0 0 1-6.74-2.74L3 16"></path><path d="M8 16H3v5"></path></svg></div><div class="pencraft pc-reset icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></div></div></div></div></a></figure></div><p>Source: <a href="https://trendeconomy.com/data/h2/Afghanistan/TOTAL">Trend Economy</a> </p><p>The size of these numbers is daunting. In 2019, a year of particularly grievous trade imbalance, Afghanistan’s export earnings would have been sufficient to pay for no more than half of its bill for imports of mineral oil products and that would leave nothing to cover the rest of its needs. </p><p>Where do Afghanistan’s imports come from? </p><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!3Uxq!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fc95c615a-781d-499e-8a53-980dc418bc6b_1240x1006.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!3Uxq!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fc95c615a-781d-499e-8a53-980dc418bc6b_1240x1006.png 424w, https://substackcdn.com/image/fetch/$s_!3Uxq!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fc95c615a-781d-499e-8a53-980dc418bc6b_1240x1006.png 848w, https://substackcdn.com/image/fetch/$s_!3Uxq!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fc95c615a-781d-499e-8a53-980dc418bc6b_1240x1006.png 1272w, https://substackcdn.com/image/fetch/$s_!3Uxq!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fc95c615a-781d-499e-8a53-980dc418bc6b_1240x1006.png 1456w" sizes="100vw"><img src="https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/c95c615a-781d-499e-8a53-980dc418bc6b_1240x1006.png" width="1240" height="1006" data-attrs="{"src":"https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/c95c615a-781d-499e-8a53-980dc418bc6b_1240x1006.png","srcNoWatermark":null,"fullscreen":null,"imageSize":null,"height":1006,"width":1240,"resizeWidth":null,"bytes":81687,"alt":null,"title":null,"type":"image/png","href":null,"belowTheFold":true,"topImage":false,"internalRedirect":null,"isProcessing":false,"align":null,"offset":false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!3Uxq!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fc95c615a-781d-499e-8a53-980dc418bc6b_1240x1006.png 424w, https://substackcdn.com/image/fetch/$s_!3Uxq!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fc95c615a-781d-499e-8a53-980dc418bc6b_1240x1006.png 848w, https://substackcdn.com/image/fetch/$s_!3Uxq!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fc95c615a-781d-499e-8a53-980dc418bc6b_1240x1006.png 1272w, https://substackcdn.com/image/fetch/$s_!3Uxq!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fc95c615a-781d-499e-8a53-980dc418bc6b_1240x1006.png 1456w" sizes="100vw" loading="lazy"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><div class="pencraft pc-reset icon-container restack-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-refresh-cw"><path d="M3 12a9 9 0 0 1 9-9 9.75 9.75 0 0 1 6.74 2.74L21 8"></path><path d="M21 3v5h-5"></path><path d="M21 12a9 9 0 0 1-9 9 9.75 9.75 0 0 1-6.74-2.74L3 16"></path><path d="M8 16H3v5"></path></svg></div><div class="pencraft pc-reset icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></div></div></div></div></a></figure></div><p>Iran is, presumably, the main source of petroleum products. </p><p>Afghanistan’s Central Asian neighbors are critical as suppliers of food (flour) and electricity. 70 percent of Afghanistan’s electrical power is imported and the annual bill comes to around $270 million. Without that power, the lights literally go out. </p><p>In Afghanistan, where it has generally been too dangerous to conduct a door to door census, we estimate the pace of urban development by counting lightbulbs from space. Specks of light shining in the dark suggest that roughly 10 million people live in Afghanistan’s cities. </p><p>What foreign funds have been covering is the yawning gap between the foreign inputs to Afghanistan’s rapidly growing society and what it is able to pay for with its very limited exports of gold and agricultural produce. </p><p>Earlier this year the IMF prepared this estimate of Afghanistan’s foreign funding needs and how they would be met. </p><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!RyNK!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Ff781f1cd-57fd-435c-ba71-9ec13a307efb_1240x1352.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!RyNK!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Ff781f1cd-57fd-435c-ba71-9ec13a307efb_1240x1352.png 424w, https://substackcdn.com/image/fetch/$s_!RyNK!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Ff781f1cd-57fd-435c-ba71-9ec13a307efb_1240x1352.png 848w, https://substackcdn.com/image/fetch/$s_!RyNK!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Ff781f1cd-57fd-435c-ba71-9ec13a307efb_1240x1352.png 1272w, https://substackcdn.com/image/fetch/$s_!RyNK!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Ff781f1cd-57fd-435c-ba71-9ec13a307efb_1240x1352.png 1456w" sizes="100vw"><img src="https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/f781f1cd-57fd-435c-ba71-9ec13a307efb_1240x1352.png" width="1240" height="1352" data-attrs="{"src":"https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/f781f1cd-57fd-435c-ba71-9ec13a307efb_1240x1352.png","srcNoWatermark":null,"fullscreen":null,"imageSize":null,"height":1352,"width":1240,"resizeWidth":null,"bytes":143544,"alt":null,"title":null,"type":"image/png","href":null,"belowTheFold":true,"topImage":false,"internalRedirect":null,"isProcessing":false,"align":null,"offset":false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!RyNK!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Ff781f1cd-57fd-435c-ba71-9ec13a307efb_1240x1352.png 424w, https://substackcdn.com/image/fetch/$s_!RyNK!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Ff781f1cd-57fd-435c-ba71-9ec13a307efb_1240x1352.png 848w, https://substackcdn.com/image/fetch/$s_!RyNK!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Ff781f1cd-57fd-435c-ba71-9ec13a307efb_1240x1352.png 1272w, https://substackcdn.com/image/fetch/$s_!RyNK!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Ff781f1cd-57fd-435c-ba71-9ec13a307efb_1240x1352.png 1456w" sizes="100vw" loading="lazy"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><div class="pencraft pc-reset icon-container restack-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-refresh-cw"><path d="M3 12a9 9 0 0 1 9-9 9.75 9.75 0 0 1 6.74 2.74L21 8"></path><path d="M21 3v5h-5"></path><path d="M21 12a9 9 0 0 1-9 9 9.75 9.75 0 0 1-6.74-2.74L3 16"></path><path d="M8 16H3v5"></path></svg></div><div class="pencraft pc-reset icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></div></div></div></div></a></figure></div><p>The key items in this balance are the current account deficit of $6290 m (in Afghanistan’s case largely identical with the trade deficit) and the official transfers (grants) of $7222 m. </p><p>If that $ 7 billion in funding is cut off, it will not be Taliban oppression alone, but a dramatic economic collapse that will bring life as Afghans have known it in recent years, to a halt. </p><p>What economists call a “sudden stop” can befall any economy heavily dependent on external funding to support a large trade deficit. “Export triumphalism” aside, this is in fact the main reason to worry about running a large trade deficit. A sudden stop can be extremely painful and destabilizing. It is the simplest way to think about the economic crisis that felled the Weimar Republic in the early 1930s. </p><p>This sudden stop is distinct from Afghanistan’s chronic poverty and the humanitarian crises triggered by civil conflict and drought of recent months. But though it may be distinct, the economic and financial crisis will interact with and compound those other problems.</p><p class="button-wrapper" data-attrs="{"url":"https://adamtooze.substack.com/subscribe?","text":"Subscribe now","action":null,"class":null}" data-component-name="ButtonCreateButton"><a class="button primary" href="https://adamtooze.substack.com/subscribe?"><span>Subscribe now</span></a></p><p>One of the critical linkages is the exchange rate. Afghans, at least in the cities, are acutely aware of their country’s precarious financial situation. The banks have been closed for more than a week. Western Union has closed its offices, shutting off flows of remittances that normally account for 4 percent of Afghan GDP. The US authorities halted the last shipment of cash dollars to Afghanistan ten days ago and the outgoing central bank governor and his staff did their best to concentrate what currency they could lay their hands on in Kabul. The Afghani <a href="https://www.npr.org/2021/08/26/1031460312/the-taliban-controls-the-afghan-economy-now-what">banking system</a> will likely be subject to panic attacks. </p><p>The obvious precautionary response to a situation of impending doom is to sell Afghani and buy whatever dollars are to be had. The Afghani plunged on August 17. Since then it is not moved much. This is surprising. I imagine that not much currency trading is going on in Kabul right now. Certainly, one would expect further deterioration in months ahead. And if we can figure that out, so can the currency traders in Afghanistan. So, it may happen fast. </p><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!eVoE!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F477009bd-4833-4cf0-a4de-7388b4c29b57_1992x594.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!eVoE!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F477009bd-4833-4cf0-a4de-7388b4c29b57_1992x594.png 424w, https://substackcdn.com/image/fetch/$s_!eVoE!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F477009bd-4833-4cf0-a4de-7388b4c29b57_1992x594.png 848w, https://substackcdn.com/image/fetch/$s_!eVoE!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F477009bd-4833-4cf0-a4de-7388b4c29b57_1992x594.png 1272w, https://substackcdn.com/image/fetch/$s_!eVoE!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F477009bd-4833-4cf0-a4de-7388b4c29b57_1992x594.png 1456w" sizes="100vw"><img src="https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/477009bd-4833-4cf0-a4de-7388b4c29b57_1992x594.png" width="1456" height="434" data-attrs="{"src":"https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/477009bd-4833-4cf0-a4de-7388b4c29b57_1992x594.png","srcNoWatermark":null,"fullscreen":null,"imageSize":null,"height":434,"width":1456,"resizeWidth":null,"bytes":156784,"alt":null,"title":null,"type":"image/png","href":null,"belowTheFold":true,"topImage":false,"internalRedirect":null,"isProcessing":false,"align":null,"offset":false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!eVoE!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F477009bd-4833-4cf0-a4de-7388b4c29b57_1992x594.png 424w, https://substackcdn.com/image/fetch/$s_!eVoE!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F477009bd-4833-4cf0-a4de-7388b4c29b57_1992x594.png 848w, https://substackcdn.com/image/fetch/$s_!eVoE!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F477009bd-4833-4cf0-a4de-7388b4c29b57_1992x594.png 1272w, https://substackcdn.com/image/fetch/$s_!eVoE!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F477009bd-4833-4cf0-a4de-7388b4c29b57_1992x594.png 1456w" sizes="100vw" loading="lazy"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><div class="pencraft pc-reset icon-container restack-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-refresh-cw"><path d="M3 12a9 9 0 0 1 9-9 9.75 9.75 0 0 1 6.74 2.74L21 8"></path><path d="M21 3v5h-5"></path><path d="M21 12a9 9 0 0 1-9 9 9.75 9.75 0 0 1-6.74-2.74L3 16"></path><path d="M8 16H3v5"></path></svg></div><div class="pencraft pc-reset icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></div></div></div></div></a></figure></div><p>Source: <a href="https://freecurrencyrates.com/en/exchange-rate-history/USD-AFN/2021">Free currency rates</a></p><p>A dramatic depreciation in the currency is an alarming prospect because it raises the price of imports and stokes inflation, unleashing a struggle for survival between more and less well-off Afghans. </p><p>Acute famines generally result from shortages of food triggering a scramble for necessities, speculation and spikes in food prices, which kill the poorest. Those are the elements we can already see at work in Afghanistan. </p><p>On <a href="https://www.savethechildren.net/news/afghanistan-price-hikes-push-food-out-reach-millions-children">August 26</a> the charity Save the Children reported the following figures for price increases from its staff in cities across the country.</p><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!LZ1N!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F07422f84-d8d9-4547-81c8-42fd23dcd3b5_1240x1462.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!LZ1N!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F07422f84-d8d9-4547-81c8-42fd23dcd3b5_1240x1462.png 424w, https://substackcdn.com/image/fetch/$s_!LZ1N!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F07422f84-d8d9-4547-81c8-42fd23dcd3b5_1240x1462.png 848w, https://substackcdn.com/image/fetch/$s_!LZ1N!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F07422f84-d8d9-4547-81c8-42fd23dcd3b5_1240x1462.png 1272w, https://substackcdn.com/image/fetch/$s_!LZ1N!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F07422f84-d8d9-4547-81c8-42fd23dcd3b5_1240x1462.png 1456w" sizes="100vw"><img src="https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/07422f84-d8d9-4547-81c8-42fd23dcd3b5_1240x1462.png" width="1240" height="1462" data-attrs="{"src":"https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/07422f84-d8d9-4547-81c8-42fd23dcd3b5_1240x1462.png","srcNoWatermark":null,"fullscreen":null,"imageSize":null,"height":1462,"width":1240,"resizeWidth":null,"bytes":138999,"alt":null,"title":null,"type":"image/png","href":null,"belowTheFold":true,"topImage":false,"internalRedirect":null,"isProcessing":false,"align":null,"offset":false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!LZ1N!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F07422f84-d8d9-4547-81c8-42fd23dcd3b5_1240x1462.png 424w, https://substackcdn.com/image/fetch/$s_!LZ1N!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F07422f84-d8d9-4547-81c8-42fd23dcd3b5_1240x1462.png 848w, https://substackcdn.com/image/fetch/$s_!LZ1N!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F07422f84-d8d9-4547-81c8-42fd23dcd3b5_1240x1462.png 1272w, https://substackcdn.com/image/fetch/$s_!LZ1N!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F07422f84-d8d9-4547-81c8-42fd23dcd3b5_1240x1462.png 1456w" sizes="100vw" loading="lazy"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><div class="pencraft pc-reset icon-container restack-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-refresh-cw"><path d="M3 12a9 9 0 0 1 9-9 9.75 9.75 0 0 1 6.74 2.74L21 8"></path><path d="M21 3v5h-5"></path><path d="M21 12a9 9 0 0 1-9 9 9.75 9.75 0 0 1-6.74-2.74L3 16"></path><path d="M8 16H3v5"></path></svg></div><div class="pencraft pc-reset icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></div></div></div></div></a></figure></div><p>As the charity <a href="https://www.savethechildren.net/news/afghanistan-price-hikes-push-food-out-reach-millions-children">added</a>: “A survey of 630 newly displaced families in Kabul, carried out by Save the Children earlier this month, already found that all of the families had run up debts in order to buy food. Many families have been forced to sell their possessions, cut back on meals or send their children out to work in order to buy food.” </p><p>We should not say that we were not warned. These are the signs of a famine to come. </p><p>In a situation of acute food shortage, logistics are critical. Famine is normally concentrated in pockets. If food can be transported into the worst-affected areas, the suffering can be mitigated. In Afghanistan that depends on truck transport and truck transport depends on imported petroleum, which has to be paid for. </p><p>And here is the thing, Afghanistan, notionally, has the funds to tide it over. Its national currency reserve is listed at slightly over $ 9 billion. That is enough to cover its import bill for well over a year. But those reserves are not in Kabul. As departing central banker Ajmal Ahmady tweeted, the Taliban were shocked to discover that the funds were, in fact, disposed of as follows: </p><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!BRuV!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fd32b0c6f-4cef-41e4-b67d-27ae49515cea_1218x662.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!BRuV!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fd32b0c6f-4cef-41e4-b67d-27ae49515cea_1218x662.png 424w, https://substackcdn.com/image/fetch/$s_!BRuV!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fd32b0c6f-4cef-41e4-b67d-27ae49515cea_1218x662.png 848w, https://substackcdn.com/image/fetch/$s_!BRuV!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fd32b0c6f-4cef-41e4-b67d-27ae49515cea_1218x662.png 1272w, https://substackcdn.com/image/fetch/$s_!BRuV!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fd32b0c6f-4cef-41e4-b67d-27ae49515cea_1218x662.png 1456w" sizes="100vw"><img src="https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/d32b0c6f-4cef-41e4-b67d-27ae49515cea_1218x662.png" width="1218" height="662" data-attrs="{"src":"https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/d32b0c6f-4cef-41e4-b67d-27ae49515cea_1218x662.png","srcNoWatermark":null,"fullscreen":null,"imageSize":null,"height":662,"width":1218,"resizeWidth":null,"bytes":134964,"alt":null,"title":null,"type":"image/png","href":null,"belowTheFold":true,"topImage":false,"internalRedirect":null,"isProcessing":false,"align":null,"offset":false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!BRuV!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fd32b0c6f-4cef-41e4-b67d-27ae49515cea_1218x662.png 424w, https://substackcdn.com/image/fetch/$s_!BRuV!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fd32b0c6f-4cef-41e4-b67d-27ae49515cea_1218x662.png 848w, https://substackcdn.com/image/fetch/$s_!BRuV!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fd32b0c6f-4cef-41e4-b67d-27ae49515cea_1218x662.png 1272w, https://substackcdn.com/image/fetch/$s_!BRuV!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fd32b0c6f-4cef-41e4-b67d-27ae49515cea_1218x662.png 1456w" sizes="100vw" loading="lazy"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><div class="pencraft pc-reset icon-container restack-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-refresh-cw"><path d="M3 12a9 9 0 0 1 9-9 9.75 9.75 0 0 1 6.74 2.74L21 8"></path><path d="M21 3v5h-5"></path><path d="M21 12a9 9 0 0 1-9 9 9.75 9.75 0 0 1-6.74-2.74L3 16"></path><path d="M8 16H3v5"></path></svg></div><div class="pencraft pc-reset icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></div></div></div></div></a></figure></div><p>As the Taliban seized Kabul, the US imposed a block on all of Afghanistan’s national reserves in the United States. The World Bank and the IMF have both stopped the disbursement of funds, as has the German aid agency, a major donor. </p><p>Worryingly, this was accompanied by a political campaign in Washington to deny “funds for the Taliban”. </p><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!kY3j!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F12684782-619e-4360-abc3-b11f0681e01b_1212x702.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!kY3j!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F12684782-619e-4360-abc3-b11f0681e01b_1212x702.png 424w, https://substackcdn.com/image/fetch/$s_!kY3j!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F12684782-619e-4360-abc3-b11f0681e01b_1212x702.png 848w, https://substackcdn.com/image/fetch/$s_!kY3j!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F12684782-619e-4360-abc3-b11f0681e01b_1212x702.png 1272w, https://substackcdn.com/image/fetch/$s_!kY3j!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F12684782-619e-4360-abc3-b11f0681e01b_1212x702.png 1456w" sizes="100vw"><img src="https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/12684782-619e-4360-abc3-b11f0681e01b_1212x702.png" width="1212" height="702" data-attrs="{"src":"https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/12684782-619e-4360-abc3-b11f0681e01b_1212x702.png","srcNoWatermark":null,"fullscreen":null,"imageSize":null,"height":702,"width":1212,"resizeWidth":null,"bytes":193974,"alt":null,"title":null,"type":"image/png","href":null,"belowTheFold":true,"topImage":false,"internalRedirect":null,"isProcessing":false,"align":null,"offset":false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!kY3j!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F12684782-619e-4360-abc3-b11f0681e01b_1212x702.png 424w, https://substackcdn.com/image/fetch/$s_!kY3j!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F12684782-619e-4360-abc3-b11f0681e01b_1212x702.png 848w, https://substackcdn.com/image/fetch/$s_!kY3j!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F12684782-619e-4360-abc3-b11f0681e01b_1212x702.png 1272w, https://substackcdn.com/image/fetch/$s_!kY3j!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F12684782-619e-4360-abc3-b11f0681e01b_1212x702.png 1456w" sizes="100vw" loading="lazy"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><div class="pencraft pc-reset icon-container restack-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-refresh-cw"><path d="M3 12a9 9 0 0 1 9-9 9.75 9.75 0 0 1 6.74 2.74L21 8"></path><path d="M21 3v5h-5"></path><path d="M21 12a9 9 0 0 1-9 9 9.75 9.75 0 0 1-6.74-2.74L3 16"></path><path d="M8 16H3v5"></path></svg></div><div class="pencraft pc-reset icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></div></div></div></div></a></figure></div><p>The <em>Wall Street Journal</em> has followed up with <a href="https://www.wsj.com/articles/imf-funding-for-the-taliban-janet-yellen-afghanistan-special-drawing-rights-11629923500">hawkish editorials</a> demanding that none of the IMF’s “funny money” should be made available to Kabul.</p><p>The United States is the last country in the world that should, at this moment, be taking the lead in securing Afghanistan’s survival. But someone must. What is needed is a multilateral financing package both to cover the immediate humanitarian crisis and Afghanistan’s acute import needs. The overwhelming majority of this should come in the form of grants. If loans are involved, the funds in the US Federal Reserve need not be released. They can serve as collateral for a funding scheme. But given Afghanistan’s trade position its ability to service international debt is extremely limited. </p><p>In light of Afghanistan’s immediate existential crisis, financial flows should not be thought of, first and foremost as a means of leverage. If that removes one more tool of influence from the arsenal of the Western powers, so be it. It is time to accept that we cannot impose our will on the situation and to focus, instead, on rescuing what can be rescued. </p><p class="button-wrapper" data-attrs="{"url":"https://adamtooze.substack.com/?utm_source=substack&utm_medium=email&utm_content=share&action=share","text":"Share Chartbook","action":null,"class":null}" data-component-name="ButtonCreateButton"><a class="button primary" href="https://adamtooze.substack.com/?utm_source=substack&utm_medium=email&utm_content=share&action=share"><span>Share Chartbook</span></a></p><p></p><p></p><!--
{
"post_id": "40756024.chartbook-on-shutdown-keynes-and",
"post_date": "2021-09-01T15:37:51.041Z",
"is_published": true,
"email_sent_at": "2021-09-01T15:37:51.072Z",
"inbox_sent_at": "2021-09-01T15:37:51.072Z",
"type": "newsletter",
"audience": "everyone",
"title": "Chartbook on Shutdown: Keynes and why we can afford anything we can do. ",
"subtitle": "To accompany a piece in the NYT ahead of the release of Shutdown. "
}
-->
<div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!FRAT!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F358c75a5-9bdd-4156-8688-a2b48d6e28c7_1500x500.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!FRAT!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F358c75a5-9bdd-4156-8688-a2b48d6e28c7_1500x500.png 424w, https://substackcdn.com/image/fetch/$s_!FRAT!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F358c75a5-9bdd-4156-8688-a2b48d6e28c7_1500x500.png 848w, https://substackcdn.com/image/fetch/$s_!FRAT!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F358c75a5-9bdd-4156-8688-a2b48d6e28c7_1500x500.png 1272w, https://substackcdn.com/image/fetch/$s_!FRAT!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F358c75a5-9bdd-4156-8688-a2b48d6e28c7_1500x500.png 1456w" sizes="100vw"><img src="https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/358c75a5-9bdd-4156-8688-a2b48d6e28c7_1500x500.png" width="1456" height="485" data-attrs="{"src":"https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/358c75a5-9bdd-4156-8688-a2b48d6e28c7_1500x500.png","srcNoWatermark":null,"fullscreen":null,"imageSize":null,"height":485,"width":1456,"resizeWidth":null,"bytes":399942,"alt":null,"title":null,"type":"image/png","href":null,"belowTheFold":false,"topImage":true,"internalRedirect":null,"isProcessing":false,"align":null,"offset":false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!FRAT!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F358c75a5-9bdd-4156-8688-a2b48d6e28c7_1500x500.png 424w, https://substackcdn.com/image/fetch/$s_!FRAT!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F358c75a5-9bdd-4156-8688-a2b48d6e28c7_1500x500.png 848w, https://substackcdn.com/image/fetch/$s_!FRAT!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F358c75a5-9bdd-4156-8688-a2b48d6e28c7_1500x500.png 1272w, https://substackcdn.com/image/fetch/$s_!FRAT!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F358c75a5-9bdd-4156-8688-a2b48d6e28c7_1500x500.png 1456w" sizes="100vw" fetchpriority="high"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><div class="pencraft pc-reset icon-container restack-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-refresh-cw"><path d="M3 12a9 9 0 0 1 9-9 9.75 9.75 0 0 1 6.74 2.74L21 8"></path><path d="M21 3v5h-5"></path><path d="M21 12a9 9 0 0 1-9 9 9.75 9.75 0 0 1-6.74-2.74L3 16"></path><path d="M8 16H3v5"></path></svg></div><div class="pencraft pc-reset icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></div></div></div></div></a></figure></div><p><em>Shutdown</em> is out next week. Order it <a href="https://bookshop.org/books?keywords=adam+tooze+shutdown">here</a> (if in the US).</p><p>Shutdown is pacy. It is the shortest and most fast-moving book I’ve written. There are a lot of weighty themes that spin off from it - critical macrofinance, Treasury markets, fascism, universal owners and vaccine geopolitics etc, etc. A lot of stuff to mull over at more length in the newsletter. </p><p>This is the first in a series of Chartbook newsletters - under the rubric “Chartbook on Shutdown” - to accompany the release of the book and deepen parts of the discussion. To get regular emails from Chartbook sign up here:</p><p class="button-wrapper" data-attrs="{"url":"https://adamtooze.substack.com/subscribe?","text":"Subscribe now","action":null,"class":null}" data-component-name="ButtonCreateButton"><a class="button primary" href="https://adamtooze.substack.com/subscribe?"><span>Subscribe now</span></a></p><p>This morning as a teaser, the <em><a href="https://www.nytimes.com/2021/09/01/opinion/covid-pandemic-global-economy-politics.html?smid=tw-nytopinion&smtyp=cur">New York Times</a></em> published an essay distilled from <em>Shutdown</em> that sketches some of the political conclusions to be drawn from 2020. </p><div data-component-name="Twitter2ToDOM" class="tweet" data-attrs="{"url":"https://twitter.com/nytopinion/status/1433030640027455492","full_text":"“The world’s decision makers have given us a staggering demonstration of their collective inability to grasp what it would actually mean to govern the deeply globalized and interconnected world they have created,” writes <span class=\"tweet-fake-link\">@adam_tooze</span>. ","username":"nytopinion","name":"New York Times Opinion","date":"Wed Sep 01 11:35:03 +0000 2021","photos":[],"quoted_tweet":{},"retweet_count":5,"like_count":11,"expanded_url":{"url":"https://nyti.ms/3mQIBvH","image":"https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/1dbfef6a-7379-4e97-99cd-61d7e193b0b5_1050x550.jpeg","title":"Opinion | What if the Coronavirus Crisis Was Just a Trial Run?","description":"The year 2020 gave us a glimpse of something radically new: tensions in politics, finance and geopolitics intersecting with a natural shock on a global scale.","domain":"nyti.ms"},"video_url":null,"belowTheFold":false}"><a class="tweet-link-top" href="https://twitter.com/nytopinion/status/1433030640027455492" target="_blank"><div class="tweet-header"><img class="tweet-header-avatar" src="https://substackcdn.com/image/twitter_name/w_96/nytopinion.jpg" alt="Twitter avatar for @nytopinion"><div class="tweet-header-text"><span class="tweet-author-name">New York Times Opinion </span><span class="tweet-author-handle">@nytopinion</span></div></div><div class="tweet-text">“The world’s decision makers have given us a staggering demonstration of their collective inability to grasp what it would actually mean to govern the deeply globalized and interconnected world they have created,” writes <span class="tweet-fake-link">@adam_tooze</span>. </div><a class="expanded-link" href="https://nyti.ms/3mQIBvH" target="_blank"><img src="https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/1dbfef6a-7379-4e97-99cd-61d7e193b0b5_1050x550.jpeg" class="expanded-link-img"><div class="expanded-link-bottom"><span class="expanded-link-domain">nyti.ms</span><span class="expanded-link-title">Opinion | What if the Coronavirus Crisis Was Just a Trial Run?</span><span class="expanded-link-description">The year 2020 gave us a glimpse of something radically new: tensions in politics, finance and geopolitics intersecting with a natural shock on a global scale.</span></div></a></a><a class="tweet-link-bottom" href="https://twitter.com/nytopinion/status/1433030640027455492" target="_blank"><div class="tweet-footer"><span class="tweet-date">11:35 AM ∙ Sep 1, 2021</span><hr><div class="tweet-ufi"><span href="https://twitter.com/nytopinion/status/1433030640027455492/likes" class="likes"><span class="like-count">11</span>Likes</span><span href="https://twitter.com/nytopinion/status/1433030640027455492/retweets" class="retweets"><span class="rt-count">5</span>Retweets</span></div></div></a></div><p></p><p>At the heart of the essay, is the double-edged lesson that 2020 taught us about our capacities for collective action: We have huge capacities for crisis-fighting. We spent trillions on giant fiscal programs to put our economies on life support. We backed them up with huge central bank activism. Financial markets were stabilized. Crash programs of vaccine development produced a suite of vaccines that as of this week have allowed 5.29 billion doses to be distributed worldwide, providing 39 percent of the world’s population with at least one dose. Vaccines that many considered to be impossible as recently as the spring of 2020. </p><p>We can, as one of my favorite quotes from Keynes says, pay for ‘this and much more. Anything we can actually do we can afford.”</p><p>But the question is in the doing. Think of everything we have not done. The opportunities gone begging. The discovery of our financial freedom robs us of excuses. This is the hard political edge of the related schools of post-Keynesianism, functional finance and modern monetary theory. If we fail to do something, we should not blame lack of money. </p><p>It isn’t lack of money that accounts for the scandal that the US is preparing to contain the ongoing pandemic with a third round of shots, whilst only 1.7% of the population of low-income countries has received even one dose of vaccine. Check out these astonishing data by the heroic data-gatherers and analysts at <a href="https://ourworldindata.org/">Our World in Data</a>. </p><p>This is not just selfish in a narrow sense. It is also staggeringly short-sighted as policy. We will not be safe until we are all safe. The IMF estimates gains in the order of trillions of $9 dollars from a comprehensive vaccine program. But we cannot find the commitment and funding to accelerate a program that might cost, at most, between $50 and $100 billion.</p><p>On the other hand, as I argued in <a href="https://adamtooze.substack.com/p/chartbook-34-how-we-paid-for-the">Chartbook #34</a> on the Global War on Terror that too was something “we could afford”. The horrifying thing is that it was one of the few things that the American elite could <em>actually</em> agree to do together. </p><p>******* </p><p>I first came across the quote - “Anything we can actually do we can afford.” - back in 2019 in Ann Pettifor’s book on the <a href="https://www.amazon.com/Case-Green-New-Deal/dp/1788738152">Green New Deal</a>. It has not let go of me since. It is the pivot of the <em>NYT</em> essay. It is one of the strong lines running through <em>Shutdown</em> itself. </p><p class="button-wrapper" data-attrs="{"url":"https://adamtooze.substack.com/subscribe?","text":"Subscribe now","action":null,"class":null}" data-component-name="ButtonCreateButton"><a class="button primary" href="https://adamtooze.substack.com/subscribe?"><span>Subscribe now</span></a></p><p>The fascination in the quote lies in the tense balance between the liberality of “assuredly we can afford this … we can afford anything” …. and the weighty counterbalance implied by “anything, we can <em>actuall</em>y do”. </p><p>Once you have cleared away the obfuscation of budgetary arithmetic, it is the doing that is the problem. 2020 has delivered a grim lesson on that score. </p><p>As Chuck Sabel my brilliant colleague at Columbia put it to me recently: In the actual doing, what counts is the recalcitrance of stuff and the recalcitrance of power. That dance between money, power and technical capacity, is the story sketched in the <em>NYT</em> piece and fleshed out in <em>Shutdown</em>. </p><p>For the NYT piece click <a href="https://www.nytimes.com/2021/09/01/opinion/covid-pandemic-global-economy-politics.html?smid=tw-nytopinion&smtyp=cur">here</a>.</p><p>This morning, to celebrate the appearance of my homage to Keynes I would return to 1942 and the original source. The “Anything we can actually do we can afford”-quote comes from a BBC talk that Keynes gave on 2 April 1942. </p><p>It has the title, “How Much Does Finance Matter?” The text is reproduced in the collected works of Keynes, which are <a href="https://www.cambridge.org/core/services/aop-cambridge-core/content/view/8CD04F0991FA097F4192F03644482A2F/9781139524216c5_p264-420_CBO.pdf/employment_policy.pdf">on line</a>. It is also available from Brad DeLong’s <a href="https://www.bradford-delong.com/2020/05/john-maynard-keynes-how-much-does-finance-matter.html">blog</a>. </p><p>I have not, so far, been able to track down a recording of the 1942 broadcast. To give you an idea of the tone, you might like to check out this newsreel of Keynes talking to a British audience about the huge possibilities opened up Britain’s exit from the gold standard in September 1931. </p><div id="youtube2-0PYSFqCSsGU" class="youtube-wrap" data-attrs="{"videoId":"0PYSFqCSsGU","startTime":null,"endTime":null}" data-component-name="Youtube2ToDOM"><div class="youtube-inner"><iframe src="https://www.youtube-nocookie.com/embed/0PYSFqCSsGU?rel=0&autoplay=0&showinfo=0&enablejsapi=0" frameborder="0" loading="lazy" gesture="media" allow="autoplay; fullscreen" allowautoplay="true" allowfullscreen="true" width="728" height="409"></iframe></div></div><p>Clearly, Keynes had a bit of a line in turning disaster into opportunity. </p><p>You can sense even in this short clip the optimism that informed his entire political and economic thinking. Its kinda hilarious to see John Maynard’s zoom backdrop. He had a famously rich collection of antiquarian books. And look at that screen! </p><p>John Maynard Keynes is surely not the most radical critic of capitalist political economy. But precisely because his attachment to existing norms of civility and civilization was so deep and his sense of possibility was so great, he was the most devastating critic of the failure to improve the status quo and remedy its shocking stupidity and inefficiency. Unlike Marxist critics (forgive the short-hand) for whom the failure of government is depressing, but predictable and easily explained, for Keynes, who believed in the possibility of improvement, it was shocking, inexcusable and, ultimately, puzzling - like the $9 trillion in economic advantage left lying on the pavement for lack of an adequate global vaccine program. In the large, in the long-run, a Keynesian would insist that “no one” really benefits from that failure. There may be some minor sectional interest here or there, but, in the large, you cannot reasonably say that this is in the interest of capital accumulation as a whole. And yet no adequate action results. </p><p>Not for nothing, for Keynes a “muddle” was a term of art. Untangling “muddles” was what his kind of reformist politics was about. “How Much Does Finance Matter” is very much in that spirit. </p><p class="button-wrapper" data-attrs="{"url":"https://adamtooze.substack.com/subscribe?","text":"Subscribe now","action":null,"class":null}" data-component-name="ButtonCreateButton"><a class="button primary" href="https://adamtooze.substack.com/subscribe?"><span>Subscribe now</span></a></p><p>*********</p><p>Keynes delivered the talk in April 1942 as part of a BBC series on postwar planning. The moment was significant. The first half of 1942 was in many ways the absolute low point of the British war. After Dunkirk in 1940 there had been some recovery. Between June and December 1941 German aggression brought first the Soviet Union and then the United States into the war on Britain’s side. The strategic prospects were much improved. But Japan’s assault on the European empires in Asia dealt a body blow to the Empire. In February 1942, only weeks before Keynes spoke, the great naval base of Singapore surrendered to the Japanese. </p><p>Nevertheless, at the urging of the Labour Party, Churchill’s partners in his wartime coalition , thinking about postwar planning was in motion. In the first half of 1942 Keynes was engaged in behind-the-scenes discussions of the Beveridge Report. Drafted by a fellow economist and liberal, William Beveridge, the Report would provide the blueprint for Britain’s postwar welfare state. </p><p>It was these discussions in mind that Keynes gave his BBC address in April 1942. </p><p>It is a brilliant essay in persuasion, painting an optimistic but also realistic vista of what might and might not be possible. </p><p>“HOW MUCH DOES FINANCE MATTER?</p><blockquote><p>“For some weeks at this hour you have enjoyed the day-dreams of planning. But what about the nightmare of finance? I am sure there have been many listeners who have been muttering: 'That's all very well, but how is it to be paid for?'</p><p>Let me begin by telling you how I tried to answer an eminent architect who pushed on one side all the grandiose plans to rebuild London with the phrase: ' Where's the money to come from?' 'The money?' I said. 'But surely, Sir John, you don't build houses with money? Do you mean that there won't be enough bricks and mortar and steel and cement?'</p><p>'Oh no', he replied, 'of course there will be plenty of all that'.</p><p>'Do you mean', I went on,' that there won't be enough labour? For what will the builders be doing if they are not building houses?'</p><p>'Oh no, that's all right', he agreed.</p><p>'Then there is only one conclusion. You must be meaning, Sir John, that there won't be enough architects'. But there I was trespassing on the boundaries of politeness. So I hurried to add: 'Well, if there are bricks and mortar and steel and concrete and labour and architects, why not assemble all this good material into houses?'</p><p>But he was, I fear, quite unconvinced. 'What I want to know', he repeated, 'is where the money is coming from'.</p><p>To answer that would have got him and me into deeper water than I cared for, so I replied rather shabbily: ' The same place it is coming from now'. He might have countered (but he didn't): 'Of course I know that money is not the slightest use whatever. But, all the same, my dear sir, you will find it a devil of a business not to have any'.”</p></blockquote><p>Keynes clearly enjoyed his witticism. But had he, he wondered, given a really adequate answer? Was money a real issue? Did finance matter? </p><blockquote><p>“if it was some technical problem of finance that was troubling him, then my answer was good and sufficient … It would be out of place to try to explain it in a few minutes on the air, just as it would be to explain the technical details of bridge- building or the internal combustion engine or the surgery of the thyroid gland. As a technician in these matters I can only affirm that the technical problem of where the money for reconstruction is to come from can be solved, and therefore should be solved.”</p></blockquote><p>For the question of how Keynesian liberalism plays on the line between the technical and the political - a question brilliantly analyzed by <a href="https://www.versobooks.com/books/3000-in-the-long-run-we-are-all-dead">Geoff Mann</a> in the most important book on Keynes in many years - this is a striking passage. </p><p></p><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!iqL2!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fe1d03ee1-a015-44f3-afb4-7feeb7418264_408x616.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!iqL2!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fe1d03ee1-a015-44f3-afb4-7feeb7418264_408x616.png 424w, https://substackcdn.com/image/fetch/$s_!iqL2!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fe1d03ee1-a015-44f3-afb4-7feeb7418264_408x616.png 848w, https://substackcdn.com/image/fetch/$s_!iqL2!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fe1d03ee1-a015-44f3-afb4-7feeb7418264_408x616.png 1272w, https://substackcdn.com/image/fetch/$s_!iqL2!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fe1d03ee1-a015-44f3-afb4-7feeb7418264_408x616.png 1456w" sizes="100vw"><img src="https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/e1d03ee1-a015-44f3-afb4-7feeb7418264_408x616.png" width="408" height="616" data-attrs="{"src":"https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/e1d03ee1-a015-44f3-afb4-7feeb7418264_408x616.png","srcNoWatermark":null,"fullscreen":null,"imageSize":null,"height":616,"width":408,"resizeWidth":null,"bytes":468384,"alt":null,"title":null,"type":"image/png","href":null,"belowTheFold":true,"topImage":false,"internalRedirect":null,"isProcessing":false,"align":null,"offset":false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!iqL2!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fe1d03ee1-a015-44f3-afb4-7feeb7418264_408x616.png 424w, https://substackcdn.com/image/fetch/$s_!iqL2!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fe1d03ee1-a015-44f3-afb4-7feeb7418264_408x616.png 848w, https://substackcdn.com/image/fetch/$s_!iqL2!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fe1d03ee1-a015-44f3-afb4-7feeb7418264_408x616.png 1272w, https://substackcdn.com/image/fetch/$s_!iqL2!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fe1d03ee1-a015-44f3-afb4-7feeb7418264_408x616.png 1456w" sizes="100vw" loading="lazy"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><div class="pencraft pc-reset icon-container restack-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-refresh-cw"><path d="M3 12a9 9 0 0 1 9-9 9.75 9.75 0 0 1 6.74 2.74L21 8"></path><path d="M21 3v5h-5"></path><path d="M21 12a9 9 0 0 1-9 9 9.75 9.75 0 0 1-6.74-2.74L3 16"></path><path d="M8 16H3v5"></path></svg></div><div class="pencraft pc-reset icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></div></div></div></div></a></figure></div><p>But what - Keynes goes on - if his architect colleague did not mean the question of finance? What if money was not the issue? What if he actually meant the physical resources that might be available to devote to capital projects that did not yield immediate returns? What if the problem was not the paying for, but the <em>actually</em> doing. “Here is a real problem", Keynes admits, “fundamental yet essentially simple”. </p><blockquote><p>“The first task is to make sure that there is enough demand to provide employment for everyone. The second task is to prevent a demand in excess of the physical possibilities of supply, which is the proper meaning of inflation. For the physical possibilities of supply are very far from unlimited. Our building programme must be properly proportioned to the resources which are left after we have met our daily needs and have produced enough exports to pay for what we require to import from overseas. ….</p></blockquote><blockquote><p>Having prepared our blue-prints, covering the whole field of our requirements and not building alone—and these can be as ambitious and glorious as the minds of our engineers and architects and social planners can conceive—those in charge must then concentrate on the vital task of central management, the pace at which the programme is put into operation, neither so slow as to cause unemployment nor so rapid as to cause inflation. </p></blockquote><p>It was, Keynes admitted, extremely difficult to predict in advance “scale and pace” on which giant construction projects could be carried out. He urged patience. Not motivated by fear and conservative caution, but by profound optimism. </p><blockquote><p>“In the long run almost anything is possible. Therefore do not be afraid of large and bold schemes. Let our plans be big, significant, but not hasty. Rome was not built in a day. The building of the great architectural monuments of the past was carried out slowly, gradually, over many years, and they drew much of their virtue from being the fruit of slow cogitation ripening under the hand and before the eyes of the designer.</p></blockquote><p class="button-wrapper" data-attrs="{"url":"https://adamtooze.substack.com/subscribe?","text":"Subscribe now","action":null,"class":null}" data-component-name="ButtonCreateButton"><a class="button primary" href="https://adamtooze.substack.com/subscribe?"><span>Subscribe now</span></a></p><p>As he wrote this, Keynes might have been thinking of the soaring magnificence of King’s College chapel. The heartbreakingly beautiful center piece of the College to which Keynes devoted so much of his life (my own alma mater), was built over the course of a century from 1446 to 1531, in three separate stages. That reflected real capacity constraints and the politics of a dynastic shift. The later part of the Chapel is adorned with Tudor regalia. These are the kind of constraints that truly limit what we can actually do. Mundane, practical, technical stuff. As Keynes said: </p><blockquote><p>You cannot improvise a building industry suddenly or put part of it into cold storage when it is excessive. Tell those concerned that we shall need a building industry of a million operatives directly employed—well and good, it can be arranged. Tell them that we shall need a million-and-a-half or two million—again well and good. But we must let them have in good time some reasonably accurate idea of the target. </p></blockquote><p>How much would the UK be able to put annually towards reconstruction projects? As Keynes admitted in April 1942 he had “no adequate data on which to guess”. Over the following months he would go on to remedy that deficiency in intensive collaboration with the pioneering economic statistician Richard Stone. But Keynes was not a man to leave his audience gasping for an answer:</p><blockquote><p>if you put me against a wall opposite a firing squad, I should, at the last moment, reply that at the present level of prices and wages we might afford in the early post-war years to spend not less than £600 million a year and not more than £800 million on the output of the building industry as a whole.</p></blockquote><p>Note that money enters in here not as a budgetary constraint, an accounting limit of what can be done but as a convenient measure of what the construction sector can digest in the way of orders in a twelve month period. As Keynes admits</p><blockquote><p>Now these are very large sums. Continued, year by year, over a period of ten years or more, they are enormous. We could double in twenty years all the buildings there now are in the whole country. We can do almost anything we like, given time. We must not force the pace—that is necessary warning. In good time we can do it all. But we must work to a long-term programme.</p></blockquote><p>What sort of projects should be built? What should be the criteria? On this too Keynes was clear. It was not “economics” as conventionally understood, the “nightmare of finance” that mattered:</p><blockquote><p>Where we are using up resources, do not let us submit to the vile doctrine of the nineteenth century that every enterprise must justify itself in pounds, shillings and pence of cash income, with no other denominator of values but this. I should like to see that war memorials of this tragic struggle take the shape of an enrichment of the civic life of every great centre of population.</p></blockquote><p>The priority was housing, industrial reconstruction, transport and “re-planning the environment of our daily life”. But Keynes was a great aficionado of the arts. Until early in the war he personally supervised the booking of acts for the Cambridge Arts Theatre. Yup you read that correctly. The architect of Bretton Woods was booking acts for his college town theater! </p><p>Little surprise then that he could see no reason why 50 million pounds (one twelfth of his fantasy budget) should not be set aside for raising schools and local government buildings to the dignity of ancient universities or European princely capitals. “And above all perhaps, to provide a local centre of refreshment and entertainment with an ample theatre, a concert hall, a dance hall, a gallery, a British restaurant, canteens, cafes and so forth.” (A British restaurant was the name chosen by Churchill for communal dining facilities set up in 1940 to provide bombed out families and anyone else in need with an affordable meal.)</p><p>What Keynes wanted in short was communal cultural wealth and material satisfaction for the entire population. And it is after that proposal - 50 million for arts centers and affordable eating out that he delivers his wonderful line: </p><blockquote><p>"Assuredly we can afford this and much more. Anything we can actually do we can afford. … We are immeasurably richer than our predecessors. Is it not evident that some sophistry, some fallacy, governs our collective action if we are forced to be so much meaner than they in the embellishments of life?</p></blockquote><p>And then comes the rousing coda: </p><blockquote><p>We shall, in very fact, have built our New Jerusalem out of the labour which in our former vain folly we were keeping unused and unhappy in enforced idleness.”</p></blockquote><p>*******</p><p>It is a truly beautiful essay. Lucid, constructive and right. </p><p>It is also seductive. It strips away the money veil to reveal the material and political reality. But it is not an operation that one should or can ever fully complete. If money is a technicality. Technicalities matter. They have to be done right. As we have learned in macrofinance, financial plumbing really matters. In March 2020 it almost blew the system up. Again! </p><p>Keynes’s message is not that we can simply ignore the question of how to finance things. But what we should not do is to fetishize it. And, as he says elsewhere, we should beware the mechanisms, such as a gigantic and oversized financial system, which take on a gigantic life of their own, making it more and more difficult to assert the primacy of real priorities. </p><p>Over the following months Keynes himself was deeply immersed in financial and economic calculations. He took the lead amongst those defending the Beveridge welfare plan against the notoriously hawkish experts of the UK Treasury. That involved, it should be said, Keynes arguing for reductions in Beveridge’s ambition, cutting back his budget. The very last thing you could accuse Keynes of being, was irresponsible when it came to Britain’s macroeconomic constraints. </p><p>Patience was truly the crucial factor, a patience sustained by optimism and clarity about how the project was to be accomplished. Better macroeconomic policy would stabilize the production and employment and ensure a much higher level of efficiency. Ultimately, he also counted on growth. Going back to the Keynes of the 1940s, alongside the inspiration for functional finance, there is also rather more of the MIT <a href="https://www.lrb.co.uk/the-paper/v43/n08/adam-tooze/the-gatekeeper?referrer=https%3A%2F%2Fwww.google.com%2F">“new Keynesian”</a> than I expected to find. </p><p>In technical terms, the effort to define what was possible would drive the development of macroeconomic accounting in Britain and the first attempt in that country to balance the basic macroeconomic factors of consumption, investment and export. It was a national program in the first instance. But it was shaped from the outset by an understanding of British dependency on US Lend-Lease funding and took shape simultaneously with Keynes’s trans-Atlantic diplomacy that set the stage for the Bretton Woods conference in the summer of 1944. In other words Keynes was formulating a comprehensive program for reformist action that recognized both national and global possibilities and constraints. </p><p>A short-hand like this simplifies. It risks rendering the vastly complex character of Keynes as a cartoonish super hero. It is ironic to find myself here. I wrote a whole <a href="https://adamtooze.com/statistics-and-the-german-state/">book </a>dedicated to freeing the history of modern economic knowledge from the long shadow of John Maynard Keynes. Also my celebration of the 1942 essay reflects my mood this morning. Much of <em>Shutdown </em>is dedicated to arguing that we should resist any confusion between our moment and that moment of the Keynesian welfare state in the 1940s. More on that in the next post in this series - out at the weekend. But as a political and intellectual actor, the scale of Keynes’s vision and the scope of his action continues to amaze and inspire. </p><p>In any case, in concluding the <em>NYT</em> essay with a call for a “progressive globalism” that seeks to multiply crisis-fighting networks away from the narrow confines of central banking into the fields of medical research and vaccine development, renewable energy and so on and - at the same time - to make them more democratic, transparent and egalitarian, it is Keynes I am thinking of. </p><p>Thanks for reading. </p><p>Check out the essay here:</p><div data-component-name="Twitter2ToDOM" class="tweet" data-attrs="{"url":"https://twitter.com/nytopinion/status/1433030640027455492","full_text":"“The world’s decision makers have given us a staggering demonstration of their collective inability to grasp what it would actually mean to govern the deeply globalized and interconnected world they have created,” writes <span class=\"tweet-fake-link\">@adam_tooze</span>. ","username":"nytopinion","name":"New York Times Opinion","date":"Wed Sep 01 11:35:03 +0000 2021","photos":[],"quoted_tweet":{},"retweet_count":5,"like_count":11,"expanded_url":{"url":"https://nyti.ms/3mQIBvH","image":"https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/1dbfef6a-7379-4e97-99cd-61d7e193b0b5_1050x550.jpeg","title":"Opinion | What if the Coronavirus Crisis Was Just a Trial Run?","description":"The year 2020 gave us a glimpse of something radically new: tensions in politics, finance and geopolitics intersecting with a natural shock on a global scale.","domain":"nyti.ms"},"video_url":null,"belowTheFold":true}"><a class="tweet-link-top" href="https://twitter.com/nytopinion/status/1433030640027455492" target="_blank"><div class="tweet-header"><img class="tweet-header-avatar" src="https://substackcdn.com/image/twitter_name/w_96/nytopinion.jpg" alt="Twitter avatar for @nytopinion" loading="lazy"><div class="tweet-header-text"><span class="tweet-author-name">New York Times Opinion </span><span class="tweet-author-handle">@nytopinion</span></div></div><div class="tweet-text">“The world’s decision makers have given us a staggering demonstration of their collective inability to grasp what it would actually mean to govern the deeply globalized and interconnected world they have created,” writes <span class="tweet-fake-link">@adam_tooze</span>. </div><a class="expanded-link" href="https://nyti.ms/3mQIBvH" target="_blank"><img src="https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/1dbfef6a-7379-4e97-99cd-61d7e193b0b5_1050x550.jpeg" class="expanded-link-img" loading="lazy"><div class="expanded-link-bottom"><span class="expanded-link-domain">nyti.ms</span><span class="expanded-link-title">Opinion | What if the Coronavirus Crisis Was Just a Trial Run?</span><span class="expanded-link-description">The year 2020 gave us a glimpse of something radically new: tensions in politics, finance and geopolitics intersecting with a natural shock on a global scale.</span></div></a></a><a class="tweet-link-bottom" href="https://twitter.com/nytopinion/status/1433030640027455492" target="_blank"><div class="tweet-footer"><span class="tweet-date">11:35 AM ∙ Sep 1, 2021</span><hr><div class="tweet-ufi"><span href="https://twitter.com/nytopinion/status/1433030640027455492/likes" class="likes"><span class="like-count">11</span>Likes</span><span href="https://twitter.com/nytopinion/status/1433030640027455492/retweets" class="retweets"><span class="rt-count">5</span>Retweets</span></div></div></a></div><p></p><p>Subscribe to Chartbook here: </p><p class="button-wrapper" data-attrs="{"url":"https://adamtooze.substack.com/subscribe?","text":"Subscribe now","action":null,"class":null}" data-component-name="ButtonCreateButton"><a class="button primary" href="https://adamtooze.substack.com/subscribe?"><span>Subscribe now</span></a></p><p>Share by clicking here:</p><p class="button-wrapper" data-attrs="{"url":"https://adamtooze.substack.com/?utm_source=substack&utm_medium=email&utm_content=share&action=share","text":"Share Chartbook","action":null,"class":null}" data-component-name="ButtonCreateButton"><a class="button primary" href="https://adamtooze.substack.com/?utm_source=substack&utm_medium=email&utm_content=share&action=share"><span>Share Chartbook</span></a></p><!--
{
"post_id": "40827506.chartbook-video-3-bruegel-panel-with",
"post_date": "2021-09-02T17:19:50.505Z",
"is_published": true,
"email_sent_at": "2021-09-02T17:19:50.531Z",
"inbox_sent_at": "2021-09-02T17:19:50.531Z",
"type": "newsletter",
"audience": "everyone",
"title": "Chartbook Video #3: Bruegel panel with Jean Pisani-Ferry, Sabine Weyand and Hélène Rey. ",
"subtitle": "... it recommends itself. "
}
-->
<p class="button-wrapper" data-attrs="{"url":"https://adamtooze.substack.com/subscribe?","text":"Subscribe now","action":null,"class":null}" data-component-name="ButtonCreateButton"><a class="button primary" href="https://adamtooze.substack.com/subscribe?"><span>Subscribe now</span></a></p><p>To say I was pleased to be on a panel with Hélène Rey (the great analyst of the dollar system) and Sabine Weyand (the EU’s DG trade) would be an understatement. </p><p>Hélène came with fascinating data and great insights about the lopsided quality of a new multipolar world. Sabine Weyand is the powerhouse behind the Brexit negotiating team. Just watch and see what I mean. After hearing her, I dare you to scoff at “open strategic autonomy” - the EU’s latest buzzword ;) I dare you!</p><div id="youtube2-OCEesvAbjaQ" class="youtube-wrap" data-attrs="{"videoId":"OCEesvAbjaQ","startTime":null,"endTime":null}" data-component-name="Youtube2ToDOM"><div class="youtube-inner"><iframe src="https://www.youtube-nocookie.com/embed/OCEesvAbjaQ?rel=0&autoplay=0&showinfo=0&enablejsapi=0" frameborder="0" loading="lazy" gesture="media" allow="autoplay; fullscreen" allowautoplay="true" allowfullscreen="true" width="728" height="409"></iframe></div></div><p>To have Jean Pisani-Ferry as chair, was the icing on the cake. </p><p>His latest paper on the global economy, “Global asymmetries strike back”, is <a href="https://www.bruegel.org/wp-content/uploads/2021/08/Asymmetries_essay-2508-online.pdf">here</a> .</p><p></p><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!GdgZ!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F5529fe1d-c9e0-43c2-be36-bfb5182b9519_684x694.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!GdgZ!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F5529fe1d-c9e0-43c2-be36-bfb5182b9519_684x694.png 424w, https://substackcdn.com/image/fetch/$s_!GdgZ!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F5529fe1d-c9e0-43c2-be36-bfb5182b9519_684x694.png 848w, 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data-attrs="{"src":"https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/5529fe1d-c9e0-43c2-be36-bfb5182b9519_684x694.png","srcNoWatermark":null,"fullscreen":null,"imageSize":null,"height":694,"width":684,"resizeWidth":null,"bytes":106557,"alt":null,"title":null,"type":"image/png","href":null,"belowTheFold":false,"topImage":true,"internalRedirect":null,"isProcessing":false,"align":null,"offset":false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!GdgZ!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F5529fe1d-c9e0-43c2-be36-bfb5182b9519_684x694.png 424w, https://substackcdn.com/image/fetch/$s_!GdgZ!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F5529fe1d-c9e0-43c2-be36-bfb5182b9519_684x694.png 848w, 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