The Federal Reserve has come under closer scrutiny as of late in our battle with inflation. And politicians left and right love to pick on the Fed. But does the Fed deserve the bad rap they often get? Frankly no. Do they make mistakes? Of course. But they have a difficult job even made more difficult because Congress is usually asleep at the switch or blinded by immediacy and can't think long-term and take appropriate precautions. So the Fed is left to pick up the pieces.
The Fed was founded in 1913, and its' role continues to evolve. And never more so than in the last 15 years. It has been instrumental in saving us from meltdowns in 2008, 2019, 2020, and now in the banking crisis brought on by a Congress giving the keys to the people most likely to drive us into the proverbial ditch. And the commercial bankers are constantly issuing blame. It doesn't take a rocket scientist to figure that out.
A New Role for The Fed
The only way out of an ever-increasing catastrophic immediate future is to reevaluate our view of money and how it is spent. An excellent place to start is with the Federal Reserve.
Changes to the role of the Federal Reserve, and allowing it direct investment, could help adapt to and mitigate the effects of global warming by influencing financial markets and promoting sustainable investments. Here are just a few ways the Fed could play a role in addressing climate change:
Green investments:
The Fed could directly invest in green bonds or other financial instruments that support environmentally friendly projects, such as renewable energy, sustainable agriculture, and energy-efficient infrastructure. These investments could help drive the transition to a low-carbon economy.
Climate-risk assessment:
The Fed could integrate climate-risk assessments into its financial stability framework, ensuring that financial institutions are more aware of the potential impacts of climate change on their assets and operations. Assessment of climate risk could encourage banks and other financial institutions to shift their investments toward more climate-resilient and sustainable projects.
Climate-related disclosures:
The Fed could advocate for, or implement, mandatory climate-related financial disclosures for companies, making it easier for investors to assess the risks and opportunities associated with their investments. This could lead to a more efficient allocation of capital toward projects that help mitigate climate change.
Monetary policy:
The Fed could consider the implications of climate change when setting monetary policy, acknowledging the potential long-term impacts of global warming on economic growth and financial stability. Monetary policy might involve considering how climate change could affect inflation, employment, and other key macroeconomic indicators.
Collaboration with other central banks:
The Fed could join forces with other central banks and financial regulators worldwide to share best practices, research, and experiences in addressing climate change. Collaboration could help develop more effective strategies and tools for mitigating the effects of global warming on the financial system.
This is simply a wish list as these potential changes to the Federal Reserve's role would face political and legal challenges from a politically-divided Congress and a politically-polluted Supreme Court. Allowing the Fed to take a bigger role will likely take a near-fatal financial meltdown, and that could be coming sooner rather than later. And time is of the essence as the next El Niño is slated for the summer of 2023. If it is a bad one, we will get a close look at what a 1.5c climate is like.
For more about the possible role of the Fed and climate change click here.
About the Author
Robert Jennings is co-publisher of InnerSelf.com with his wife Marie T Russell. He attended the University of Florida, Southern Technical Institute, and the University of Central Florida with studies in real estate, urban development, finance, architectural engineering, and elementary education. He was a member of the US Marine Corps and The US Army having commanded a field artillery battery in Germany. He worked in real estate finance, construction and development for 25 years before starting InnerSelf.com in 1996.
InnerSelf is dedicated to sharing information that allows people to make educated and insightful choices in their personal life, for the good of the commons, and for the well-being of the planet. InnerSelf Magazine is in its 30+year of publication in either print (1984-1995) or online as InnerSelf.com. Please support our work.
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this article was written with assistance from ChatGPT (code name George). I asked if I could call him that and he gave me the thumbs up.
