* The Federal Reserve in NYC Assesses the Risks due to Climate Change

Climate Change is Real. Its Impact is Already Affecting Economic Investments & Outcomes. The Federal Reserve Shared a Closer Look with us in October 2023.

January 23, 2024 / NYC Neighborhoods / NYC Issues / News Analysis & Opinion / Gotham Buzz NYC.

On Monday, October 2, 2023 I headed down to the Federal Reserve Bank in NYC to make a withdrawal. Not a withdrawal of money, but to collect some information about Climate Change, at a Conference they hosted for local media outlets.

Keynote Speaker - Economics Professor Stiglitz

The Keynote speaker was Joseph E. Stiglitz, a professor at Columbia University, who participated in a discussion with John C. Williams, the President and Chief Executive Officer of the Federal Reserve Bank of NY.

Informational Economics - Investment & Business Decisions are Based on Imperfect Information

The keynote speaker, Joseph Stiglitz, has expertise is in economics, and more specifically, informational economics. Stiglitz was preceded by economist George Stigler [not to be confused with the keynote speaker Joseph Stiglitz] who is credited with first developing 'The Economics of Information' in 1961 while a professor at the University of Chicago. This was the beginning of an entire area of study of how information and information systems affect economic decision making.

In the 1970's three researchers, one of whom was Joseph Stiglitz [the keynote speaker], is credited with developing the theory of 'Asymmetric Information' which posits generally that one of the parties - in a two party transaction - has better information. For example the seller of a used auto knows more about the car than the buyer, or a borrower likely has better information about whether there will be problems in repaying the loan than the lender.

• CLICK here to read the rest of our report on a cursory assessment of the risks associated with climate change at the Federal Reserve Bank in NYC.

Asymmetric Information - Processing Climate Change Risks

An Important Example of where Ignorance is Not Bliss

For purposes of this discussion, the asymmetrics of information was discussed in a more global fashion, as the various and sundry impacts of global climate change have already begun to affect all economic transactions - albeit at the present time - some areas of the economy far more than others. Here what we're talking about is understanding the risks that climate change have on various economic sectors.

One example of a sector already impacted by climate change would be waterfront property, where the severity of flooding over the past decade or so, has increased the risk of devastating consequences and thus likely dampened - if not lowered the price - at which one can sell such property, while simultaneously increasing the cost and risk of insuring said properties.

Another example is where climate change is affecting the value of oil stocks. As the human race becomes more aware of the devastating side effects of uninterrupted use of carbon energy - which could lead to a near total extinction of, not just the human race, but most other species on the planet as well - the tax credits and investments in carbon fuel will stop, or slow to a trickle, like the Mississippi River has in some parts.

For details on what's happening to the Mississippi River, copy and paste this url into your browser- https://www.nytimes.com/2022/11/27/opinion/environment/mississippi-river-drought-colorado.html

You might think I'm sensationalizing the potential impact of climate change by stating that it could lead to mass extinctions of species or nearly mass extinction of the human race. I say nearly mass extinction of the human race, because there will likely be some human survivors, and likely to be among them, are some of the people who profited from doing this to the rest of us.

Anyhow to demonstrate that cataclysmic ecosystem failure can occur, in what appears a short period of time, take note that in the past few years, BILLIONS of Alaskan snow crabs have disappeared from oceanic areas around Alaska. While scientists are still trying to determine exactly what happened here, they hypothesize that warming oceanic temperatures have significantly reduced their food supply.

For details see - https://www.cnn.com/2023/10/19/us/alaska-crabs-ocean-heat-climate/index.html#

Please, don't - for a moment - think that this can't happen to the food supply of the 7 - 8 billion people living on this planet. Because just as the climate change weather pattern shifts have started affecting human activities, they are wreaking havoc with the underlying ecosystem - the most significant impacts of which we humans have yet to experience. And which - if we do not soon roll back the ecosystemic changes - will become irreversible.

Enter the Federal Reserve - The Goal Here is to 'Manage Systemic Financial Risk'

So one might rightfully ask what has Climate Change got to do with the Federal Reserve?

The best place for this answer was the Federal Reserve website, which generally stated that its role is as follows, " ... 1) Managing the nation's monetary policy by influencing money and credit conditions in pursuit of full employment and stable prices, 2) Supervising and regulating banks and other important financial institutions to ensure the safety and soundness of the nation's financial system and to protect the credit rights of consumers, 3) Maintaining the stability of the financial system and containing systemic risk, and 4) Providing certain financial services to the U.S. government, U.S. financial institutions, and foreign official institutions, and overseeing the nation's payments systems ...". Editor's Note - I edited out of the above statement what I believe was superfluous verbiage. See for yourself -

https://www.federalreserve.gov/faqs/about_12594.htm#:~:text=Supervising%20and%20regulating%20banks%20and,may%20arise%20in%20financial%20markets.

https://www.federalreserve.gov/econres/notes/feds-notes/climate-change-and-financial-stability-20210319.html

The Federal Reserve Conference on Climate Change

Now that we've briefed you with some background information, we're ready to go inside the Federal Reserve Bank, to hear what was said about climate change, and it's potential impact on the economy and financial system.

More coming later this week, or possibly this weekend. Stay tuned.