XPost: alt.fan.rush-limbaugh, alt.atheism, alt.politics.trump   
   XPost: or.politics, sac.politics   
   From: x@y.com   
      
   Kilowatt Madness   
   Trumps electricity crisis  and ours   
   Paul Krugman   
   Aug 22   
      
      
      
   We're hearing a lot of talk about stagflation now, for good reason. Tariffs   
   and mass deportations are both stagflationary: They increase inflation   
   while depressing growth.   
      
   Its becoming increasingly clear that theres a third major stagflationary   
   force coming into play: Soaring electricity prices, which will also hurt   
   growth while increasing inflation.   
      
   Now, during the 2024 campaign Donald Trump boasted a lot about how he would   
   bring down energy prices. He talked very big, and made specific promises.   
   Notably, he declared that he would cut the price of electricity in half   
   within 12 months of taking office:   
      
   So hows that going?   
      
   And this is only the start. Many analysts expect further large increases in   
   electricity prices over the next year or more, largely because of surging   
   demand from AI data centers. The electricity outlook is sufficiently scary   
   that Texas  Texas!  has passed a new law giving the grid operator the right   
   to cut off data centers during periods of power shortage.   
      
   An aside: In the America I grew up in, people who made big boasts about   
   what they would achieve then completely failed to deliver were considered   
   unserious blowhards. What happened to that country?   
      
   But Trump has a scapegoat, which probably wont surprise you  renewable   
   energy:   
      
   Its unclear what his theory is. How does adding wind and solar generating   
   capacity  increasing electricity supply  lead to higher prices?   
      
   To the extent that there is a story here, it involves what Ive called MAGA   
   brain, the belief that the only way you can get results is by being tough   
   and nasty, avoiding anything that might be considered woke  which includes   
   renewable energy.   
      
   As it happens, the data overwhelmingly reject Trumps claims about   
   renewables and prices. The Department of Energy has data on the share of   
   each states electricity generated by renewable sources. For example, Iowa   
   gets 80 percent of its utility-scale power from renewables, mostly wind,   
   while New Jersey only gets 4.6 percent from renewables. Yet Iowas   
   electricity prices actually fell slightly from May 2024 to May 2025, while   
   NJ prices rose 10 percent.   
      
   Trump, however, has his own reality:   
      
   Except New Jersey doesnt have any windmills. There have been proposals for   
   large offshore wind farms, but they have never come to fruition  and Trump   
   has signed executive orders that will effectively ban future offshore wind   
   development.   
      
   So why are electricity prices soaring? The main answer is clearly a surge   
   in power consumption by data centers, driven mainly by AI. Crypto is also   
   playing a role, although we dont know for sure how much  and thanks to the   
   influence of the crypto bros, we may never find out:   
      
   Can we blame Trump for rising electricity prices? Not yet. The AI boom   
   began well before Trump won the election, and the grid just wasnt ready.   
   Trump is, however, doing all he can to make the problem worse  boosting   
   crypto and AI while blocking the expansion of renewable energy, which has   
   accounted for the bulk of recent growth in electric generating capacity:   
      
   Oh, and the Trump administration is rolling back energy efficiency   
   standards for home appliances, which will worsen the electricity shortage.   
      
   So the electricity crisis is set to get worse. And it will matter a lot.   
   Households spend a substantial share of their budgets on electricity, but   
   the overall impact of electricity prices goes well beyond your utility   
   bills: electricity is an important cost of doing business, and an increase   
   in that cost will be passed on to consumers. By my estimate, overall   
   spending on electricity  both direct spending by consumers and spending by   
   businesses that ultimately gets passed on to consumers  is about 2 percent   
   of GDP. So large electricity price increases could have a significant   
   effect on the cost of living.   
      
   Rising electricity costs will also lead businesses to produce and invest   
   less. In particular, as I wrote the other day, energy shortages could bring   
   the boom in AI spending to a screeching halt  and that spending is   
   currently the only thing keeping the U. S. economy above stall speed,   
   growth so slow that economic weakness becomes self-reinforcing.   
      
   Many people, myself included, have drawn parallels between the current AI   
   frenzy and the telecoms boom and bust of the late 1990s  an alarming   
   parallel, because the telecom bust led to years of elevated unemployment.   
   But as Peter Oppenheimer of Goldman Sachs has pointed out, there have been   
   many such boom-bust cycles over the centuries, going back to Britains canal   
   mania in the 1790s. And heres one analogy that has occurred to me: What   
   would have happened if, midway through the 1790s canal-building boom,   
   investors had realized that there wasnt enough water to fill all those new   
   canals?   
      
   So the electricity crisis is serious, adding significantly to the risk of   
   stagflation. Unfortunately, it would be hard to find policymakers Id trust   
   less to deal with this crisis than the Trump administration, whose energy   
   policy is driven by petty prejudices (Trump is still mad about the   
   windmills he thinks ruin the view from his Scottish golf course), macho   
   posturing (real men burn stuff), and hallucinations (the imaginary   
   windmills of New Jersey. )   
      
   A word about Federal Reserve Governor Lisa Cook   
      
   Ill write more about the Lisa Cook affair next week, but feel that I should   
   say something now. Cook is a Federal Reserve governor, a long-term   
   appointment  long-term because we want to insulate the Fed from political   
   pressure.   
      
   Now Trump officials are demanding that Cook resign because, they claim, she   
   once provided false information on mortgage applications, claiming two   
   different houses as her primary residence.   
      
   Its clear that the Trump Administration is weaponizing federal mortgage   
   records to go after anyone they think stands in their way. First Leticia   
   James, next Adam Schiff, and now Lisa Cook. Rather than follow fair legal   
   procedures and allow Cook to defend herself, Trump makes insinuations about   
   Lisa Cook and demands that she quit her position.   
      
   Of course, everyone understands whats happening here  even that socialist   
   rag, the Wall Street Journal. Trump wants to replace Cook with an obedient   
   minion, so Trump loyalists went trawling through everything they could find   
   out about her, looking for some pretext to force her out. This is a   
   grotesque abuse of power.   
      
   It also endangers Americas future. The Feds perceived independence is a   
   major source of economic stability  more about that in this weeks primer.   
   Were already worried about stagflation. The risk will be far greater if   
      
   [continued in next message]   
      
   --- SoupGate-Win32 v1.05   
    * Origin: you cannot sedate... all the things you hate (1:229/2)