This is a really fascinating exploration of how data center build out, funded by debt, debt that relied on low interest rates, can then put pressure on interest rates, which then causes the utilities to raise their rates. It's beautiful.
It feels like this is a game between speculators that want low interest rates, and a money machine that wants to protect their investments in the stock market. If you work for Goldman for 30 years before joining the fed, then you surely have an interest in protecting the status quo.
Is there no other system we could envision that makes it possible for us to avoid these goliaths battling and destroying the planet and our opportunities to live in peace?
Eliminate investor owned utilities, and thereby a return on equity requirement. Until that happens, focus solar and battery deployments in the territories of investor owned utilities to drive down their profit until the economics collapse.
Solar and batteries will only keep getting cheaper, and will eventually consume any ability to profit from providing electrical service at the local level. Could be five years, could be fifteen years. Hard to say while we watch the world absorb annual solar and battery production year over year.
TLDR Every investor owned utility is a target to sunset, proceed accordingly. You have to cut out the middleman.
Does this really solve the problem? The article said that municipal bond costs are higher too. Buying up these companies will take a lot of capital. Cities will need to raise money somehow to pay for electrical grid investments and equipment. Even publicly owned companies work hire private ones which means needing to pay them.
Your comment demonstrates you did not read the piece. Higher interest rates are pushing investor owned utilities to ask for higher returns on equity. This pushes up electricity costs to retail consumers who cannot simply "destroy demand" for the baseline electricity they need. It is a reinforcing feedback loop for those exposed to investor owned utilities who can keep asking for returns coming out of retail electricity user pockets.
> Higher interest rates drive demand destruction. There doesn't need to be a credit shock to reduce inflation.
Only when demand is elastic. If demand is non discretionary and inelastic, demand is not destroyed. People still need to drive to work, and will pay for their fuel tank until the cost exceeds some threshold, for example. Same for electricity. Same to ship goods via modes of transportation that rely on diesel fuel. This is also a core component of what is driving inflation higher over the last six months, inflation the Federal Reserve and interest rates are powerless to reduce.
Yes I read the piece, I agree that higher power prices reportedly due to higher interest rates would be bad for consumers. However power prices going up are due to a number of factors. You haven't addressed the "Inflating the AI bubble" from the title, it's not in the article at all. The "they have begun their interest rate hikes again, though they are keen to pause at any point that the AI bubble wobbles", isn't about inflating the bubble.
Eww... economically illiterate demagoguery under the guise of this is good/bad for 'ordinary people'. Maybe Matt would be happier if they used Erdogan's Monetary policy and the hyperinflation because he thinks the time opportunity cost should be zero.
This is a really fascinating exploration of how data center build out, funded by debt, debt that relied on low interest rates, can then put pressure on interest rates, which then causes the utilities to raise their rates. It's beautiful.
It feels like this is a game between speculators that want low interest rates, and a money machine that wants to protect their investments in the stock market. If you work for Goldman for 30 years before joining the fed, then you surely have an interest in protecting the status quo.
Is there no other system we could envision that makes it possible for us to avoid these goliaths battling and destroying the planet and our opportunities to live in peace?
Eliminate investor owned utilities, and thereby a return on equity requirement. Until that happens, focus solar and battery deployments in the territories of investor owned utilities to drive down their profit until the economics collapse.
Solar and batteries will only keep getting cheaper, and will eventually consume any ability to profit from providing electrical service at the local level. Could be five years, could be fifteen years. Hard to say while we watch the world absorb annual solar and battery production year over year.
TLDR Every investor owned utility is a target to sunset, proceed accordingly. You have to cut out the middleman.
https://www.arcgis.com/home/item.html?id=a249744f9f5e494d917...
https://www.electric.coop/
https://en.wikipedia.org/wiki/Investor-owned_utilities_in_th...
Does this really solve the problem? The article said that municipal bond costs are higher too. Buying up these companies will take a lot of capital. Cities will need to raise money somehow to pay for electrical grid investments and equipment. Even publicly owned companies work hire private ones which means needing to pay them.
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Funny, I was going to ask "is it as simple as going off the grid"?
It makes the Biden and Obama solar subsidies look very different. Indirectly they were protecting us from private profiteering utilities?
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Here is a related, somewhat biased but way more entertaining video on how utility pricing works.
https://www.youtube.com/watch?v=3fDGcZ8qpPM
Where is the "Inflating the AI Bubble" part? Clickbait.
Higher interest rates drive demand destruction. There doesn't need to be a credit shock to reduce inflation.
Your comment demonstrates you did not read the piece. Higher interest rates are pushing investor owned utilities to ask for higher returns on equity. This pushes up electricity costs to retail consumers who cannot simply "destroy demand" for the baseline electricity they need. It is a reinforcing feedback loop for those exposed to investor owned utilities who can keep asking for returns coming out of retail electricity user pockets.
> Higher interest rates drive demand destruction. There doesn't need to be a credit shock to reduce inflation.
Only when demand is elastic. If demand is non discretionary and inelastic, demand is not destroyed. People still need to drive to work, and will pay for their fuel tank until the cost exceeds some threshold, for example. Same for electricity. Same to ship goods via modes of transportation that rely on diesel fuel. This is also a core component of what is driving inflation higher over the last six months, inflation the Federal Reserve and interest rates are powerless to reduce.
Yes I read the piece, I agree that higher power prices reportedly due to higher interest rates would be bad for consumers. However power prices going up are due to a number of factors. You haven't addressed the "Inflating the AI bubble" from the title, it's not in the article at all. The "they have begun their interest rate hikes again, though they are keen to pause at any point that the AI bubble wobbles", isn't about inflating the bubble.
1 reply →
Eww... economically illiterate demagoguery under the guise of this is good/bad for 'ordinary people'. Maybe Matt would be happier if they used Erdogan's Monetary policy and the hyperinflation because he thinks the time opportunity cost should be zero.
Or... "how humanity fell for yet another promise of Lucy's to not yank the football away" if you just follow orders
From religions promise of forever life with your loved ones to "starts a SaaS! Disrupt!"
All just political ploys of the elite class of the day. Cause the kids stupid lizard brains take decades to figure it out
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