Topic: Carbon Derivatives

At COP27, central bankers discussed a new asset class involving "natural capital," where resources like water, trees, and biodiversity are tokenized. The plan involves creating financial derivatives and a pricing curve for sequestered carbon to integrate nature into the global financial architecture.

Speculation arises regarding the timing of the ClimateGate leak, suggesting it may be a CIA-led "hit job" intended to derail the upcoming Copenhagen climate summit. The potential impact on the "Cap and Trade" bill is discussed, with the hosts characterizing the legislation as a phony market for unregulated derivatives and a hidden form of taxation.

Kenneth Green warned that cap and trade creates a new financial instrument that could lead to a "carbon bubble" similar to the housing crisis. He also argued that carbon controls favor biofuels, which could lead to the displacement of natural forests by 2065. Green dismissed the promise of "green jobs," asserting that government policy merely shifts jobs with a net loss to the economy.

A critical section of the climate bill, found on page 210, establishes carbon derivative markets and amends the Commodity Exchange Act. The legislation allows for the trading of emission allowances and offset credits, overseen by the Federal Reserve. The hosts argue this repeals existing regulations and creates a new market for "phony baloney" trading similar to the credit default swaps that caused the financial crisis.