On 26 August, just over a month ago, Nepal was hit by a horrific natural disaster, something between a flash flood and an avalanche. It seems to have come from a collapsed glacier. Huge amounts of water, rock, ice and debris travelled over 70 kilometers, killing thousands of people. Many of you have probably seen pictures and videos of this catastrophe. Perhaps the worst showed a huge wave crashing through the China-Nepal border, much bigger than the buildings ahead of it, moving so fast that no one in front could escape.
If you are looking for a metaphor of the global situation, this might be it.
The engineers who built hydropower dams down that valley designed them to survive 100-year floods. But the historical record did not have floods like these. Actual water levels were 20 times higher than the 100-year line. The standard precautions were not enough. Spaces that should have been safe were not. Fundamentally, the environment had become much more dangerous and unpredictable than people had realised. There was a gradual buildup of danger, and then there was a catastrophe many could not escape. It was literally a crisis cascade.
There are several dimensions to this analogy and its relevance to our global situation. In this speech, I will discuss five: climate change; imbalances; technological change, chiefly artificial intelligence (AI); debt; and fiscal dominance of monetary policy.
I will start with the most direct connection, which is climate change. This event was a result of the world getting warmer. This August was the joint hottest month on record. The El Niño phenomenon developing in the Pacific looks set to break records. We do not have climate change on this scale in our historical experience.
