Loose monetary policy leads to inequality, said the chief economist of Saxo Bank, Steen Jakobsen.
Despite the recent emphasis on renewable energy, he said, oil and gas companies are still important to investors.
Inequality and climate change will be the top issues in 2020, the chief economist at Saxo Bank said on Monday.
“In fact, inequality and climate will come to the fore in 2020 across the board,” Steen Jakobsen told the “Squawk Box” of CNBC.
Steen Jakobsen said, “It’s not even going to be in the radius. It’s going to be an agenda that dramatically changes the way we perceive things.”
However, it will be difficult to have a consensus on where countries and nations want to go; “things are going to get worse before they get better,” he added.
Easy monetary policies drive the issue of inequality, Jakobsen said.
He stated, “The inequality we see every single day (is) by the discrimination that happens through the monetary policy,”
He said that: “The lower interest rates go, the more regulatory capital the banks need to put aside, and that increases the hurdle rate to actually access private credit in the system,” he added, “The monetary policy is now so loose that it has actually become discriminatory against not only the elderly and young people, but against the society as a whole,”
The only place that makes lending easier, the banking system, is monetary policy “under attack,” he said.
When it comes to investing in renewable energy, Jakobsen said oil and gas companies are still relevant to investors, particularly as they are now trading companies in the renewable energy sector at a 20 percent discount.
“The return on investment is only half of that of the capital,” he said of the renewable energy sector, leading to a cash depletion problem. He added that, “They are destructing capital on a day by day basis.”
Jakobsen explained, in contradiction, oil and gas companies have high cash flows and technological knowledge alongside experience in how to manage long-term projects and infrastructure.
“What needs to be happening is that you have both the black economy and the green economy working together as a unit, because that is the only way you are going to have a credible and predictive way of getting climate change onto the front seat of what goes on,” he said.


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