Energy transition: The parallel with what happens after a war

After a war, capital ha s been destroyed and ha s to be replaced with more investment. In addition, public debt ratios are very high. The situation that will be created by the energy transition is similar: capital destruction (fossil fuels, ICE cars), high investment needs (renewable energies, thermal insulation of buildings), very high public debt ratios (after COVID). The answer to this situation after the two world wars was to introduce highly negative real interest rates, which both boosted investment and reduced debt ratios. The same solution may be found in response to the energy transition: capital destruction leads to a fall in potential production, which drives up inflation; central banks do not react to the inflation, resulting in negative real interest rates.