Former Obama Adviser El-Erian Discusses Inflation Surge Due To Green Energy Shift

 May 19, 2024

The debate around inflation has received a new perspective from Dr. Mohamed El-Erian.

According to Breitbart, Dr. Mohamed El-Erian, a notable economist during the Obama administration, aired views on Bloomberg's "Surveillance" discussing how the shift toward sustainable energy and other global changes have structured today's economy to be more susceptible to inflation.

Dr. El-Erian, who served as the former Chair of the Obama Global Development Council and is currently the President of Queens' College and Chief Economic Adviser at Allianz, emphasized the significant role sustainable energy transitions play in the current economic landscape. According to him, this shift contributes to creating a higher inflation environment than previously experienced.

The economist criticized the traditional inflation target of 2%, calling it arbitrary. He suggested that aiming for a 3% inflation rate might not have as detrimental effects as feared, questioning the validity and sustainability of the conventional target in today's evolving economic climate.

Changing Paradigms in Global Economic Policies

Dr. El-Erian pointed out that there has been a distinct move away from the so-called Washington consensus, which favored deregulation and fiscal prudence. Today's policies lean more towards government intervention and what he describes as fiscal irresponsibility.

He also discussed the change from globalization to a more fragmented approach in international relationships and policy-making. This fragmentation, according to El-Erian, has further implications for economic stability and inflation.

Impact of Technological and Sectoral Shifts on Inflation

The conversation also covered the broad transitions occurring across various sectors such as generative AI, healthcare, defense, and food security. Dr. El-Erian believes these are pivotal in shaping a unique inflationary landscape.

Dr. El-Erian explained during his interview on Bloomberg, "If you put all that together, it is a different inflationary environment. It’s a world that’s subject to higher inflation, and we’ve come from a world that was subject to lower inflation."

This perspective challenges the current economic strategies and targets set by global leaders and policymakers. El-Erian's insights suggest that a reevaluation of inflation metrics and economic approaches is crucial.

Sustainable energy, while necessary for environmental sustainability, comes with its set of economic challenges. According to Dr. El-Erian, this transition has been one of the leading contributors to a structurally higher rate of inflation.


Reflecting on the domestic policy changes, Dr. El-Erian highlighted the shift in economic philosophies from liberalization and deregulation towards more industrial and protective policies. This shift, according to him, affects everything from business operations to consumer prices.

Further discussing the impact of technological innovations on the economy, Dr. El-Erian brought up significant advancements in AI, life sciences, and healthcare. These innovations, while promising, also complicate the economic forecasts and inflation controls.

In concluding his interview, Dr. El-Erian encapsulated how these myriad transitions—from energy sources and technological advancements to geopolitical changes—intertwine to create a new inflationary framework that differs substantially from the past. This evolving scenario, he suggests, calls for adaptive strategies that consider the varied factors now at play in the global economy.

This in-depth examination by Dr. El-Erian not only sheds light on the causal connections between new tech and energy solutions with inflation but also calls for a nuanced understanding of current economic policies and their long-term impacts.

About Victor Winston

Victor is a freelance writer and researcher who focuses on national politics, geopolitics, and economics.

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