Time to Wake Up: Days of Abundant Resources and Falling Prices Are Over Forever

Discussion in 'Economics' started by dcvtss, Apr 27, 2011.

  1. dcvtss


    "Summary of the summary" from GMO's quarterly newsletter, his conclusion is a likely upcoming commodity crash is the buying opportunity of a lifetime, don't know if I agree or not, in my opinion if we are on this "new" old paradigm of population bumping against limited resources the other old paradigm of demand destruction through conflict over resources is also a factor, a factor that is absent from his analysis.

    Entire newsletter here: http://www.gmo.com/websitecontent/JGLetterALL_1Q11.pdf

    Time to Wake Up: Days of Abundant Resources and
    Falling Prices Are Over Forever
    Jeremy Grantham
    Summary of the Summary
    The world is using up its natural resources at an alarming rate, and this has caused a permanent shift in their value.
    We all need to adjust our behavior to this new environment. It would help if we did it quickly.
    * Until about 1800, our species had no safety margin and lived, like other animals, up to the limit of the food supply,
    ebbing and fl owing in population.
    * From about 1800 on the use of hydrocarbons allowed for an explosion in energy use, in food supply, and, through
    the creation of surpluses, a dramatic increase in wealth and scientifi c progress.
    * Since 1800, the population has surged from 800 million to 7 billion, on its way to an estimated 8 billion, at
    * The rise in population, the ten-fold increase in wealth in developed countries, and the current explosive growth in
    developing countries have eaten rapidly into our fi nite resources of hydrocarbons and metals, fertilizer, available
    land, and water.
    * Now, despite a massive increase in fertilizer use, the growth in crop yields per acre has declined from 3.5% in
    the 1960s to 1.2% today. There is little productive new land to bring on and, as people get richer, they eat more
    grain-intensive meat. Because the population continues to grow at over 1%, there is little safety margin.
    * The problems of compounding growth in the face of fi nite resources are not easily understood by optimistic,
    short-term-oriented, and relatively innumerate humans (especially the political variety).
    * The fact is that no compound growth is sustainable. If we maintain our desperate focus on growth, we will run
    out of everything and crash. We must substitute qualitative growth for quantitative growth.
    * But Mrs. Market is helping, and right now she is sending us the Mother of all price signals. The prices of all
    important commodities except oil declined for 100 years until 2002, by an average of 70%. From 2002 until now,
    this entire decline was erased by a bigger price surge than occurred during World War II.
    * Statistically, most commodities are now so far away from their former downward trend that it makes it very
    probable that the old trend has changed – that there is in fact a Paradigm Shift – perhaps the most important
    economic event since the Industrial Revolution.
    * Climate change is associated with weather instability, but the last year was exceptionally bad. Near term it will
    surely get less bad.
    * Excellent long-term investment opportunities in resources and resource effi ciency are compromised by the high
    chance of an improvement in weather next year and by the possibility that China may stumble.
    * From now on, price pressure and shortages of resources will be a permanent feature of our lives. This will
    increasingly slow down the growth rate of the developed and developing world and put a severe burden on poor
    * We all need to develop serious resource plans, particularly energy policies. There is little time to waste.
  2. DT-waw


    fear mongering.
    there is so much resources in the world, that the earth could house and feed 50 or 90 billion people easily.

    the technology exists to make virtually everything 5x cheaper and 5x more effective than what we are presently using.

    free energy, hemp, coal, hydroponic agriculture, nano solar panels. the list goes on and on.
    see http://www.thevenusproject.com/
    and jacque fresco inventions.

    but the media will never want to let you KNOW.
    its a grave threat to monetary system.
    the bankers want you to think all things are scarce and should cost a fortune.
  3. Visaria


    interesting, thanks for link.