Time to Wake Up: Days of Abundant Resources and Falling Prices Are Over Forever.
Jeremy Grantham
Most of you probably don't know who Jeremy Grantham is. He's not a tree hugging environmentalist, he's not a liberal politician, and he's not a socialist economist. He's an investment strategist for an asset management firm that controls $107 Billion dollars.
You're probably thinking, why should I care? Well, you should care, you should care a lot. Because Jeremy Grantham gets it! He understands what happens to things and economies when we have an overpopulated finite planet that is rapidly being depleted of the resources that make our civilization possible. He gets it so much, that in his latest newsletter, he tells his clients that they better get it too, or they're going to lose their money.
I find this to be a remarkable, and one of the most hopeful signs I've seen in a very long time. When you get filthy rich people, telling other filthy rich people, to wake up and change, and change NOW, then maybe, just maybe, the people with power and money will join with those of us who've been fighting this battle for decades, and maybe we can prevent the catastrophe that is coming at us like a freight train.
For those who think that we will have a "recovery", or see "green shoots" that will take us back to the pre 2008 days of McMansions in the burbs and a FORD F150 in every garage, you better read his entire letter very carefully. Those days are gone forever.
We sustained those days only through the help of corrupt and incompetent governments that prevented their own people from sharing in the remaining resources the earth had available. But many of those countries have woken up and they want a piece of the pie. And there ain't enough pie to go around folks. So we in the good ole U.S. of A, are going to have to do without, so others can have a few crumbs more.
The only question is, can we manage the inevitable decline in our standard of living so it is equatable and so that we can all still enjoy a comfortable life that fulfills the promise of the pursuit of happiness that our forefathers sought? Or will we crash and burn under a resource collapse brought on by the greedy and selfish policies of a Republican party that manipulates a zombie Tea Party that scares politicians who should know better, into endless submissive compromises.
The game is over. We're not going back. So we better personally prepare for a future of far fewer material goods, at far higher prices, and we better fight like our lives depended on it, to remove the politicians who would have our country crash and burn, and elect the politicians who have a chance at implementing the policies that will transition America to the new future that awaits it.
Here is a summary of the letter from Jeremy Granthem, followed by a link to the entire letter. I urge you to read the entire letter.
Summary
Until about 1800, our species had no safety margin and lived, like other animals, up to the limit of the food supply, ebbing and flowing 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 scientific progress.
Since 1800, the population has surged from 800 million to 7 billion, on its way to an estimated 8 billion, at minimum.
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 countries.
We all need to develop serious resource plans, particularly energy policies. There is little time to waste.
Time to wake up: