You remind me of the typical Australian who, if told housing was a problem, would start WWIII.
You cannot - but probably will- argue with the fact that any economic system cannot grow on a compound basis forever without meeting resource limitations.
Continuous growth in the face of a growing population ultimately results in the inability to continue growth so long as resources are limited. I think Prof. Bartlett has it exactly right: the greatest failing of the human race is its inability to understand the exponential function.
Resources are becoming more difficult to produce. The easy extraction of essentially everything has ended, particularly of hydrocarbons. Oh, sure, there is plenty of oil in the world, but it is in oilsands, shale and miles below the ocean. You undoubtedly read the Saudi lies about being able to replace Libya's production but did not do so due to 'internal consumption.'
The statistical analysis Grantham had his quants do was very interesting. The recent rising trend in prices of commodities was shown not to be a temporary bubble. That virtually all of them were shown not to be in a bubble says it all. The paradigm has changed, and Chinese and Indian demand are contributing greatly to this trend. Cheap commodities and easily obtainable energy fueled the very real prosperity of the hydrocarbon era.
The implications are there for all to see. We will have rising commodity prices because the competition for them will be fierce. Resources are going to be allocated meagerly, living standards are likely to trend down, we may even see resource wars [some would tell you that the conflicts in the ME are all about resources.]
We are not doing the necessary to use resources wisely or to plan for shortages. I think this is obvious.
Because there is absolutely nothing I can do to influence the apparent mistakes we are making except discuss them, I look at these things strictly from an investment standpoint. In that regard, the way to protect yourself and your family from the problems that the limitations on resources will undoubtedly create is to buy farmland and commodities (including gold because the price of everything is going to go higher and we will need to protect purchasing power) then sit and wait.
I think the country that will succeed in an enormous way in this new paradigm will be Canada. It has huge resources, a small population, a system that efficiently protects property rights, and politicians who are not fiscally insane nor prone to engage in crazy-expensive wars. |
