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Jeremy Grantham Goes Malthus: It's "Time to Wake Up" Or The Great Paradigm Shift From Declining Prices To Rising Prices

Tyler Durden's picture


And so another one joins the commodities craze: "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." No, not Malthus. Grantham.|

Summary of Grantham's latest:

  • 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 surplus es, 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 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.

Fear not Jeremy, Obama will "punish" all the speculators courtesy of his latest working group, and all shall be well.

Full letter below (pdf)

GMO April


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Mon, 04/25/2011 - 15:29 | 1204812 Bazooka
Bazooka's picture

All of these talking heads were calling for peak oil in 2008 before oil crashed to under $35...

It ALL seems deja vu to me these months....oil up, gold up, silver up, corn up, dollar down, house prices setting new lows.....A CRASH IS IMMINENT!

Mon, 04/25/2011 - 15:28 | 1204821 tmosley
tmosley's picture

Remember, no QE last time.

BIG difference.

Mon, 04/25/2011 - 15:43 | 1204864 66Sexy
66Sexy's picture

It has everything to do with market fundamentals. Supply demand. Dollars are being traded for physical commodities. Now a new flux of federal reserve notes are entering the market from asia with no buyers, but the federal reserve itself.


Mon, 04/25/2011 - 16:04 | 1204910 Quixotic_Not
Quixotic_Not's picture

Obama to 'MeriKa; "Let them eat shit and die":

Mon, 04/25/2011 - 16:26 | 1205095 the mad hatter
the mad hatter's picture

Paradigm shift is right. Here is the new normal:

  • No more permagrowth
  • The overall trend is deflation but mad money printing and wreckless fiscal policy will cause inflation
  • Inflation causes consumers to consume less which crashes economy (demand destruction)
  • Leaders and banksters will again try to force permagrowth down our throats with more money-printing and "stimulus spending" which leads to inflation again
  • Rinse, repeat, trade, and profit.

Somewhere within this new normal lies the absolute destruction of your purchasing power. There will be a point where everyone gives up on the dollar after politcians and Bernanke destroy the dollar's reserve currency status.

So cross your fingers like I am and hope that we can harness fusion power and have food replicators a-la Star Trek soon.

Mon, 04/25/2011 - 19:12 | 1205678 avonaltendorf
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EPA kills exploration of Beaufort Sea

Shell has spent five years and nearly $4 billion dollars on plans to explore for oil in the Beaufort and Chukchi Seas. The leases alone cost $2.2 billion. Shell Vice President Pete Slaiby says obtaining similar air permits for a drilling operation in the Gulf of Mexico would take about 45 days. He’s especially frustrated over the appeal board’s suggestion that the Arctic drill would somehow be hazardous for the people who live in the area. "We think the issues were really not major," Slaiby said, "and clearly not impactful for the communities we work in."

The closest village to where Shell proposed to drill is Kaktovik, Alaska. It is one of the most remote places in the United States. According to the latest census, the population is 245 and nearly all of the residents are Alaska natives. The village, which is 1 square mile, sits right along the shores of the Beaufort Sea, 70 miles away from the proposed off-shore drill site.

The EPA’s appeals board ruled that Shell had not taken into consideration emissions from an ice-breaking vessel when calculating overall greenhouse gas emissions from the project.

At stake is an estimated 27 billion barrels of oil. That’s how much the U. S. Geological Survey believes is in the U.S. portion of the Arctic Ocean. For perspective, that represents two and a half times more oil than has flowed down the Trans Alaska pipeline throughout its 30-year history. That pipeline is getting dangerously low on oil. At 660,000 barrels a day, it’s carrying only one-third its capacity.

Production on the North Slope of Alaska is declining at a rate of about 7 percent a year. If the volume gets much lower, pipeline officials say they will have to shut it down.

[Fox News a few minutes ago]

Mon, 04/25/2011 - 19:17 | 1205688 Flakmeister
Flakmeister's picture

Read very carefully what the USGS said...27 billion is OOIP, now factor in 30% recovery. Also read up on what they define as p5, p50, p95  probabilities. Basically, there is some oil, but otherwise it is a crapshoot.

Mon, 04/25/2011 - 20:37 | 1206106 Bananamerican
Bananamerican's picture

There is, in fact, a "Paradigm Shift"

Mon, 04/25/2011 - 16:39 | 1205111 the mad hatter
the mad hatter's picture

DP, shitty internets fail

Mon, 04/25/2011 - 20:29 | 1206075 Fox Moulder
Fox Moulder's picture

Let them eat Soylent Green.

Mon, 04/25/2011 - 16:24 | 1205075 A Man without Q...
A Man without Qualities's picture

"Now a new flux of federal reserve notes are entering the market from asia with no buyers, but the federal reserve itself."

Ok, so the question is, what is the Fed giving them in exchange for these FRNs?

Mon, 04/25/2011 - 15:34 | 1204835 SheepDog-One
SheepDog-One's picture

Except this time there probably wont be a 'crash', we'll just suddenly find ourselves in a WW3, getting 'terrorist attacks' markets wont matter when youre listening in to the 1 radio channel broadcasting where its safe to go to get away from the radiation or biological weapon cloud. Of course that will be a FEMA bus terminal, but whatever.

Sun, 05/01/2011 - 11:58 | 1225511 Seer
Seer's picture

Yeah, for TPTB this really starts to sound like the only real option.  I'd love to hear from the folks who junked you as to why they feel your post is junk-worthy...

Mon, 04/25/2011 - 15:37 | 1204843 Misthos
Misthos's picture

Are you familiar with the concept "demand destruction?"

Peak Oil does not mean forever rising prices.  The rising price of oil acts as a brake on the economy.  Oil price spikes, economy crashes, oil price crashes, economy resumes....

wash, rinse, repeat....

Peak Oil isn't an overnight process either.  It's a gradual process.  We likely have already peaked in terms of conventional oil.  It's the type of thing you don't get a clear picture of until a decade or so later.  You see it in the rear view mirror, so to speak.

Mon, 04/25/2011 - 15:47 | 1204892 66Sexy
66Sexy's picture

Rising oil prices brake the economy but justify QE 3.

NET? Exactly what we have now, main street / wall street disconnect.

What we are seeing now are the initial stages of international dollar hyperinflation. The rush out of the dollar by the international community is happening now.

This means the dollars are coming home to roost, in the form of higher prices across the board, prices being buffered by corporate earnings that will eventually suffer.

QE3 is assured, the question is how will the game be played. The problem with a pause in QE is TPTB will still be buying so there wont be a deep correction, just the same as before... BTFD economics. 

Mon, 04/25/2011 - 15:52 | 1204904 SheepDog-One
SheepDog-One's picture

Uh huh sure, its all supply and demand. Well except for the invisible hand in the iron glove BATS canceling trades, printing money, manipluating stocks and bonds...other than that just normal central bankster owned unfettered free markets.

Mon, 04/25/2011 - 15:52 | 1204922 Quixotic_Not
Quixotic_Not's picture

The proper term is "Divide & Conquer"...

Mon, 04/25/2011 - 15:59 | 1204957 Misthos
Misthos's picture

I agree - It's not all supply and demand.  Obviously speculation occurs, especially in a ZIRP (QE) world. But that speculation also exaggerates price swings on the way up, and on the way down.

We live in a complex world.  Many factors enter the equation.  But on a macro, long term level, Peak Oil is happening right now.

Forget economics...  just look at how the world powers are carving up Africa right now. Why do nations engage in resource wars?  


Mon, 04/25/2011 - 16:08 | 1204974 Quixotic_Not
Quixotic_Not's picture

We live in a complex world.


Not really -- The banksters only established "The U.S. Treasury Direct-to-PD" looting model in 2008...

Things aren't really all that complicated, unless you need them to be  ;-)

Mon, 04/25/2011 - 16:10 | 1205018 SheepDog-One
SheepDog-One's picture

Not complex, just iron fisted banker market control. 84 stocks flash crash? No problem, delete the trades by time machine. Oil from $35 to $148 to $30, thats 'demand'...funny I didnt see everyone riding bicycles back then, demand for oil only fluctuates a few % at most.

Mon, 04/25/2011 - 16:20 | 1205054 Misthos
Misthos's picture

I said I agree, speculation is part of the problem.  But demand is growing globally.

How many people were riding bicycles in China 20 years ago?  How many drive cars instead today?

Why are we increasingly seeking unconventional and more expensive to produce oil like tar sands and offshore?  Because the cheap easy stuff is either running out or not enough for the world economy.

Hey, I'm no fan of the banking cartel either...  but there is more to it.

It is complex.

Sun, 05/01/2011 - 12:07 | 1225527 Seer
Seer's picture

The  fundamentals aren't complex, but what we do them ARE.

Sigh... sadly people will still pick windmills to tilt at lest they have to confront the realities that their iPod, SUV-driving ways can't be sustained.  It's like declaring gravity bad because one tripped and fell- gravity, it's a conspiracy don't ya know! (NOTE: I DO believe that conspiracies exist -duh!-, but some calculate out at such low probabilities as to be near improbable (hence not worth spending time speculating over).

Mon, 04/25/2011 - 16:41 | 1205138 Peak Everything
Peak Everything's picture

"It's a gradual process."

Maybe. Maybe not. 1) Technology currently used to enhance oil recovery will result in a steeper decline curve. Think adding more straws to the same drink. 2) Politics in exporting countries may accelerate export reduction once it becomes clear we are on the downslope. "Let's save some for our kids". 3) Producing countries generate wealth which increases internal consumption of energy thus reducing the remainder available to export. Google "Export Land Model" for more information. 4) High energy prices will temporarily collapse demand and prices thus disrupting the long term investment capital needed to maintain current supply. 5) Higher energy costs and/or lower net energy supplies will reduce surplus wealth (aka savings) in society thus reducing our ability to invest in new energy production resulting in a swift positive feedback collapse of civilization. 6) Wars initiated to fight over the remaining resources will burn more of the resources being fought over thus accelerating the collapse.

Sun, 05/01/2011 - 12:11 | 1225539 Seer
Seer's picture

Pure facts/logic!

I'd summarize the difficulties as that of the reversal of economies of scale.  And with energy this affects EVERYTHING.  Decrease gas sales and you increase the cost of shipping: trucking will incur more of the costs for road maintenance (POVs help subsidize trucking); price of goods have to be pushed up (relative to income), resulting in less sales in these other goods, which then pushes trucking costs up, which...

Mon, 04/25/2011 - 16:10 | 1205019 Popo
Popo's picture

This crash is going to be one for the history books...

Mon, 04/25/2011 - 16:20 | 1205052 Mr Lennon Hendrix
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Saudi oil production peaked, as reported by such mainstream news vehicles as cnbc, in '09.  If they were the swing producer, what does that mean for oil production?  Russia is the world's second largest producer of oil.  Russian production peaked in '89.  Once again, what does that mean for production?

Mon, 04/25/2011 - 17:36 | 1205364 Diogenes
Diogenes's picture

All of these talking heads were calling for $100 a barrel oil in 1979 before oil crashed to under $35 in 1981 and eventually fell to $11.

I can also show you similar predictions from 1947 and 1913.

Sun, 05/01/2011 - 12:20 | 1225553 Seer
Seer's picture

OK, show us!

Oh, and please explain how we could NOT run out of oil given that this is a finite planet.  Do you re-fill your fuel tank?  Why?  Why doesn't it magically re-fill on its own?  Also, how come people who go through their entire lives w/o cancer GET cancer?

Because something was once false (based on incomplete/false data) does not mean that it will always be false.  But, go ahead, continue to believe in unicorns and skittles; just don't ask me to fund your wars for what you believe is abundant.

Mon, 04/25/2011 - 18:28 | 1205548 trendybull459
trendybull459's picture

Absolutly agree!

Mon, 04/25/2011 - 18:28 | 1205551 trendybull459
trendybull459's picture

Absolutly agree!

Mon, 04/25/2011 - 18:28 | 1205560 trendybull459
trendybull459's picture

agree 100%

Mon, 04/25/2011 - 22:58 | 1206472 gabeh73
gabeh73's picture

I have read and enjoyed Grantham's letters over the years, but this is crap. Prices for commodities aren't rising because of the ideas of malthus and his more recent retreads like Ehrlich"population bomb".


The money printers caused rising prices. Now when prices rise the people who favor a stronger and more centralized government will use the "resource scarcity" peak everything meme to gain control.


of course they will also blame "speculators", "hoarders" and "greedy" people who are scared of their families starving due to a totally corrupt government!...but the "peak everything" meme is the one that worries me the most because that is one theme that I see many here at ZH falling for. Sure we are all now aware that unallocated inventories and secure vault storage fees at JP Morgans finest facilities in London is a scam...but seriously people don't fall for this shit.

Read about the history of the peakers predictions. The peak energy guys are always shifting the definition of "conventional easy to find". One guy thought soceity would collapse when the caves in south america ran out of bat dung...then it was whale oil...then iit was a peak pennslyvannia oil...then texas...then saudi Arabia...the last 5 years has seen shale gas drilling know how improve so much that our nat gas resource base more than double from 50 year supply to 100 year supply...and that shit is all over the world but much of the world is still flaring natty so people don't even bother looking.

Sun, 05/01/2011 - 12:31 | 1225566 Seer
Seer's picture

Are you saying that the costs of oil extraction are still the same (even if inflation is factored in)?

I'd suggest that extraction costs ARE going up, and it's got less to do with inflation than with the degree of difficulty encountered.

"the last 5 years has seen shale gas drilling know how improve so much that our nat gas resource base more than double from 50 year supply to 100 year supply"

This is absolute rubbish!  It's MEANINGLESS!  What kinds of consumption levels are you talking about?  50 year, 100 year "resource base" means WHAT?  Is it enough such that if I were to switch EVERYTHING over to this energy source that it would still last 100 years?

Nothing like shallow thinking to land one in a shallow grave.  Best of luck to you! (but again I have to remind folks not to pick my pockets in order to continue feeding your addiction- no spilling the blood of my kin/loved ones for your failure to understand simple math).

Tue, 04/26/2011 - 02:21 | 1206477 gabeh73
gabeh73's picture

I have read and enjoyed Grantham's letters over the years, but this is crap. Prices for commodities aren't rising because of the ideas of malthus and his more recent retreads like Ehrlich"population bomb".


The money printers caused rising prices. Now when prices rise the people who favor a stronger and more centralized government will use the "resource scarcity" peak everything meme to gain control.


Of course they will also blame "speculators", "hoarders" and "greedy" people who are scared of their families starving due to a totally corrupt government!...but the "peak everything" meme is the one that worries me the most because that is one theme that I see many here at ZH falling for. Sure we are all now aware that unallocated inventories and secure vault storage fees at JP Morgans finest facilities in London is a scam...but seriously people don't fall for this shit.

Read about the history of the peakers predictions. The peak energy guys are always shifting the definition of "conventional easy to find". One guy thought society would collapse when the caves in south america ran out of bat dung...then it was whale oil...then it was a peak pennslyvannia oil...then texas...then saudi Arabia...the last 5 years has seen shale gas drilling know-how improve so much that our nat gas resource base more than doubled from a 50 year supply to 100 year supply...and that shit is all over the world but much of the world is still flaring natty so people don't even bother looking.

Mon, 04/25/2011 - 15:30 | 1204817 tmosley
tmosley's picture

Yeah, it's clearly caused by demand, because we are all running around buying more, driving more, wasting more, now that everything costs more.

All followers of Malthus should kill themselves and save us the annoyance.

Mon, 04/25/2011 - 15:31 | 1204827 SheepDog-One
SheepDog-One's picture

Thats what I tell all the depopulation pushers...go set the example jump off a bridge.

Mon, 04/25/2011 - 15:50 | 1204894 A Lunatic
A Lunatic's picture

Well if the Darwinists actually believed what they say then they would stop trying to save the ignorant effing sloths that suck up every damned thing they can get their hands on. Do you realize that my chainsaw came with a warning to not attempt to stop the blade with your hands? I say if someone is that effing stupid then by all means use your hands, better yet stop it with your neck. And speaking of chainsaws, it's time we took a few thousand of them to the public trough and gut this hypocritical and corrupt system.

Mon, 04/25/2011 - 16:14 | 1205023 SheepDog-One
SheepDog-One's picture

They should in fact put a label on to stop the blade with their face. If they werent a bunch of hypocrite communists at heart.

Mon, 04/25/2011 - 15:36 | 1204848 SWRichmond
SWRichmond's picture


There, I feel better.

Mon, 04/25/2011 - 15:46 | 1204884 Manthong
Manthong's picture

It's peak Jack Daniels you have to watch out for.

Mon, 04/25/2011 - 16:02 | 1204948 Quixotic_Not
Quixotic_Not's picture

Nah, peak JD will be when times are still good  ;-)

It's peak .308 FMJ that you have to dread...

Mon, 04/25/2011 - 16:07 | 1205000 LFMayor
LFMayor's picture

+168g bthp.

Mon, 04/25/2011 - 17:03 | 1205250 rocker
rocker's picture

How did you know that's my favorite caliber. Have plenty. Even with Silver tips.

Mon, 04/25/2011 - 17:44 | 1205404 Pchelar
Pchelar's picture

I've thought a lot about this, and unless you already live in a defensible place (in otherwords nowhere urban or suurban...), there is little point in having more ammunition than you could reasonably carry in case you had to leave a bad place on foot in the dead of night.  Unless you can get all that ammo to a safe place BEFORE things get real bad it is not going to do you much good.  YMMV of course...

Mon, 04/25/2011 - 19:09 | 1205670 Flakmeister
Flakmeister's picture

All followers of Malthus should kill themselves and save us the annoyance.


Hey Tmosley, why don't you just go fuck yourself....

I mean everytime you open your mouth on resource matters you get put in your place by people that actually have a clue what they are talking about...

Tue, 04/26/2011 - 10:32 | 1207697 Lower Class Elite
Lower Class Elite's picture

Come on, Flak.  Didn't you know that there are thousands, nay, millions of giant Jed Clampett-style lakes of light sweet crude just waiting to be pumped directly into your Yukon Denali?  If only those evil enviro-commies/Middle Easterners/African villagers/space lizards would stop cock-blocking those poor, defenseless energy corporations and their governement/financial industry friends, we'd be swimming in oil.  SWIMMING, I tell ya!  

Tue, 04/26/2011 - 11:04 | 1207835 Flakmeister
Flakmeister's picture

 Yeah, it's all rosy.... Why Donald Trump just said that all we have to do is comandeer the Iraqi oil fields and tell OPEC to lower prices because they owe us....

We just gotta shoot a few oil speculators and drill our way outta this. If it wasn't for that communist vegan conspiracy in Texas that sucessfully shut in production in 1970 everyone would still be driving big-block V8s....  

Tue, 04/26/2011 - 12:13 | 1208090 gabeh73
gabeh73's picture

The big powerful energy companies have a long history of putting together groups to convince the government to put up limits to supply that can brought online. Read a couple of books about JD Rockefeller...even those that are authorized by the Rockefelelr family and favorable to him. It will make this dynamic a little more. From the organization of the Texas RRC to OPEC...this ain't a conspiracy theory.

Tue, 04/26/2011 - 14:11 | 1208469 Flakmeister
Flakmeister's picture

The state of the world oil industry has little relation to that which existed in the time of Rockefeller... The Texas RRC released all restrictions back in 1970... What fraction of world supply is controlled by the 7 sisters? What fraction of world reserves are controlled by them? Did you not find it curious that Exxon cannot replace it's oil reserves?

So, pray tell, where is all this oil that can be brought to market that is being suppressed?

Did it ever occur to you that the US lives and dies through cheap oil?

Mon, 04/25/2011 - 19:45 | 1205840 trendybull459
trendybull459's picture

I do not use more or spend more,I'm saver.Die,if you crazy using everything you wish,I use things people throw and make from it nice garden-not  buying anything,all from the street-earth,boxes.Seeds i grow myself,same to every one,if he is just brainless money spender-go on!We do not need all those things really,we are overconsump,because....USA advertising

Tue, 04/26/2011 - 02:28 | 1206809 gabeh73
gabeh73's picture

All mosley is saying that the population has remained practically constant over the last 12 months. Given this constant and a 100% increase in price you aren't going to see a increase in is BS. The problem is the currency and the fact that most governments in the world are incredibly corrupt....making commodities look like a safer store of value than any of the fiat currencies. + really the hypocritical people like Ted Turner who had 5 kids and then declares we should have a 2 child policy worldwide....that is some double evil right there. People like that should be told to kill themselves.

Sun, 05/01/2011 - 14:36 | 1225746 Seer
Seer's picture

Well, good of you to defend the defenseless, I suppose...

Perhaps the price of oil has been suppressed for a LONG time and that it can no longer be suppressed?  Perhaps the externalized costs (like wars) can no longer be kept hidden?  And, perhaps these costs are now being factored in?

And, lastly, people are STILL failing to get the notion of economies of scale in reverse.  Yes, prices CAN go UP while demand goes down!  Increased R&D costs (pushing the envelope) and increased production costs on a per-unit basis can ONLY result in increased sales/end-user costs.  Further, the U.S. Congress is talking about reducing oil subsidies (yeah, the GOP is talking about it, though I'm sure it's just talk): the U.S. has the thrid largest oil reserves, in which case such actions can have a signficant impact on global pricing.

People spouting off about "speculation" obviously don't know shit about markets (that's what they are all about!).  Yeah, there's more heaving going on because capital is becoming controlled by fewer entities- this is only going to more of the case, whining isn't going to do anything (besides, it's the NATURAL progression of capitalism, of anything that's based on growth [and which then runs into the real world of limited resources]).

Mon, 04/25/2011 - 15:29 | 1204822 plocequ1
plocequ1's picture


Mon, 04/25/2011 - 15:37 | 1204841 Misean
Misean's picture

Oh yeah, flood the market with trillions of fiat and then when prices rise call it running out of stuff. Whatever...

Mon, 04/25/2011 - 15:39 | 1204861 SWRichmond
SWRichmond's picture

Isn't it amazing?  How do these people get to the positions they're in?  How do they remember to breathe?

Mon, 04/25/2011 - 15:56 | 1204932 SheepDog-One
SheepDog-One's picture

Its all a total joke...print trillions and monetize everything in sight, then blame iron fisted fascist market control on limited resources when the bankers get in a bind. Limited resources is horseshit, the USA only 30 years ago supplied plenty of our own cheap food and we also supplied the rest of the world. Did our land shrink? No, now 90% of all farming is Monsanto GMO Frankencrops. 

Mon, 04/25/2011 - 16:15 | 1205025 Misean
Misean's picture

But the farm subsidies are to help the small farmers...

Mon, 04/25/2011 - 17:29 | 1205340 GeorgeHayduke
GeorgeHayduke's picture

Yes, in many ways out land did shrink. Many of the McMansion built during the past 30 years, plus those churned out enmasse during the mindless housing boom were built on former farmland or pasture land, or orange groves, etc... Also, the population has grown quite a bit in 30 years. And, more people around the world are increasing the amount of resources they consume, as more people live on the earth.

Naturally, these things aren't the only reason for commodities going up. However, it seemsa little simple to blame everything about rising commodity purely on money printing. I would venture that unequal doses of the items I mentioned above, plus money printing, plus other issues we may not know now or ever know, are pushing us toward the cliff at an ever increasing speed. I'm betting we fly off the cliff long before anything effective is seriously considered, let alone done about it. Well, anything that helps the masses. The Powers That Be will always scramble to assist and protect the upper 1-5%.

Mon, 04/25/2011 - 23:22 | 1206520 gabeh73
gabeh73's picture

Bullshit, food prices aren't rising because of Mcmansions...there is more forest in the USA today than 100 years ago.

The banksters print money to create the problem and now they offer up this mindless shit so they can propose a solution that will benefit them.

Drive around New England and you can see 100 year old rock walls in all the forests where farms used to be. If you don't believe that then look it up the USDA's own stats confirm it.


A lot of the problem is not the first order effects of money printing, but the other effects of having a crony corporatism leviathan working on behalf of Monsanto and ADM to red tape to death any small farmers that aren't taxed or debt bombed to death.

Sun, 05/01/2011 - 14:43 | 1225754 Seer
Seer's picture

You're a fucking idiot, plain and simple!

Pay fucking attention to what has happened since the early 70s when the US's oil production PEAKED (yes, the maximum amount of oil that the US could pump out of the ground happened back in the early 1970s!).  ALL has gone downhill since!  And yes, the USD was decoupled from gold then as well.  But to state that it's only been about debasement of the USD fails to understand WHY the USD is being debased, and that reason is because of a decline in POWER, in energy!

Go from net exporter (which is how you actually "produce" wealth) to next importer of one of the most important resources in human history and then tell me that it's not important.

On one hand you resource deniers appear to understand the concept of the exponential function as it applies to a virtual thing like currency/money, but on the other hand you completely fail to grasp it as it applies to the REAL world!  FUCKING FAIL!

Mon, 04/25/2011 - 16:29 | 1205098 AldoHux_IV
AldoHux_IV's picture

+100 These assholes are no better than the assholes on TV talking about how important it is to talk about budget proposals that do nothing but impose more strain on the peasantry of the country.  Lauded political buffoons who really have no real solutions are the soup du jour while the reality of inequality grows no real solutions to society's greater problems are acheived just more smokes and mirrors before the whole thing comes crashing down.

Mon, 04/25/2011 - 15:44 | 1204858 Re-Discovery
Re-Discovery's picture

It's no longer 'inflation'.

It's the natural consequence from consuming too much, and what we need to do is change our ways and consume less.

So really, WE are the problem and loose monetary policy has nothing to do with it.

<sarc off>

(Along with the vanished MIT report, this is another interseting cover story leading into our esteemed Chairman's remarks this week.) 

Mon, 04/25/2011 - 15:55 | 1204942 SheepDog-One
SheepDog-One's picture

We're not producing anywhere near capacity. Huge farming states now sit basically idle as farmers get paid to not grow, and we hear we're simply consuming too much. Utter BS.

Mon, 04/25/2011 - 16:20 | 1205068 Ricky Bobby
Ricky Bobby's picture


Mon, 04/25/2011 - 23:56 | 1206585 gabeh73
gabeh73's picture

Grantham just un-masked himself as a promoter of a Dominant Social Theme. The Daily Bell is good at exposing these people.

Sun, 05/01/2011 - 14:48 | 1225760 Seer
Seer's picture

No, that's YOUR myopic, stupid-assed interpretation.

I suppose Grantham believes in gravity as well, in which case, according to you, is likely propaganda just because he warns us that gravity can make us face-plant (apparently you've done this way too many times, at a very young age).

At what fucking point do you believe that there is a limit?  None?  If you say anything other than "none" then you are in agreement with Grantham.  If you say there are no limits then you're clearly in fantasy land.

Mon, 04/25/2011 - 15:39 | 1204860 disabledvet
disabledvet's picture

ridiculous.  "where have you been for the  last 10 years?"  so many posers needing to be "stripped naked for their Vietnamese master."  Mrs market is "sending us price signals"?  REALLY?  This is the collapse of absolutely nothing but Grantham and his "vodoo."  By all means "roll the bones" of course.  Malthus has never been anything other than right especially in his after-life.

Mon, 04/25/2011 - 15:40 | 1204863 Homey Da Clown
Homey Da Clown's picture

Tell me Obama is not intentionally driving up oil prices.



Shell Oil Company has announced it must scrap efforts to drill for oil this summer in the Arctic Ocean off the northern coast of Alaska. The decision comes following a ruling by the EPA’s Environmental Appeals Board to withhold critical air permits. The move has angered some in Congress and triggered a flurry of legislation aimed at stripping the EPA of its oil drilling oversight.

Shell has spent five years and nearly $4 billion dollars on plans to explore for oil in the Beaufort and Chukchi Seas. The leases alone cost $2.2 billion. Shell Vice President Pete Slaiby says obtaining similar air permits for a drilling operation in the Gulf of Mexico would take about 45 days.

Read more:"

Sun, 05/01/2011 - 15:52 | 1225850 Seer
Seer's picture

What part of externalization of costs don't you get?

The fucking oil companies have been subsidized for so long now and when they don't get all the breaks they send their bevy of lobbyists and Park Avenue maketing manipulators to work attacking the very govt that has helped them.  Well, OK, Shell isn't a US company, but the basics are there for the entire industry: not like it's a big surprise, and it makes every bit of sense to me that "collectively" we would look to promote something as crucial as oil.

BUT, maybe, MAYBE, there really isn't enough oil to justify their drilling?  Maybe they're scapegoating the neutered EPA to save face with shareholders?

Geezus, think that only govts can spin?

Mon, 04/25/2011 - 15:43 | 1204874 LawsofPhysics
LawsofPhysics's picture

"Oh yeah, flood the market with trillions of fiat and then when prices rise call it running out of stuff. Whatever.."


Exactly, the TBTF have a choice and they know it and have been planning for it.  Destroy the dollar, not just the value, but literally destroy it completely such that a new world currency and complete renegotiation/confiscation of wealth can occur or kill billions of the right people.  I am guessing that we will get a bit of both.

Mon, 04/25/2011 - 15:49 | 1204899 centerline
centerline's picture

Population growth charts are as parabolic as the fed's money supply charts.  We all know what the math says about parabolic moves.  Plan accordingly.

Mon, 04/25/2011 - 16:37 | 1205140 mind_imminst
mind_imminst's picture

Not latley. The popualation growth RATE hit a maximum in the late 1960s/early 1970s. It has been declining ever since.

Sun, 05/01/2011 - 15:56 | 1225859 Seer
Seer's picture

Declining doesn't mean that the population isn't still growing.  It's a carry-over/coasting thing...  Simple population counts tell the story.

And while total population size is something to be concerned about, it's overall consumption that's the real issue, and it's here where the US population consumes as though it's about 3 billion.

Mon, 04/25/2011 - 15:44 | 1204876 RobotTrader
RobotTrader's picture

175 million shares of SLV

A new world record for this ETF.

Mon, 04/25/2011 - 15:57 | 1204955 SheepDog-One
SheepDog-One's picture

Go buy the imaginary silver ETF then and stop humping its leg all day.

Mon, 04/25/2011 - 15:48 | 1204890 MisterAmbassador
MisterAmbassador's picture

There is science backing up the idea that the planet is over-populated.  Oil has allowed us to overshoot the carrying capacity of the planet.  We will never actually run out of oil, but we have used most of the easy-to-access oil.  A point will be reached where it requires more energy to extract oil than the oil would produce.  I've posted about this many times.

You can see an oil production/population correlation:

The BBC talks about it:

You can't just reduce per capita consumption.  We cut down rain forests faster than they can regrow.  We put CO2 and other gases into the air faster than the planet can recycle them because we cut down the trees and vegetation used to recycle them.

The more energy we produce, the more we consume.  So, things like fusion power are just wishful thinking.  Unlimited power would just cause us to consume fossil fuels and other resources in other ways than energy.


This professor really outlines all of it:


Malthus was right.  He just didn't know that oil oculd artificially increase the carrying capacity of the planet.  There is no way the planet can feed itself without oil - fertilizers, pesticides, tractors - massive farms require oil.

People who cite Malthus are doing so to deny the truth.  Matlhus didn't know about carrying capacity, oil production, finance, economics.

If we hit five trillion barells of oil in Texas tomorrow and oil prices fell to $5/bbl, the economy would be booming.


The Matrix is right - human beings are like a virus on the planet.  However, I don't support government policies aimed at reducing population.  That would lead to the types of things that occurred in Nazi Germany.  But, you just shouldn't have social "safety nets" at the governmental level.  There shouldn't be this institutionalized welfare that supports irresponsible people and vaccinates people in third world countries using tax payer dollars. 

Private charity, now that's a completely different story.  Personally helping people who need a hand or can't help themselves is wonderful and everyone should do it.  However, charity shouldn't be institutionalized with big government programs like Medicare, Medicaid, Social Security, the UN food programs, the IMF, and all the other stuff that takes tax dollars from Americans or other nations to spread the wealth around.


Anyway, the planet will be fine.  It was here billions of years before humans and will be here billions of years after.  But, as population increases higher and higher, we will all suffer the consequences of ecological collapse.  Then millions of years from now the next dominant species may be pondering the question "what ended the humans?".  Imagine their surprise when they discover that the humans ended the humans.

Mon, 04/25/2011 - 15:51 | 1204911 tmosley
tmosley's picture

So, when are you going to do it?

Kill yourself, I mean.

Mon, 04/25/2011 - 16:09 | 1204995 MisterAmbassador
MisterAmbassador's picture

I've also already discussed that in previous posts.  Just because I recognize these problems doesn't mean I believe that they can be solved or will be.  Death is nothing to fear.  It's as natural as birth.  Just leave this universe and go into the next.  What's on the horizon for the world is worse than death.

My life philosophy:

When the United States collapses and goes into civil war, I will gladly leave this world.

When WWIII erupts, I will gladly leave this world.

I have no desire to be here for the chaos and carnage that is on the horizon.

Gerald Celente has laid most of it out, and I agree for the most part.  There's also the "Gloom Boom Doom" report.

I'm hoping it happens beforehand ("we'll choke on our vomit and that will be the end"), though.  I don't really want to be here to watch America fall apart.

I'm gonna go pop some more Adderall.

Mon, 04/25/2011 - 16:09 | 1205013 Seasmoke
Seasmoke's picture


Mon, 04/25/2011 - 16:23 | 1205074 tmosley
tmosley's picture

So, when are you going to do it?

Kill yourself, I mean.

Mon, 04/25/2011 - 17:00 | 1205230 MachoMan
MachoMan's picture

Apparently this is where he calls us after taking too many pills and asks if we've ever heard a death rattle...  I'm just wondering who's gonna come to his place and shake the dildo on the dresser.  (and fuck him like he hasn't been fucked since he was a school girl to keep him awake).  I nominate Math Man.

Mon, 04/25/2011 - 17:38 | 1205371 MisterAmbassador
MisterAmbassador's picture

There's no such thing as "too many pills".

Drugs are awesome.  Mr. Mackey is wrong.

Mon, 04/25/2011 - 19:24 | 1205721 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

M-kay, sure.  Whatever.

Mon, 04/25/2011 - 17:35 | 1205362 MisterAmbassador
MisterAmbassador's picture

I thought I already answered this.

When America collapses or when WWIII erupts.

"I know not with what weapons WWIII will be fought, but WWIV will be fought with sticks and stones."  - Albert E.



Mon, 04/25/2011 - 17:43 | 1205372 Population Bubble
Population Bubble's picture

The way most survivors look at it is they would rather kill five of you than one of themselves and end up ahead of the game plus a stronger gene pool.

Sun, 05/01/2011 - 17:31 | 1225979 Seer
Seer's picture

Why do you even bother typing? I mean, it's not like you can add anything to this kind of conversation (you're a fucking idiot denier).

Mon, 04/25/2011 - 15:53 | 1204914 A Lunatic
A Lunatic's picture

Maybe now would be a good time to militarize Greenpeace and PETA.

Mon, 04/25/2011 - 17:40 | 1205385 tomster0126
tomster0126's picture

No way, hippies with guns?  not a good idea, those things don't even know how to use firearms.

Mon, 04/25/2011 - 15:58 | 1204945 centerline
centerline's picture


The problem... too many stupid people being kept alive who otherwise would have been eliminated.

Mon, 04/25/2011 - 15:57 | 1204961 SheepDog-One
SheepDog-One's picture

Set the example, kill yourself.

Sun, 05/01/2011 - 17:31 | 1225981 Seer
Seer's picture

Like that's going to keep the world from being overpopulated by in-breds like you?  Naw...

Does it get tiring trying to stand behind BS all the time?  Pathetic deniers...

Mon, 04/25/2011 - 15:53 | 1204919 slaughterer
slaughterer's picture

"Our goal should be to get everyone out of abject poverty, even if it necessitates some income redistribution." Stopped reading there: can't tolerate people who never have heard of a job MARKET.

Mon, 04/25/2011 - 15:55 | 1204929 A Lunatic
A Lunatic's picture

Or work ethic. Or ambition. Or responsibility for ones actions...........sigh

Mon, 04/25/2011 - 16:16 | 1204920 Mercury
Mercury's picture

Gee Jeremy, no mention of our out of control government and the devaluation (and expected further devaluation) of the $US? Doesn't math also apply in this area?

Let me guess: regular, innumerate plebs can't be trusted to deal with this serious problem on their own.  What we need is a governing authority of unelected experts accountable to no one that will force appropriate behaviors.

The thing about overpopulation and lopsided demographics is that they are temporary problems.  Besides, take a look at live births per female across the world.  The high numbers indicate whose problem this is going to be.

Sun, 05/01/2011 - 17:38 | 1225985 Seer
Seer's picture

ARG!  You dumb fucks just ain't getting it, are you?  The devaluation is a symptom.  Grantham is talking about the root problem.  I have yet to hear from all you govt-is-the-source-of-all-evil-and-Capitalism-is-god explain how you figure sans govt spending (though, curiously, at the same time begging it to protect your "rights") can operate on the principle of growth.

Mon, 04/25/2011 - 15:52 | 1204921 willien1derland
willien1derland's picture

I would recommend Mr. Grantham leave his desk & visit some warehouses - they are brimming with industrial metals - Aluminum, Copper, et al -

Mon, 04/25/2011 - 15:59 | 1204973 LawsofPhysics
LawsofPhysics's picture

Yep, just no buyers.

Mon, 04/25/2011 - 15:55 | 1204924 Re-Discovery
Re-Discovery's picture

Strongest selling pressure across a number of silver stocks in a couple of weeks.  To very little effect but I have a feeling the shorts will be back tomorrow.

Mon, 04/25/2011 - 16:39 | 1204935 HistorySquared
HistorySquared's picture

How does a bubble expert completely miss the the China property and infrastructure bubble that has propelled all of his top new paradigm commodities? incredible.

He has a Green Peace bias.

Mon, 04/25/2011 - 15:55 | 1204941 AldoHux_IV
AldoHux_IV's picture

It's not a problem of scarcity, but a problem of control-- centrally planned control as their understanding of the problems are very limited and only lead to further unnecessary furor over the mundane while social class genocide prevails unknowingly to the victims.

Things will come to a head and the problem that everyone has been avoiding will present itself-- ironically it will also be the step in the direction to solving the imbalances that exist in many forms.

Nothing prophetic, but just common sensical.

Mon, 04/25/2011 - 15:57 | 1204944 Spigot
Spigot's picture

Having a few years under my belt I have seen the shifting of these rationalizations over decades. This being the latest, last revisited in the 1970's. At least now I'm not invested in believing it, just making sure it does not run me over.

Mon, 04/25/2011 - 17:17 | 1205287 Crack-up Boom
Crack-up Boom's picture


Mon, 04/25/2011 - 16:00 | 1204964 A Lunatic
A Lunatic's picture

Velcome to the misinformation age comrades.

Mon, 04/25/2011 - 16:06 | 1204997 Seasmoke
Seasmoke's picture

8 billion vs. a couple 100 yahoos......who are you betting on

Mon, 04/25/2011 - 16:07 | 1205003 ml8ml8
ml8ml8's picture

So let's see, there's an increasing number of people in the world and a finite resource base with which to serve them.  So commodities prices will tend to rise over the long run (and the corollary, wage pressure will continue downward).  In other words, stagflation is a permanent state of affairs.

Um, seems like pretty basic analysis to me. 

Mon, 04/25/2011 - 16:17 | 1205046 SheepDog-One
SheepDog-One's picture

Stagflation...this time its here to stay because asshole banksters now run everything. We've not advanced a bit since the Dark Ages, just that now the slaves have IPhones to keep them placated.

Mon, 04/25/2011 - 18:09 | 1205478 ml8ml8
ml8ml8's picture

I'm not trying to defend banksters, but they just provide the capital.  I wouldn't reduce the responsibility of minersters, processsters, manufactursters, transporsters, distribusters, retailsters, and consumsters, along with the banksters. 

And you have to admit, the dental care is much better now than the dark ages.  (I'm not a dentister.)

Mon, 04/25/2011 - 16:20 | 1205051 nantucket
nantucket's picture

i've heard the "we are running out of...." story too many times to get too worked up about it.  It seems to ignore substitution, technological advances, and the cyclical nature of so many things in this world.  Why take such a hard line stance and say something is "forever" and not leave yourself any wiggle room for unknowns when you could just as easily state your case and acknowledge that current data indicate the high probability of XYZ, or assuming no material changes to current supply, etc, etc.  The fact that someone unnecessarily makes an absolute statement is a red flag that would lead me to do far more research into the topic.  x`

Mon, 04/25/2011 - 17:39 | 1205381 thames222
thames222's picture

that kind of attitude is the kind of attitude that has put us all in this position in the first place.  What can we substitute petroleum with?  Huh?  Tires, plastics, textiles, EVERYTHING IS MADE OF OIL.  hemp is a big part of the potential solution but it looks like weed is going to be legal before industrial hemp is.

Tue, 04/26/2011 - 07:34 | 1207137 nantucket
nantucket's picture

i'll start to conserve X when the people that claim we are running out of it start acting like we are instead of consuming tons of fossil fuels and other materials to jet-set around the world tell us of impending doom.

Sun, 05/01/2011 - 17:39 | 1225993 Seer
Seer's picture

What a pathetic piece of an excuse.

I'm just looking to burn up all the resources so all you dumb fuckers' children die off.  Evolution, ya know...

Mon, 04/25/2011 - 16:20 | 1205067 Catullus
Catullus's picture

More like an overpopulation of central bankers. I'm sure that chart is parabolic as well.

These are the types of articles that elitists read and say "yes, there is too much consumption. We should tax consumption. And if we start a war, and millions die, net-net we'll be better off."

They really do knod their head in agreement to this shit, knowing that it doesn't mean that they specifically are consuming too much, but rather everyone else is. In fact, it's pretty much the test of whether you're an elitist. Or maybe we can create a new word "exceptionalist". Elitist means you're part of the elite. There are plenty of people not in the elite who think like elites. They need a name. Exceptionalists.

Mon, 04/25/2011 - 16:25 | 1205087 ebworthen
ebworthen's picture

Best I've seen so far, and because Grantham realizes that it is about FOOD.

Not oil, not currency, not capital, but FOOD.

The biggest house of cards we have built is hungry mouths that cannot be fed without mechanized modern agricultural methods that depend upon oil and labs and technolgies that cannot be sustained without a population "event" (e.g. - lots of people dying).

Mon, 04/25/2011 - 16:42 | 1205156 LFMayor
LFMayor's picture

Excellent post.  When the trucks stop running into the cities poo shall be flung.
Too bad they'll bleed all the productive people to death trying to keep those trucks running.

Mon, 04/25/2011 - 17:22 | 1205312 Crack-up Boom
Crack-up Boom's picture

I disagree. We've relied on oil up to now, but we can grow food without it.  Square foot gardening makes it easier for suburbanites to grow their own and rooftop gardening is apparently big stuff in cities.  Food could become a problem, but there are solutions. 

Mon, 04/25/2011 - 18:06 | 1205467 Magilla Grilla
Magilla Grilla's picture

It's true that many people are becoming more self-sufficient in regards to growing more of their own food, but the majority of people aren't gardening and have no more than a few days worth of food in their pantries.

The big problem isn't that humans are animals, it's that we're domesticated ones. If that just in time food distribution system gets disrupted, it'll get ugly fast once everyone realizes that their masters won't be filling up their bowls of Kibble N Bits every morning.

Mon, 04/25/2011 - 16:32 | 1205114 Life of Illusion
Life of Illusion's picture


A resource plan? Grantham where in hell have you been?

It’s a “RESOURCE THEATER” and about to get very intense.

Mon, 04/25/2011 - 17:24 | 1205327 gwar5
gwar5's picture

By "Resource Plan" I'm sure he means, "Where are the central planners and their official resource rationing boards?" He's ready for a full on Logan's Run already.

The genocidal central planners are the ones who planned and created the current problems. They're the ones who need to get out of the way.



Mon, 04/25/2011 - 16:38 | 1205145 anony
anony's picture

If some guy 2,000 years ago could turn water into wine and fill a million ton oil barge with fish, just by snapping his fingers at the Sea of Galilee, surely feeding another 9 billion more people should be kid stuff for the ag engineers of today.

I'm more worried about where i'm gonna park.

Mon, 04/25/2011 - 16:43 | 1205157 Stuck on Zero
Stuck on Zero's picture

"The world is using up its natural resources at an alarming rate."

Where have we heard this BS before?  The resources of physical nature are limitless.  The ability of lawyers, socialist governments, green Nazis, bureaucrats, and corruption to stymie resource utilization likewise has no upper bounds.  We're not talking about raping the planet.  We're talking about developing new safe energy sources as the root of all other resource issues.  Geothermal,safe gas/pebble bed reactors, reprocessing, solar, and other sources can carry us for the next few hundred years.  With limitless energy we can tap deep ocean rifts to extract more metals than we could ever use.  Materials technology will give us durable, strong materials made from rock.  Technology can provide for us all. 

If we allow oil companies, Wall Street, political fools and the uninformed to lead us we will have shortages of everything from food to housing.


Mon, 04/25/2011 - 16:47 | 1205184 SoNH80
SoNH80's picture

Jeez, we can only hope so.  The trick will be for the meddlers to get the hell out of the way of builders before it's too late (entropic collapse... old ways fail before new ways developed successfully).  On the plus side, Victorians were paranoid about coal supplies running out, and they pulled the big brown rabbit (petroleum) out of the hat... maybe there are some rabbits to grab.  But oh, our idiot politicians today (groan)

Mon, 04/25/2011 - 17:25 | 1205318 Crack-up Boom
Crack-up Boom's picture

Who junked you and everyone else who disagreed with Mr. Graham??

Mon, 04/25/2011 - 17:42 | 1205396 thames222
thames222's picture

I like your thinking---it's going to take a lot of resources and focus to make a new infrastructure a reality, though.  we all need to pitch in.

Mon, 04/25/2011 - 17:09 | 1205265 gwar5
gwar5's picture

What every one of these pricks is really saying (since John Malthus 275 years ago) is that we'd be better off without all the "poor people" and "useless bread eaters." They just want to find a way to scapegoat the poor people so they can justify getting rid of them and kicking them off the planet. Won't work. 

Of course, it is the sociopaths that always want to force the other guy to go first. They never voluntarily and quietly just give up their jets and SUVs and live like Ghandi. They're always front and center with their big mouths telling everybody else to give up everything so they can pig out for themselves. (D-Sen, Al Gore, Jr. comes to mind, son of his late D-Sen. Al Gore Sr, benevolent racist and segregationist Manbearpig).  

The marxist/socialist/progressive refuge has always been "There's too many people, it is just the shortage of resources that is causing the famines and hardships. Somebody has to die, for the good of all." Of course, they never blame their own discredited economic model(s) which misallocate and waste valuable resources causing human carnage and devolution of civil society in the first place.

To wit, Venezuela: Nationalizing grocery stores and rationing food with "loyalty" coupons because the government let 80,000 tons of food rot in warehouses -- so they scapegoated the grocery stores as "hoarders". Now, Hugo Chavez is forcing communal living by forcing 2 people per bedroom, somehow. This, amidst, the highest rate of inflation in the world, and the fastest rising poverty and crime rates in the Western Hemisphere. There was never a food or housing shortages like this before the Marxist Bolivarian Marxist revolution. And they are an oil rich nations and a gallon of gasoline costs less than 25 cents per gallon there..... they still can't make it.


Mon, 04/25/2011 - 17:25 | 1205319 oldmanagain
oldmanagain's picture

Demand is exceeding supply, so prices go up.  It is a form of rationing.  Some wil get less than others.

This subject was brought up at various historical times.  Famine, die offs, wars often resulted.

What is different  this time  is the global scale, and in some cases the finality of the limits that are available to resolve the conflict. Cheap oil is gone, except when econs crash as a temporary slow down in upward pressure on prices and costs to produce.  The change is that price/availability will be trending up most of the time as the world recovers from chronic crashes.  And the reactions to these slumps.

The electron age will allow all of us to have a smaller footprint so this trend will offer temporary relief.  Everyone has to learn what EROI means.  It is not feasible to have energy that is more expensive than the result.  In terms of energy itself or cost basis. It is highly unlikely that our present distribution by pricing is going to be efficient enoughl to distribute limited supplies.  Animal spirits will be over kill, and sanity wil prevail when the smoke clears.  

A quick look a others posts reveal denial, go hide out, kill thy neighbor, and various solutions that aren't solutions.   What would have really helped, would have been to take action when energy was cheap(favorable EROI).  Much like global warming.  It does little to recognize it when it becomes self perpetuating.


It is great sport to make fun of Jimmy Carter.  He saw the money problem and brought in a hard nosed Fed, but he failed to get the nation to recognize future energy problems. Reagan went down the other path while Clinton  had a few good years of facing real challenges.  Tax cuts do not pay for themselves.  Velocity is not wealth.  Good wages for all is better than a few getting most of it.  There is no tooth fairy called "animal spirits" that is beneficial.

Mon, 04/25/2011 - 17:25 | 1205322 edmondantes
edmondantes's picture

"Paradigm shift" is an acceleration of moneyprinting since 2002 by the banking cartel... oil price in gold terms has been broadly constant throughout... all we need to do is bankrupt the cartel and re-establish the gold standard

Mon, 04/25/2011 - 17:37 | 1205376 tomster0126
tomster0126's picture

Prices are going to be so high as inflation skyrockets in the next couple of years...i'm honestly scared for what everyday stuff is going to cost.

Mon, 04/25/2011 - 19:02 | 1205649 JR
JR's picture

The outrage over gas prices was all over NPR and the radio this morning. Apparentlly the outrage can't be contained any longer.  The public is after the politicians' heads, not Libya's. I even had a guy I didn't know approach me in church yesterday and begin telling me that the price of gold was so high, "not because it's worth $1,500 an ounce, but because the dollar's worthless."

I filled up my tank yesterday, a Boxster, and the bill was $70.00.

Obama's poll numbers are plunging big time they say, because of prices at at the pump.

I guess there's something to that old adage, you can't fool all of the people all of the time.  This might not include Jeremy, though. 

Mon, 04/25/2011 - 18:01 | 1205454 skipjack
skipjack's picture

Two words:  Julian Simon.

Mon, 04/25/2011 - 18:04 | 1205460 The Alarmist
The Alarmist's picture

And yet he continues to push Managed Timber ... seems there is some room for growth.

Mon, 04/25/2011 - 18:47 | 1205614 BKGuy
BKGuy's picture

Painfully absent from Grantham's analysis is the impact of the gold standard (or lack thereof after 1971) on price stability over the 100 year period he references and the dramatic volatility since 1971 and especially since 2000 coincident with increasingly reckless monetary policies worldwide.

Mon, 04/25/2011 - 18:52 | 1205621 JR
JR's picture

We’ve had Jeremy. Now it’s time to have Al Gore... if we can’t get Paul Ehrlich.

Carter would say we're headed toward malaise and a lower standard of living for every American.  But I'd simply go with Rodney King. “Hey, can’t we all just get along?”

Mon, 04/25/2011 - 18:59 | 1205640 Smiddywesson
Smiddywesson's picture

There is a solution to scarcity.  It's called war.  We have waged it for thousands of years, tens of thousands if you include our killing off of the other varieties of man.  If Gordon Gecko were a general, he would say "War works, war is good."

Soon, a solution to your scarity and your surplus billions will present itself.  Nothing is as good at killing and destroying stuff as us, except maybe nature, and she is a lot more predictable.

I suggest we all enjoy our lives and let nature take its course.  The beer is cold, and the view of the eggheads trying to save the system from Skynet is absolutely hilarious.

Yes, the fall of Rome was traumatic, but that was because they reached such great heights.  Think of the honor that has been bestowed on you, to be born in the time when the greatest empire in the history of man, The Amero-Fiat Banking Empire (TM) meets its inevitable end.  I'm sure this time will be different, so we don't have to worry about the rioting and mayhem.  I mean, this time it's not like our inner cities are filled with plebians who never really liked the system during the good times, who have been filled with hatred for everyone and everything because they have been coddled by the system their whole lives and yet, been told that they and those like them have been victimized (how you could suck at the system's teat and still feel yourself a victim won't occur to them as they light up your house.)

When Rome fell, you didn't have millions of people with only 3 days of food on the shelves nearby.  Modern society has left us with industrial farming that is hundreds of miles away from the people who need the food, and an industry that is highly dependant upon transportation and energy.  Cut off the diesel and electricty to a local farm, there are local answers.  However, in a world of zero inventory and just in time delivery, starvation is just a handful of days away.

Civil unrest and war.  That has always been the solution to human problems and it always will be so.  The real interesting thing is that we have been on such a parabolic rise in human prosperity, the fall portends to be equally as impressive.

Forget gold, I have taken all my money and put it into Spam.  Yes, 50,000 cases of Spam.  When society crashes, people need to eat, and a long day of burning and raping leaves one hungry for pork shoulder and ham.  But my Spam isn't free, I must be proclaimed the Spam king, and worshipped for the devine savior that I am, or nobody gets my Span unless they pry it from my cold dead fingers. 

Mon, 04/25/2011 - 19:27 | 1205739 r101958
r101958's picture

It is and always has been due to finite resources. All else is tertiary.

Mon, 04/25/2011 - 19:52 | 1205855 JR
JR's picture

An Open Letter to Jeremy Grantham:

America did not become the world's greatest success by burning and consuming her resources; she got there by developing and growing her resources.  By replenishing the earth.

America’s gift to the world, the gift that lifted the standards of living for all people, was the fruit produced from individual freedom: the opportunity to own property and develop the means of production.  America, as steward of her resources, advanced man’s progress that for more than 60 known centuries had advanced no farther than wagon wheels and open fire cooking, where men were no more than beasts of burden, carrying their possessions upon their backs.  

The fruits of freedom has lifted poverty and fed peoples throughout the globe.

Ruth Wilder Lane in The Discovery of Freedon: Man’s Struggle Against Authority (1943) explains the situation:

“Why did men die of hunger, for six thousand years?

Why did they walk, and carry goods and other men on their backs, for six thousand years, and suddenly, in one century, only on a sixth of this earth’s surface, they make steamships, railroads, motors, airplanes, and now are flying around the earth in its utmost height of air?

“Why did families live six thousand years in floorless hovels, without windows or chimneys, then, in eighty years and only in these United States, they are taking floors, chimneys, glass windows for granted, and regarding electric lights, porcelain toilets, and window screens as minimum necessities?

“Why did workers walk barefoot, in rags, with lousy hair and unwashed teeth, and workingmen wear no pants, for six thousand years, and here, in less than a century –silk stockings, lip sticks, permanent waves, sweaters, overcoats, shaving cream, safety razors.  It’s incredible.

“For thousands of years, human beings used their energies in unsuccessful efforts to get wretched shelter and meager food.  Then on one small part of the earth, a few men use their energies so effectively that three generations create a completely new world.

“What explains this?”

Human energy has not varied greatly in 6000 years; the physical earth has not changed historically.  It is “not raw materials, but the uses that human energy makes of raw materials, that create this rich new world.”

In short, freedom, not hydrocarbons, created this new world.

Tue, 04/26/2011 - 01:01 | 1206695 FreedomGuy
FreedomGuy's picture

JR, your post is music to my ears and good for my soul. That is it exactly. It is so simple, so profound and so powerful that statists come up with incredibly complex explanations that revolve around two consistent themes: 1. Men must be ruled. 2. Freedom is what causes the problems.

We've fallen for it for most those 6000 years and 90% of the earth's surface. We still fall for it today.

Mon, 04/25/2011 - 20:09 | 1205965 sellstop
sellstop's picture

The creation of money was able to stimulate growth/consumption when energy was cheap/easy.

Since the 1970's growth has come at a higher and higher price. Meaning less growth for the buck/increased debt. It is no coincidence that this is the time of the US going off the gold standard and the decline of US oil production/increase in imports of oil.

The new paradigm will be when everyone accepts the fact of dwindling resources.

From the responses here at this "cutting edge" forum, I'd say we are a loooong way from change.

Mon, 04/25/2011 - 20:29 | 1206058 proLiberty
proLiberty's picture


The federal government, via laws like the Endangered Species Act and other regulations, has sequestered over 400 million acres from mineral exploration and development.  This is about the land area of the Louisiana purchase.  We have vast ares of the ocean offshore of the continental US that is off limits to exploration and drilling for oil and gas.  Any claim that we have a shortage of anything that enjoys a free market is pure sophistry. Supply and demand are always in balance when the market is free to set the price.

We used to be prosperous enough to afford entertaining factions in our society who only want the US to use raw materials from third world countries. We no longer can afford this luxury.


Mon, 04/25/2011 - 21:33 | 1206246 horseman
horseman's picture

Wanna hear a real story of the Administrations actions causing a misallocation of capital and food resources.  I live in an extremely fertile area where 60-80 bushel wheat yields are the norm.  As it is wheat country, it has wind.  Guys are selling access to their fields for wind farms, as the wind companies are all flush with federal subsidy cash.  This will take untold acres out of prodution as heavy duty roads are needed to each and every windmill site.  (wont even talk about the yeild lost to fire when a turbine sparks in a wind storm) When the subsidies stop and the wind farms go bankrupt, it won't be like ethonal where a new food crop can be planted the following season and sold back into the market.  The cost to remove the roads and windmills will be beyond the farmers financial ability.  It will be good farmland lost forever.

Mon, 04/25/2011 - 22:55 | 1206460 NorthenSoul
NorthenSoul's picture

Grantham was right: most humans are inumerate as a load of comments on this board make crystal clear: incapable of grasping the simplest of concepts: can't have exponential growth in a finite resource universe. Just can't possibly happen!!


What do we get in response?


  1. Malthus; thanks Tyler for being so fucking dismissive. Great contribution to the discussion! Didn't you even bother to READ Grantham's discussion on Malthus?
  2. Grantham wants to bring the central planners (EEEEEK!) Euh...No! He merely said it's about time the US gets an energy POLICY.
  3. I'll skip the comments about those who got their pipi hot upon reading the cursed words "income redistribution". Let's just say it is a testament to the mental toxicity of Fix News and the Reichpublisums noise machine.


Mon, 04/25/2011 - 23:35 | 1206548 gabeh73
gabeh73's picture

Many people on this board that think Malthus can be dismissed were actually interested in Mathus at a early age. When I was 13 and playing around with exponential growth functions and I first read about Malthus I thought it was quite convincing. Then when you see it in practice used to make predictions and the read a thorough history of those who followed in Malthuses footsteps you realize it is a meme used by central planners to try and get individuals to give up their freedoms to tyrants.


Julian Simon pwned Paul Ehrlich....if only Julian Simon was more up on the dangers of money printing...then we probably never would have heard of Julian Simon.

Mon, 04/25/2011 - 23:50 | 1206572 gabeh73
gabeh73's picture

"Grantham wants to bring the central planners (EEEEEK!) Euh...No! He merely said it's about time the US gets an energy POLICY."


US energy about we auction off all federal land, send the checks to people who paid taxes this year....and stop all defense subsidies to energy companies. Is that the US Energy policy you are talking about? NO? Then you are probably a central planner, probably a supporter of the money printers or a dumb ass so shut up.



"I'll skip the comments about those who got their pipi hot upon reading the cursed words "income redistribution". Let's just say it is a testament to the mental toxicity of Fix News and the Reichpublisums noise machine."

wrong, Fox news is all for "Energy idependence" other memes supported by those commonly wanting a central planning blank check called a "US energy policy".

"income redistribution" is looked down upon with those who are familiar with history, political movements in other countries and murderous regimes. Try reading a couple books about Pol Pot, The Great Leap forward, The Bolshevik revolution....and if you can actually stomach those then come back and tel us how fucking great income redistribution is. If you want to fix the wealth disparity issue then try taking away the powers to print money from the small group of corrupt bankers and get rid of the government apparatus that some corporations now use to protect their business by oppressing the population and small businesses.

Tue, 04/26/2011 - 02:45 | 1206829 boogey_bank
boogey_bank's picture

I can believe in peak oil, I can (perhaps) believe in peak silver...

I CAN'T BUY the peak everything argument. The most astonishing thing is that people smart like Grantham keeps reasoning in a FLAWED metric.

Iron ore price is nearly 5 standard deviation up... but in dollars. Let's try to measure iron ore price in gold. It spells DEFLATION.

So let Maltus rest in peace and reappoint Gold to his old work.

We need gold as Money.

Tue, 04/26/2011 - 03:41 | 1206865 MSimon
MSimon's picture

The "we are running out of resources" schtick is common in periods of Secular Decline.

We have at least 100 year stores of any material you would care to name. And if Polywell Fusion or some such works out - well I'm definitely going to need shades. What we need is 100,000 one million dollar research projects, 1,000 ten million dollar projects, and maybe 5 or 10 one hundred million dollar projects.

Just take power electronics. Huge breakthroughs have already been made in production of Silicon Carbide and Gallium Arsenide with Carbon (graphine, bucky tubes) in the wings. Costs are just about at the knee of the curve where a market takes off.

And that is not counting all the things we currently know that are far from production.

Energy is the key. But despite the fear mongers we do have enough to get us through to NEXT. No need for a permanent solution. Just the next one.

Tue, 04/26/2011 - 03:45 | 1206867 MSimon
MSimon's picture

Or how about the Wave Engine:

Which effectively increases our oil supplies by a factor of 2 to 5.

Tue, 04/26/2011 - 13:28 | 1208264 jmc8888
jmc8888's picture

Another dumbass who thinks going through 5 percent of the earth's crust is 'all the resources', forgetting space, where 99.99999999999999 and then many powers more percent of resources, and forgetting a little thing that could be ours in a few decades called the fusion arc (which can create using fusion all the natural elements 1-92)

He also forgets that arable land can increase with water projects.  Gee I don't know of any oceans on this planet, if only they covered about 70 percent of the surface.....


Science Driver program

-fusion, fusion arc


-space (real one) program

-machine tools


-and more!!!

Not bankster debt in a monetary system, credit utterance for real things (like above) through Hamiltonian Credit System (yes it was once ours).

Of course, should we go all malthusian and destroy the world for nothing, that new dark age would make it tough to actually progress as the easily reachable raw materials ARE being dwindled.  That's the real crime, we're so close after such a long haul in realizing what man can do....virtually limitless energy, deep space, etc, yet if we follow the banksters we'll never reach it.

Glass-Steagall and let the fraudulent crap be worth 0.

Sat, 04/30/2011 - 16:58 | 1224430 Sathington Willougby
Sathington Willougby's picture


ever hear of a fiat currency?  That's all there is these days.

This is zerohedge you know. 

Of course resources are finite, and paper is too, but printing diverges at a much faster rate.


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