Jeremy Grantham is paid to make people money. Among his clients is Dick Cheney, who, based on Grantham’s advice, was well-positioned before the economic collapse (as I noted at the time, Cheney had positioned his portfolio prior to 2008 in anticipation of the dollar’s decline and likely volatility in the debt markets. If he maintained the positions described in 2007, he did just fine during the near collapse).
Grantham has written an extremely bracing report of our current situation, centered on the crisis facing humanity in the form of a wave of resource depletions. The report is not for the weak of heart – it is a careful examination of the various resource constraints facing the world in the near, middle, and long-term, with a view to advising clients about investment strategies. Among his conclusions is that his best advice – a situation of “great difficulty,” he admits – is his “new specialty of regret minimization” (17). This is an investment strategy of the stoic.
In 2007 Grantham wrote that the bursting of the credit bubble “will be across all countries and all assets, with the probable exception of high-grade bonds. Risk premiums in particular will widen. Since no similar global event has occurred before, the stresses to the system are likely to be unexpected.” Given his prophetic track record, I’d say we’d best pay attention.
FPR is sometimes regarded by skeptical readers as a site that recommends a certain lifestyle for the leisure class centered on local life, sustainable economics, and feel-good agrarianism. If Grantham is right – and I am of the view that the evidence is on his side – then the future we face is not a “lifestyle choice,” but no real choice at all: we will need to live more locally, more modestly, and within limits. Or, many of us won’t live at all.