Sliding Down the Super-Cycle: Resource Doom Postponed Indefinitely – by Ronald Bailey ( – May 13, 2016)

Legendary investor Jeremy Grantham admits he was wrong about “peak everything.”

“Time to Wake Up: Days of Abundant Resources and Falling Prices Are Over Forever” was the title of an urgent report written by the legendary asset manager Jeremy Grantham in 2011. Grantham proclaimed the advent of a resource scarcity “paradigm shift” that was “perhaps the most important economic event since the Industrial Revolution.”

As evidence, he noted that “the prices of all important commodities except oil declined for 100 years until 2002, by an average of 70%.” Since then, he continued, “this entire decline was erased” by the price surge, which he took as a signal that the world was using up its natural resources at an alarming rate. The result, he declared, would be a permanent shift where the prices of raw materials rise and shortages become common.

Grantham also pointed to a slowdown in crop productivity, suggesting that it would be impossible to feed the world’s burgeoning population. “How we deal with this unsustainable surge in demand and not just ‘peak oil,’ but ‘peak everything,’ is going to be the greatest challenge facing our species,” he wrote.

This week, Grantham took almost all of that back. Grantham, like a whole raft of professional doomsters, was declaring Peak Everything just as the latest economic super-cycle was cresting; many commodities’ prices peaked the very year of his report and have been drifting downward ever since.

Economic forecasting often seems little better than reading tea leaves or parsing the convolutions of a sheep’s liver. Nevertheless, some economists argue that stepping back from the crises and volatilities of the moment and taking a longer view can shed light on how the economic future will likely evolve.

Specifically, they have identified what they call economic super-cycles, which trace the steady downward trend of commodity prices as they have gone through a series of decades-long peaks and valleys. A 2012 study by economists associated with the Australian National University analyzed price trends from 1650 to 2010 and concluded that “relative commodity prices present a significant and downward global trend over almost the entire capitalist age.”

For the rest of this article, click here: