Jeremy Grantham has a fresh warning about Russia's invasion of Ukraine: oil-price spikes of this magnitude have always triggered recessions, and the global economy is at risk of much bigger challenges in the coming decades as finite commodities become scarce.
"It seems nearly certain that the trend in resource prices will continue to rise," Grantham, the co-founder of Boston asset manager GMO, wrote in a paper published Wednesday. That threatens not only slower growth but also a disruption of political systems, as "most ancient civilizations were brought down by overuse of their resources."
Grantham ticked off a number of potentially troubling trends, including that the war in Ukraine will cause food prices to rise and that developing countries eager to grow will contribute to "repeated commodity boom cycles."
"Although we live on a finite planet, we have been attempting for the last 250 years to do the impossible: to generate perpetual compound growth," said Grantham, 83.
He added that investments in renewable energy have fueled an increasing demand for goods needed to build windmills, solar farms and transmission lines, the development of which will be "spectacularly resource intensive."
