Overcrowding of the planet will soon have a devastating effect, warns Jeremy Grantham, co-founder of private equity trust GMO, in a letter to his clients.
Jeremy Grantham wrote in a report that humanity’s future is bleak because of overcrowding and reduced natural resources. The planet simply can not sustain the population. Population grows continuously and reduces resources: oil, metals and food are limited and will be soon not enough. Earth could only sustain 1.5 billion people, compared to the 7 billion living today, writes Business Insider.
In the last 200 years, despite demographic explosion, population was supported by newly discovered oil resources, but these resources are limited. In the last 100 years, the bills for the daily comfort have gone down, thanks to technological progress, but now this trend will disappear and utility prices will rise.
The best example is the price of a barrel of oil. In 100 years, it has grown from $16 per barrel to $35 and $75 a barrel because of the demand that exceeds the natural resources.
40 years ago, agricultural production grew by 3.5% per year, while population grew by 2%. Nowadays production increase is only 1.5% annually and will soon be surpassed by population growth.
Grantham says: “The U.S. GDP growth rate that we have become accustomed to for over a hundred years – in excess of 3% a year – is not just hiding behind temporary setbacks. It is gone forever. Yet most business people (and the Fed) assume that economic growth will recover to its old rates.”
He added about the resource costs: “If resources increase their costs at 9% a year, the U.S. will reach a point where all of the growth generated by the economy is used up in simply obtaining enough resources to run the system.”
According to Grantham, “GDP growth (conventionally measured) for the U.S. is likely to be about only 1.4% a year, and adjusted growth about 0.9%.”
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