The coming commodity price nightmare
By Colin Barr
Here’s another sign we have much bigger inflation problems than Ben Bernanke.
The commodity price boom we’ve all been bellyaching about for the past six months started not in August, when the Fed chief first started talking about quantitative easing, but a full eight years earlier – when Bernanke was but a Fed governor and the housing bubble was a mere gleam in Alan Greenspan’s eye.
So says Jeremy Grantham, the value manager who helped found the Boston-based GMO asset management firm. Not just a savvy stock picker, Grantham is also a veteran worrier about the implications of population growth and resource scarcity, the sore subjects that are the focus of his latest quarterly letter.
Though much has been made of the developing world’s contributions to global growth, Grantham points to the cost of that growth, as measured via soaring commodity prices. The world, he writes, has been changed in ways we don’t fully understand by the ascent of China, India and Brazil – a shift that is measurable at least in part by the surging price of food, metals and energy.