Investment Strategist Jeremy Grantham on Debt, Paper World vs. Real World

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Jeremy Grantham, Co-founder and Chief Investment Strategist of Grantham Mayo Van Otterloo (GMO) an asset management firm, and known for his predictions and views of  market bubbles was this week interviewed on the Charlie Rose show. Grantham covers a whole range of subjects related to the economy and financial markets. One of the things he mentioned, which I found remarkable, was that debt is not the main problem facing the U.S. and the world economies. Debt is part of the paper world, he says. More important is the real world, which is, in his view about the quality of people, their education and training and the innovation of products and equipment.

Other areas he touches upon are the dangers of the Keystone pipeline for the environment; the importance of renewable energies in order to move away from the current carbon driven society; that the housing market collapse and the price increase of commodities are the main reasons for the current economic crisis, more so than the debt crisis; how the shortage of fertilizer and specifically the finiteness of phosphorus could cause a food disaster within the next 50 years;  and how current monetary policies are transferring wealth from the poor (i.e. savers and pensioners) to the rich (i.e. hedgefund managers and banks.) For the complete interview click here.