During his recent interview on the Conversations With Tyler Podcast, Jeremy Grantham explained why it’s par for the course for markets to be wrong. Here’s an excerpt from the interview:
Grantham: Absolutely. I think it’s par for the course for markets to be wrong. On a horizon that’s over two years, I count on the markets being wrong. As for economists, I typically count on them being wrong for anything that is long-term, anything to do with the commons, anything that requires a lot of common sense.
Economists have an ability to build models and get off into abstractions and assumptions so profound that after a while, they need to pinch themselves and remind themselves where they live in the real world.
I think the economics profession on the topic of resource limitations — energy in particular, but metals and climate change — has been extravagantly poor, I mean remarkably lacking, with the one or two notable exceptions here and there, where economists have actually made a big point of resource and energy as key to the long term, but they’re all marginalized. James Galbraith. These are not pillars of the establishment, the people who see energy for what it is. Energy, obviously, is the driver of civilization.
You can watch the entire discussion here:
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