Henry Blodget of Business Insider wrote a piece on investor Jeremy Grantham's treatise on the causes of the rise in commodity prices in which he asserts that we're in a permanent "paradigm shift" and have outpaced the planet's ability to support us. Both Bloget's and Grantham's pieces should be read; depressingly Grantham is right.

Commodities are the basic building blocks of society- the oil, sugar, grains, timber, and metals that are used to create the trappings of modern life. Those commodity materials get cut, hammered, baked, and formed into cars, computers, shopping bags, bread, and fruit roll ups.

The price of commodities has steady dropped over the last century as technology has allowed for more efficient machines and processes. In the last decade or so that trend has reversed and we're now at the bottom of a flip as commodity prices start their statistical climb back up the chart.

Two things are conspiring against our ability to get a ton of steel on the cheap- first, in many cases we've reached Peak Discovery and have no more large fields to tap, large fields to sow, or deposits to mine. When demand grows steadily but supply is constrained, the price will rise.

Second, demand for everything is being boosted by a rise in China and India. There are billions of impoverished people yearning for a better life in those two countries who want their own shot at owning their own house and apartment. Millions are achieving that dream every year and their boost in life style means everyone else pays more. Right now China uses more than half of the world's supply of concrete.

Poor people have every right to want the comfortable lifestyle of the average First Worlder but it's going to make for a messy transition.

Via Reddit

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