The case for pessimism: the coming new age of scarcity

This article was recently published in the Summer edition of “The International Economy”. It suggests that we are moving from an “Age of Plenty” to an “Age of Scarcity”. For the last few decades we have benefited from a variety of positive supply shocks. Unfortunately, every one of these shocks has now turned negative. Moreover, there is now  a need for much higher investment levels to minimize the effects of these negative shocks. The legacy of this fundamental change will be that inflationary pressures will prove more persistent that currently anticipated, that consumption must suffer and that interest rates will stay “higher for longer”.