Jeremy Grantham: US should focus on “green” infrastructure spending

Jeremy Grantham, co-founder of asset manager GMO, says the US must set out on a new “green” Marshall Plan to tackle climate change.

If the US is serious about tackling the biggest challenges facing the country right now, it needs to embark on a new “green” Marshall Plan, says Jeremy Grantham.

Jeremy Grantham, who co-founded US asset manager GMO in 1977, believes the US government should take advantage of historically low interest rates to finance “a long, sustained and massive public works programme”, similar to the scheme that helped to rebuild Europe in the wake of World War II, “at negative real rates”.

While Covid-19 is today’s obvious concern, Grantham is more worried about long-term issues. “I believe income inequality is eating away at the economy from the inside with the lack of economic progress for workers reducing demand.”

This problem goes back to the financial crisis, if not beyond. “The great waste in 2009 and 2010... was the use of precious resources to bail out banks,” says Grantham. The decision “was both unjust and economically inefficient: it was a violation of the spirit of capitalism”.

A new Marshall Plan should focus on “green” infrastructure spending: “It is absolutely imperative that the entire economy be greened if we want any hope to maintain a stable global civilisation in coming centuries.” Infrastructure in the US is already “unusually behind schedule on maintenance and subpar quality”, and many of the jobs created would be “industrial and labour-intensive”, helping to address growing inequality. The move would also help challenge China’s “growing dominance” in green tech.

Recommended

James Henderson: buy banks
Bank stocks

James Henderson: buy banks

James Henderson, director of UK investment trusts at Janus Henderson Investors, is a fan of British banking stocks.
22 Feb 2021
Cathie Wood: the superstar investor shooting for the stars
People

Cathie Wood: the superstar investor shooting for the stars

Cathie Wood has quietly built a reputation for picking the unloved and misunderstood stocks that go on to thrive. She has just launched a new ETF that…
21 Feb 2021
Bondholders beware – inflation is coming, says Jeremy Siegel
Inflation

Bondholders beware – inflation is coming, says Jeremy Siegel

With vaccines promising an end to lockdowns, inflation won't be far behind, warns Jeremy Siegel, professor of finance at Wharton.
26 Jan 2021
Three clean energy stocks for your portfolio
Share tips

Three clean energy stocks for your portfolio

Professional investor Christian Roessing of the Pictet Clean Energy Fund highlights of his three favourite stocks at the forefront of the clean energy…
25 Jan 2021

Most Popular

The days when you could get 7% from your bank are long gone – so what do you do?
Bitcoin

The days when you could get 7% from your bank are long gone – so what do you do?

With interest rates at rock bottom for so long, we’ve been forced to move from saving to speculating to earn any sort of return. Dominic Frisby asks w…
24 Feb 2021
Why you should still put money into a cash Isa
Cash ISAs

Why you should still put money into a cash Isa

Interest rates may be lousy, but tax-free saving into a cash Isa is still a good idea.
23 Feb 2021
Why you should pay attention when investment trusts raise new money
Sponsored

Why you should pay attention when investment trusts raise new money

There was a time when buying into an investment trust public offering was a bad idea. But things have changed, says Max King. Investors need to keep a…
23 Feb 2021