The business is a zero-sum game, he points out, and "we collectively add nothing but costs". Costs have grown because there is no fee competition, due to the agency problem and the information advantage the agent has over the client. Growing complexity has increased the client's dependence on the industry.

The increase in fees has been at the expense of long-term growth. "If we raise our fees from 0.5 per cent to 1 per cent, we actually raid the balance sheet. We take 0.5 per cent from what would have been savings and investment and turn it into income and GDP. In other words, you're taking money that would have become capital and chewing it up as bankers' bonuses."

Mr Grantham rejects the idea this misallocation of capital to fees creates useful extra liquidity. "What does the liquidity buy us as a society? Serious investment is about long-term holding. It's about making bets about what will happen in the nextseveral years. The rest is some form of speculation."

David Fuller's view Subscribers are likely to be interested in what Jeremy Grantham has to say about bubble candidates in the latter portion of this interview.