Book challenges the so-called specialists

Dice have no memory
By Bill Bonner
Publisher: John Wiley & Sons (Asia)
Pages: 330
Price: Rs 1,348

How many of you have been selling dollars or buying gold since 1999? Remember, that was when stock markets were in a frenzy, the Internet bubble had yet to burst and 9/11 had not happened.

Gold was selling for around $264 a troy ounce, against $1,500 or so a troy ounce today. Don't kick yourself for not having sold dollars or bought gold then. Bill Bonner, author of Dice Have No Memory, and the man who gave many other pieces of sound-in-retrospect advice for free, did so in his Internet newsletter, the Daily Reckoner, which at a time when blogging had not been invented, few got to read.

The subprime crisis of 2008 that led to the global financial meltdown has spawned truckloads of books on who was to blame, why things went wrong and inside stories of Wall Street's merchant banks as well as scamsters. Bonner's Dice Have No Memory is different in that it is a print collection of online articles Bonner wrote over the past decade taking on governments, central banks, investors and market players.

Despite being a collection of articles written much earlier, the book is not yellowing history. Even so, as you read each chapter, it helps to refer to the dateline at the top, or you could at times think Bonner is talking of something that is happening right now. Bonner's mental approach and irreverence are doubly important today, when millions of people around the world live in active distrust of governments, central banks and CEOs of giant corporations after the events of 2008. Bonner's engaging style grabs you right at the start. "Not much in life is certain. That is why it is such a comfort to have government," he writes. Why? Because "One of the few things you can depend on is that government officials will do the wrong thing."

The first section is a collection of articles blasting economists, or at least most of the tribe, for leading governments into greater deficits with huge spending programmes that were expected to restart economies. Bonner points out that America tried Keynesian economics in the 1930s and Japan in the 1990s, and in "neither case were the results favourable".

"Civilisations flourished for thousands of years before anyone made a living as an economist," Bonner points out, and recounts how the United States abandoned the gold standard completely on the advice of economists. This led to consumer credit booms, the first one in the 1920s, and by the 1950s, "Americans had lost their residual fear of debt".

Economists, Bonner says, had created a 100-year flood of consumer debt and are congratulating themselves because civilisation has survived. So what if households are sinking? As for central banks, the US Federal Reserve has a reliable record, Bonner pronounces. "Charged with protecting the currency, it has done the exact opposite," he wrote in May 2001. He adds: since 1913, when the Fed was set up, the dollar has lost 95 per cent of its value. It had remained stable in the 100 years up to 1913.

Bonner is no stuffy economist wary of losing credibility in his profession by questioning, for example, why the US central bank should print money to pay for federal expenses. Or warning us about government debt. But he talks plenty of sense.

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