Book Review: Bill Bonner's 'Dice Have No Memory'

by: Investment U

By Alexander Green

Today we stand at a unique crossroads. There are good reasons to be optimistic about the future of the economy, the financial markets and our standard of living. And good reasons to be entirely pessimistic, too.

Today we’ll discuss both since understanding our precarious economic condition is the key to successfully navigating the financial markets in the months and years ahead.

Let me begin with the case for optimism. It’s called the profit motive. And though folks on one side of the political aisle tend to see it as gauche, selfish and exploitative, over the last few hundred years it has managed to lift the world out of poverty and create unparalleled prosperity in the West. (And now many developing countries are experiencing the transformative power of privatization, deregulation and economic incentives, too.)

Entrepreneurs and business people everywhere – forever in pursuit of a dollar – are eager to meet your needs and create new ones. (After all, who pined for an iPhone, a Miracle Bra, or a 60-inch plasma TV a decade ago?) Every day, businesses compete tooth and nail for our benefit (and theirs) by making products and services that are better, faster, less expensive, or more efficient.

As there’s no limit to man’s imagination, there are no limits to the economic prosperity that free minds and free markets can create.

There is, however, a fly in the ointment. And it’s bigger than Jeff Goldblum. It’s called the public sector.

President Calvin Coolidge – the last president with whom I entirely agreed – used to say that if you see a problem coming down the road you shouldn’t worry. Nine times out of 10 it will run into a ditch before it gets to you.

But mounting public debt and unfunded liabilities (currently amounting to more than $534,000 per U.S. household) aren’t going to fall into a ditch, however much we may wish it. Rather they’ll hit us headlong. And it won’t be pretty.

Investors are (finally) beginning to recognize this. Everywhere you go, people openly fret about the tsunami of federal debt that threatens to swamp the financial markets and our standard of living.

What should you do? You might start by listening to the folks who correctly predicted and profited from it.

For example, 11 years ago my friend and colleague Bill Bonner beat the drum loudly for his “Trade of the Decade:” Sell the dollar and buy gold. At the time, gold was selling for around $264 an ounce. Today it sells for roughly $1,500. And the greenback? Let’s just say you rarely hear Americans bragging about all the bargains in Switzerland.

Of course, many money managers and investment gurus now claim that they foresaw the financial crisis. Many have selective memories. Yet more than a year before the crisis broke, Bill published his runaway bestseller "Empire of Debt: The Rise of an Epic Financial Crisis."

The book made fortunes for some readers… and saved the fortunes of others. However, the problems Bill foresaw in the public sector have only worsened in the past few years. Fortunately, he has a new book out, "Dice Have No Memory," a selection of essays that paints a sobering view of our financial future.

This is a book worth reading, even if you don’t agree with it. Perhaps especially if you don’t agree with it.

Investors (and human beings generally) have a natural tendency to read only views they already subscribe to. That can be a mistake. To make good investment decisions, you need to expose yourself to intelligent viewpoints on every part of the spectrum.

And I can guarantee you’ll enjoy reading Bill’s. Whether he’s describing the ineptitude of the Fed, the War on Terror (“the first fighting war against nobody in particular ever proposed”), or some hot investment system de jour, his essays are unfailingly smart, funny and wise.

I’m an optimist at heart. Bill isn’t. I think the strengths of business can ultimately overcome the stupidity and ineptitude of government. Bill is less sanguine, to put it mildly.

Dice Have No Memory is a pleasure to read and belongs in every serious investor’s library. Not just because Bill Bonner’s views are well argued and witty, but because history may very well prove him right… again.

Disclosure: Investment U expressly forbids its writers from having a financial interest in any security they recommend to our subscribers. All employees and agents of Investment U (and affiliated companies) must wait 24 hours after an initial trade recommendation is published on online - or 72 hours after a direct mail publication is sent - before acting on that recommendation.