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Dice Have No Memory: Big Bets and Bad Economics from Paris to the Pampas by William Bonner

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Chapter 1

The Incompetence of Economists

Fight the Fed?

May 17, 2001

“Almost half of the 1,300 employees of the Peruvian Central Bank of Reserve are related to one another,” Bloomberg reports. Central banking is, after all, a government job. It is different from, say, the local Department of Human Resources, only in that its employees are better paid and get better press. Even the Federal Reserve—perhaps the world’s most powerful and prestigious bureaucracy—is still, like every other government agency, a scam, a sinecure, and waste of money.

At least, that is the working hypothesis of today’s letter.

Not much in life is certain. That is why it is such a comfort to have government. One of the few things you can depend on is that government officials will do the wrong thing. Even when they occasionally seem to do the right thing—it turns out later on that it was at best accidental, and at worst, the wrong thing after all.

“The last successful government program,” observed New York mayoral candidate Jimmy Breslin, “was WWII.” Since then, there have been a number of wars declared and undeclared by Washington hawks. But in almost every instance bureaucratic instincts and motives were hopelessly wrongheaded.

In the war on drugs, as we observed here just the other day, the government seeks to put drug dealers out of business by interdicting supplies. This is just the wrong thing to do, since it increases profit margins. The more taxpayer money spent trying to keep illegal drugs off the ...

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