04/21/2010 05:12 am ET | Updated May 25, 2011

Charlie Munger: 'Basicland' A Parable Of How One Nation Came To Economic Ruin

From Munger's parable of "Basicland," an imaginary -- though extremely recognizable -- economy:

"Basicland's investment and commercial bankers were hostile to change. Like the objecting economists, the bankers wanted change exactly opposite to change wanted by the Good Father. Such bankers provided constructive services to Basicland. But they had only moderate earnings, which they deeply resented because Basicland's casinos--which provided no such constructive services--reported immoderate earnings from their bucket-shop systems. Moreover, foreign investment bankers had also reported immoderate earnings after building their own bucket-shop systems--and carefully obscuring this fact with ingenious twaddle, including claims that rational risk-management systems were in place, supervised by perfect regulators."

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