How an Economy Grows and Why It Crashes

What Peter Schiff has told in this book, is something I used to think deeply about as a child. It is regarding the basics on how the economy governs. I remember in my youth thinking how some nations become wealthy and others poor, what determines wealth, where do business' get their money from (or where does the first person get his money from) etc. These were basic questions that I used to ponder over as a child, and as I got older, I learnt new stuff (e.g. macroeconomics) but my questions as a child remained unanswered. That was until I finished reading this book. Essentially, Peter Schiff tells a story, initially in it's primitive stages which gets complexed as you read further. It starts with 3 characters Able, Baker and Charlie who, in the beginning, have no other time except catching one fish a day, eating it, resting and sleeping. It states that through sacrifice and innovation, their standard of living increases (e.g. building a net that can catch two fishes). Thereafter, the story becomes complex with the introduction of banks, paper money, foreign nations etc but nevertheless, remains an extremely exciting read and understandable. If there is one thing I have realised is that all this wealth (i.e. the wealth of nations) comes about by lowering the cost of food (in this case the fish i.e. being able to catch more than one fish a day). I have realised that this is key to the success of standard of living (i.e. this is what creates the factories, the manufacturing industry, the tourism etc). This statement seems quite simple, yet something that is not first thought of given the complex economical system that we live in. Whilst I don't think the book states that clearly within the text, it gave me a sense of satisfaction that if I learnt just this from the book it would have been sufficient and a worthwhile read. I'm happily to say, that fortunately it touches on many more topics. Nevertheless, the wonderful tale presented by Peter Schiff captivates the reader to keep reading more. You can quite comfortably read this book within a few days even if you set aside a couple of hours at the end of a busy working day.

This is economic theory in simple terms, in this book Schiff essentially derives the modern global economy from ancient times when the world was far simpler. He expounds the necessity of risk and underconsumption. Failure is always a possibility but without taking the risk then there is no advancement. Without savings then there is nothing to spend. The global economy seems complicated when you try to consider everything at once but how did it come to be like that? What underpins it? This is what Schiff illustrates in this book. Some reviewers complain of the light hearted comic nature of the book; the ideas are explained in parable form so it is essentially an economic comic book. The light hearted nature makes the book approachable as well as simple to understand, if anything this should fuel people's desire to understand more about the economy actually works rather than give up. I think this book would be easily readable for a keen high school student. The key concepts of this book are that money should be something based in reality with a fixed, or at least a less manipulable substance than current, and that the original role of banks was as a safe place to store money (particularly gold / silver). Schiff highlights the parallels between the original role of a bank and self-storage facilities that holds people's stuff that they no longer have space for: it costs to store your items but these 'banks' provide a safe location and the extra space that you don't have. Therefore, banks are a business that provide a necessary service but somewhere along the lines it has all gone wrong. Money no longer has a basis in reality and the role of a bank is now obfuscated. This book isn't a practical guide to investing, nor does it contain any equations or any praise for central banks. This much you should have already guessed.

A very witty, enjoyable but educational read and I commend the authors for making the subject matter interesting by the clever manner in which this book was written. It's clearly aimed at their American audience as all the major characters are based on American politicians and economists with a fishy twist in their names but whilst that adds to the enjoyment of the book it wouldn't be any less informative if you'd never heard of any of them. The authors do indulge themselves a little by putting in their own doomsday scenario of what could happen if politicians don't take a different route to sorting out our current economic woes but after what has happened over the past couple of years who is to say that they aren't right. I bought this as a holiday read so didn't want anything too heavy and I found it to strike the right balance of being a light read on a serious subject. If only A'Level Economics had been taught this way 30 years ago, I might have taken more interest!

Great read - last few chapters accelerate the pace very quickly from what is initially very easy to follow, but good book regardless

Economics explained in simple and funny way. Despite being a sad story of how the economy was built and destroyed, the autor makes us laugh every time.

Es un libro muy ameno y fácil de leer. De una manera muy simpática se describen los retos de una economía, desde el principio, hasta el colapso. Recomendable

This book is simply mind-blowing, though some of the details could have been better developed or revised. It reminds me of a Peter Lynch quote talking about one successful investor who didn’t have any formal business school experience: “The secret of his success is that he never went to business school. Imagine all the lessons he never had to unlearn.” I certainly have a rough idea that all the complicated models taught in textbooks are not challenged enough. However, it is upon reading this little book that I started to realize how much my reasoning was limited by all of these “demand-driven growth” baloney. Good and audacious work 👍

A book well integrated about the past and the future ! Plus makes basics of Economics easy for non-specialists in Economics.