Enter your mobile number or email address below and we'll send you a link to download the free Kindle App. Then you can start reading Kindle books on your smartphone, tablet, or computer - no Kindle device required.
To get the free app, enter your mobile phone number.
Other Sellers on Amazon
+ $3.99 shipping
+ $3.99 shipping
+ $3.99 shipping
How an Economy Grows and Why It Crashes Hardcover – May 3, 2010
"Rebound" by Kwame Alexander
Don't miss best-selling author Kwame Alexander's "Rebound," a new companion novel to his Newbery Award-winner, "The Crossover,"" illustrated with striking graphic novel panels. Pre-order today
Frequently bought together
Customers who bought this item also bought
Customers who viewed this item also viewed
If you feel you want to get a decent grasp of free-market economics this book is the perfect place to start. (Daniel Hannan, Telegraph.co.uk/Blog, July 2010). Using illustration, humour and storytelling, the authors take economics off its lofty shelf and place it back on the kitchen table (TheStar.com, September 2010).
From the Back Cover
EveR WONDER . . .
- Why governments can spend without ever seeming to run out of money?
- Why some countries are rich while others are poor?
- Whether spending or saving is the best cure for a bad economy?
- Where inflation comes from?
- Why it's so hard to catch a fish with your bare hands?
How An Economy Grows And Why It Crashes
Understanding how all the pieces of an economy fit together can be a daunting task—especially when the experts can't seem to do it. But when you get down to the basics, it is much easier than you may think. How an Economy Grows and Why It Crashes uses illustrations, humor, and accessible storytelling to take economics off its lofty shelf and put it back on the kitchen table where it belongs.
This straightforward story of fish, nets, saving, and lending exposes the gaping holes that lie hidden in our global economic conversation. With wit and humor, the Schiffs explain the roots of economic growth, the importance of trade, savings, and risk, the source of inflation, the effects of interest rates and government stimulus, the destructive nature of consumer credit, and many other economic principles that are so frequently discussed and so poorly understood.
The story may appear simple on the surface but it will leave you with a powerful understanding of How an Economy Grows and Why It Crashes.
Author interviews, book reviews, editors picks, and more. Read it now
Top customer reviews
There was a problem filtering reviews right now. Please try again later.
Peter Schiff’s book tries to take these complicated theories and teaches his readers through a short story about the progression of a small island economy. Peter’s book is an updated version of his father’s book How an Economy Grows and Why It Doesn’t by adding recent events and characters to the story.
The book introduces us to a little bit of history of the science of economics in the last hundred years. Peter talks about the early Austrians and the rise of Keynesianism in the 1930s as a counter to the Great Depression. Keynesianism became the dominant paradigm and has plagued economics and the world since.
Once Upon a Time
The story starts with three islanders – Able, Baker, and Charlie. They were in dire poverty. The only resource they can gather is fish, and only one per day since they are using their bare hands (just enough to survive in this story). Since they consumed everything they caught, there were no savings in case something bad had happened.
But they wanted more for their lives than spending the entire day catching one fish. Able came up with an idea to create a fish catcher, but in order to create this device, he must sacrifice a day and become on the verge of starvation to try and produce this net since there are no savings. When he created this net, his productivity doubled as he is now able to catch two fish per day.
Throughout the book, Peter slips in economic ideas by explaining what the islanders are doing and sums up these ideas at the end of each chapter. For example, when Able created the net, he had to sacrifice eating a fish for a day, which meant he underconsumed, in order to create a net, or a capital good.
As the story progresses, as there are now savings thanks to Able’s invention of the net, economic expansion accelerates. Able is able to do more than just fish because he now has a net. As they continue to save and create capital goods, their lives become better.
The story continues with the explanation of other economic theories, such as the interest rate and what they do, why banks are created, how trade expands, the division of labor, and finally, how governments inflate the currency and drive interest rates lower to create an economic boom with an inevitable crash.
The story ends and Peter shifts to the modern day, as he explains how the bursting of the dot-com bubble and George Bush and Alan Greenspan’s heavy intervention into the market has fueled the bubble for the housing bubble and created the crash. He continues to describe how the government, instead of learning from the lessons of the past, keeps trying the same thing that caused the last crisis. When Obama came to office, he did the same thing Bush did, which was to stimulate the economy in order to make it look good for re-election. So if you really want to understand the cause of recessions in an easy and fun manner, Peter Schiff’s book will tell you a good story.
More importantly, the book is a paragon of clarity, in teaching the basics of capitalism and free-market economics, and the harm of government intervention into the economy. It's fun, and addictive, to start with the simple analogy of a 3-man, desert island economy, ...and build from there, in discussing key concepts. To my surprise and delight, even my 12 year-old son saw it laying around and picked it up, and read the first two chapters non-stop---and said he found it "great."
I will say, that it does get a bit confusing at around Chapter 12 and a discussion of the "error" of global trade imbalances in a world where the Dollar has world-wide Reserve Status---and I'm not totally convinced the author isn't wrong on this point---but maybe I need to re-read the book from that point onward; My understanding of free-market economics was always that there is no such thing as a "trade imbalance"...
Peter Schiff’s "How An Economy Grows" is in the same vein as my thought experiment. This is why I bought it. But the book is not really the same thing—while it certainly explains basic economics clearly, it’s primarily meant as a polemic and a series of claims of how modern economists err, or at least how Keynesians err. I would have preferred a simple explanation of not only concepts that are relatively easy to understand, such as comparative advantage, but also of concepts that I find difficult to grasp (which is most economics concepts). Instead, I got what I take is basically simplified Austrian School economics. That, of itself, has some value. But the polemic overwhelms—everything is shown as totally simple and obvious, and any disagreement is cast as the specious mouthings of liars, frauds, and blackguards, and not even explained clearly. This sharply reduces the value of the book.
At the root of the book are two common beliefs, which I understand are associated with the Austrian School of economics—that fiat money is pernicious; and Say’s Law, in essence that supply creates demand, not vice versa. (This may not be an accurate statement about Austrian economics, about which I know little.) Neither of these is specifically mentioned; they just flow organically from the evolution of a thought experiment similar to mine, here beginning with three men on an island existing by subsistence fishing with hand nets. From this also flow other core principles of this book, including that deflation is not as bad as inflation and that government is almost always the creator of problems to the extent it performs functions beyond those of a night watchman state.
The book consists of a cleverly illustrated series of short chapters that relate the history of the island, each followed by a short direct lecture from the authors to readers. The economy grows through the productive efforts of its inhabitants, who by free exchange become richer and establish basic mechanisms like credit and banks, expanding into production and exchange of goods and services beyond fish. Government arises and is quickly captured by the stupid and grasping. The money supply is artificially increased (by the government manufacturing fake fish, which are the unit of currency, presumably meant as an argument for the gold standard). Politicians manipulate the economy to inflate the money supply, misallocate resources, and ultimately massively borrow real value (in the form of fish) from China (“Sinopia”) in exchange for the debased fiat currency, which they fear the Sinopians may one day want to redeem for actual value. A housing crisis ensues, caused by overvaluation of real estate due to government manipulation that misallocates resources from productive uses objectively valued to dubious uses that are politically favored. Ultimately, the economy all comes crashing down, when the Sinopians stop lending and the islanders are exposed as producing little of actual value and having no savings of value, and the islanders are reduced, once again, to fishing with hand nets.
I had hoped that this book would take my halting thought processes and advance them. But it didn’t. Yes, there is some useful basic economic information in here. But much of it is meant to be clever references to actual people in the modern world, reflected as barely disguised characters in the developing economy of the island. We are meant to see how obviously stupid these people are, because what they do in our world is supposedly the same as what they do in the island world. Maybe it is. But unless you know precisely what these people advocate in the modern world (say, for example, Ben Bernanke, Brent Barnacle in the book), and why they do so other than they’re stupid liars, the reader is left mostly in the dark as to what the parallel is and what is limitations are. And, as I say, this is polemic, rather than illumination. So this book has the limited use of explaining to children or the uneducated how a basic economy is created—but beyond the first half of the book, it is not worth much.
Most recent customer reviews
This book makes you want to steer clear of bonds.Read more