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 is bewilderingly complicated because there is so much disagreement amongst the professionals...the economists. So, just when you think you have understood what is going on around you by listening to the BBC and how the forces of Fiscal Stimulus, Government Spending and low Interest Rates will save us from another great depression, you hear that some are deeply opposed. Why? This book is written from that dissenting side who feel that enormous government borrowing and the trend to get others to make the stuff we need will lead us to destruction. It is very persuasive because it is written as a fable on a land with fish as its currency. It bears an uncanny resemblance to the United States but the message is universal that corruption of currency by government overspending is the root of most economic trouble. The end scenario of this allegory is quite sobering because, again, it is logical and presented simply. Altogether an easy and amusing read.

If you've ever been baffled by economic theory then take heart. The reason is probably that the person explaining it didn't really understand what was going on either. Yes, there is a lot of complexity in the details and many tomes on economics would have you wade through graphs, calculus and statistics until your ears bled and yet never give you a birds eye view of what an economy actually is. Peter Schiff is a man who, in 2006 (and even before that), was forecasting with great accuracy, the recent/current financial crisis while loftier economists scoffed at his warnings. This book offers a clear and understandable overview of what an economy is, what makes it grow and what can go wrong. It does this by relating the tale of a fictional island, whose main natural resource is fish, and follows the development of its economy from its inhabitants first attempts at wealth creation through to the islands rise to inter-island trade dominance and subsequent fall. Despite being a 200+ page book about economics it is easily read within a day and, surprisingly for so easy a read, will leave you feeling much wiser. In fact you'll probably finish with the thought "surely economics can't be that easy?". It may take you a bit more time to realize that it is, and that the complexity offered up by some economists is merely a smokescreen for their own lack of understanding (after all, how many of them saw the recent troubles coming?).

Having just read the 'most useful critical review' of this book [it's a rant about this being a thinly-disguised force-feed of XYZ politics], I'll set out by saying: this book is very useful even if you don't subscribe 100% to the implications or politics of the theory it presents. That said, I am searching eagerly for an intelligent critique of this book that is written with the same level of clarity (so don't direct me to an economics tome by your favourite historical figure unless it is _as readable and clear as this one_). We have become too accepting that 'serious' books should be wrapped up in complicated scholarly language. It is refreshing that the Schiff family have altogether contributed fun and profound summaries of Economic Theory. Where are the other books like this from the experts themselves? Bring them out!

An economics textbook presented in the style of a cartoon book for children. An excellent way of putting the argument across clearly and a style that others might look to copy as it has the advantage of being potentially easy to rebut as it's so clear. The fact that the argument comes across as thoroughly convincing makes a strong case for the Austrian school of economics. I wonder if the 21st century advocates of ever greater government spending would dare to expose their arguments in the same way. Although they call it Keynesian, I think Keynes himself would have been appalled as my understanding is that he advocated government spending around 25% of GDP and not the 50% plus we have seen and are seeing in Europe.