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How an Economy Grows and Why It Crashes

4.16  ·  Rating details ·  3,702 ratings  ·  393 reviews
How an Economy Grows and Why it Crashes uses illustration, humor, and accessible storytelling to explain complex topics of economic growth and monetary systems. In it, economic expert and bestselling author of Crash Proof, Peter Schiff teams up with his brother Andrew to apply their signature "take no prisoners" logic to expose the glaring fallacies that have become so ing ...more
Hardcover, 233 pages
Published May 3rd 2010 by Wiley (first published April 29th 2010)
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Jay Roberts, CFP®, CRPC ®
Aug 09, 2011 rated it did not like it
Shelves: economics
If you read this one book, and then formulate your opinions about the market with this material alone, you are a moron. This book will forever stick in my memory as a yardstick to determine intelligence by. I told my wife that it isn’t bad, per se. It’s just stupid, wrong, and written for a 5th grader. Admittedly, it simplifies a huge problem in a concise manner… but that’s the problem.

It is such an oversimplification that it allows the author to subtly interject erroneous beliefs into the narr
...more
Toe
Nov 25, 2012 rated it liked it
Shelves: nonfiction
Peter Schiff exposes the flaw in Keynesian economics through the use of an extended allegory or parable. His story involves an island nation that grows from subsistence living to great prosperity and then declines. The island nation represents the United States. The story serves as a warning against Keynesianism.

In the beginning, there are only three men. Each man catches and eats one fish per day. Then, one man decides to forgo his meal for the day to build a net, which proves successful and su
...more
Jeremy
Apr 18, 2011 rated it it was amazing
Shelves: econ, different

This book is pure, unadulterated genius.

It explains where we’ve come from and where we’re headed. It explains how Keynesian ideas have prospered over Austrian economics, even though they are utterly, hopelessly wrong and are ruining our country. I cannot recommend this highly enough to anyone who cares about America. I read it in two days, easily, and so can you. Who doesn’t have two days to change their life?

Quotes:

We are told that we must go deeper into debt to fix out debt crisis, and that we
...more
Nilesh
Mar 23, 2012 rated it it was amazing
This book reflects my views and style more than anything I have read that's not my own. Hence the rating could not have been any different!

Economic theories need to be de-jargonized every now and then to understand the stupidity of some of the things that policymakers do or are recommended to do. Extremely few people, with many experts excluded, tend to understand the basic meaning of some their pet economic solutions or policies. Complex theories effectively lead to equivocation, obfuscation of
...more
Miroslav
This is my review on Amazon dated October 22, 2013:

The book walks you through the basics of "island economics," in which FUNDAMENTAL ECONOMIC PRINCIPLES in a hypothetical three-man (initially) economy are explained.

It is basically an allegory of the US economic history riddled with lots of illustrations that add visual dimension to the humor in which the authors present the story. No, a touch of humor does not at all downplay the seriousness of the subject matter, nor does it detract anything fr
...more
awwsalah
Apr 03, 2018 rated it it was amazing
Shelves: economics
well, If you are destined to become a successful person, then facing your personal issues wouldn’t be a problem for you. People in general, have very little knowledge of how the economy affects our daily lives, regardless of our interests.
Sometimes, the lower-class citizens are entirely neglected by the government, which makes it even hard for people with their set of skills to find a job. In the final analyses, Schiff is convinced that the countries should eradicate the concept of minimum wage.
...more
Ashish Joshi
Feb 04, 2016 rated it it was amazing
This book must be read at an age when your mind is ready to differentiate between the prevalent economic ideologies and their merits/demerits but certainly not before an age where you cannot locate the fallacies in the author's arguments. Without any background in economics, I personally wish I could have read it before my post-graduation in business management.
Andrew Fish
Nov 26, 2012 rated it liked it
Shelves: economics
Fun, but flawed.

As a basic primer on the evolution of economies, this book is a light and fluffy start for the layman. Where it is flawed, however, is that it's written with a conclusion already in mind and the analogy on which it builds is therefore twisted to suit that view. The trouble is that the gold standard, which this book extols, is not the same as an economy based on fish - fish being a resource which can be replenished and grown. A real economy, based on gold, can only be stifled by t
...more
V K
Dec 06, 2015 rated it it was amazing
A really good easy explanation for what's happening with our economy and why, for people who couldn't be further from economic theory. Perfect. Can this be required reading for our federal government and ALL high school seniors? This instead of a standardized test please.
Marcelo Advíncula
Mar 18, 2019 rated it really liked it
It’s an over simplified explanation of how a regular economy works and its cycles (boom and bust). But it is focused on the united states economy (mainly the recession part [housing and educational bubbles])

The book’s characters also have names very similar to the real life people behind the real events (e.g. George W. Bass, Ben Barnacle e Barry Obuda).

I think the book is aimed for beginners in economy studies but at the same time you have to have a certain knowledge on economics subjects such a
...more
Humzah Yazdani
Jun 10, 2015 rated it it was amazing
As a lawyer interested in the field of economics, I had read numerous books on the subject. However, my exposure until this book had been restricted to the Keynesian school of thought which did leave a lot of questions unanswered. I am glad that, inadvertently, I came across this book which is from the Austrian school of thought. Even though it does oversimplify the field of economics, he does back it up with solid facts of the modern day and age at the end of each chapter.

Regardless of which s
...more
Fab Mackojc
Jan 02, 2016 rated it really liked it
Shelves: finance
I really enjoyed this book. It’s a novel way of explaining basic economics. Although the author has pretty strong views against government intervention in the economy. While I don’t necessarily disagree with these views I feel like this permeated a bit too much through the book. I definitely enjoyed the multiple parodies of real people using fish references. George W. Bass and Barack Ocuda are two of the leaders of “Usonia” haha. Although it’s a massive simplification you can still get the gist ...more
Miguel Miranda
Jul 18, 2014 rated it it was ok
This book is good up to a certain point. You can only take an analogy so far. When it starts explaining more complicated issues with the idea of fish as currency it will leave you more confused. You are far better off in the long run reading Adam Smith's Wealth of Nations and other similar books of its caliber even though it will take more effort.

If you want to be smarter don't expect to grow by reading "easy" books.
Nathaniel
Feb 10, 2013 rated it really liked it
Very entertaining and a remarkably easy read. Schiff argues compellingly that the basic principles of an economy remain basically the same between large and small economies. He allegorizes how an economy grows in the story of small fishing economy, providing many clear insights in economics along the way.
Alexander Thomas
Apr 11, 2020 rated it did not like it
This is a breezily written book of utter nonsense. Schiff does not seem to know the basics of credit creation by banks and his fish analogy which goes on for 20 chapters or so should have ended by chapter 2. This book is fine if read prior the seventeenth century, but four centuries of empirical evidence seem to have passed blithely by Schiff.

The other really irritating thing about the book his his tone of righteous indignation at market interventions like infrastructure building, minimum wage,
...more
Marie
Aug 19, 2017 rated it liked it
The allegory in this book is useful for understanding economic principles, but the author's main message seems to be that an unregulated market economy is always the best thing for everyone, and problems occur only when government steps in to try to help. Everyone on the island seems to benefit equally from advances in technology; somehow the guy catching fish still earns a livable wage even when there's someone who owns all the nets and boats. It seems to me it's easy to say "look where Keynesi ...more
Chris
Jun 08, 2018 rated it it was amazing  ·  review of another edition
A real eye-opener

Reading this book will show you what is really going on with both our domestic and global economies. It's written in a simple story form but also contains additional information that digs a little deeper.
Mohammad Ramezani
May 13, 2020 rated it really liked it
Even though the main focus of the book is to explain how 2008 depression happened, it presents an eye-opening introduction to the underlying economic concept such as money, capital, and credit, which happened to be beneficial to outsiders like me.
Ahsan Khan
Apr 23, 2019 rated it it was amazing
Fantasy explanation of economics that mimics the real world! Great book.
Hussain Rasheed
Oct 19, 2019 rated it it was amazing  ·  review of another edition
An excellent piece written on the basics of economy and how to live within the means.
Massgreen
Mar 12, 2017 rated it it was amazing
Economy will be better off by running free market. Artificially low interest rate to stimulate spending is not the way to boost/recover the economy. The governments attempts to smooth out the volatility of free markets by expanding the supply of money and running large budget deficits when times were tough set a greater fall in the future.

good fact: "Inflation is simply a means to transfer wealth from anyone
who has savings in a particular currency to anyone who has
debt in the same currency. With
...more
Mark Geise
Feb 10, 2015 rated it it was amazing
“How an Economy Grows and Why it Crashes” is an enjoyable read by Peter and Andrew Schiff. It is obviously a simple allegory, but I think it does a great job to illustrate things that have happened and continue to happen on a global scale. Due to the economics profession, most people believe that macroeconomics is beyond their understanding. Much of the economics profession has (I believe) intentionally obfuscated basic concepts to put them out of reach of the layman. I laughed out loud a few ti ...more
Lynda
Feb 06, 2015 rated it it was amazing
This is the first book I have read two times back to back. For economics majors who were (only) exposed to Keynesian economics, this book serves as a wake-up call. The book's substance and argument are profound despite its 'fun' tone with the wonderful cartoons displayed throughout and its compact size and accessible language; no American should go about their lives without reading it. When reading the news about how Fed pondering raising interest rates later in 2015 since they claim the economi ...more
Mustafa Abdelrahman
Feb 16, 2015 rated it it was amazing
Shelves: favorites, economics
With the simplest and most interesting approach, the author demonstrated the main economic principles staring from microeconomics to the international trade with a highlight on the relationship between china and the US.

The book starts by a tale of three men living on an island with one requirement to live,Each one has to catch at least one fish.For simplicity, they spend the whole day to catch that fish.After that, one of them came up with an idea ,that would boost the productivity of the entire
...more
Bill Peacock
Peter and Andrew Schiff wrote this book based on the book by the father Irwin. It combines simple explanations and cartoon-like illustrations on almost every page to lay out clearly the effects of government intervention in the market. It begins with three men on a Pacific-style island who work all day to catch one fish with their bare hands--just enough to survive. One of them, Abel, finally gets tired of sustenance living and his desire for more leads him to invent a net. Abel has to go withou ...more
Clinton
Jan 27, 2012 rated it it was amazing
Although the book only briefly illustrates the philosophy of Austrian Economics, How an Economy Grows and Why It Crashes is a wonderfully concise and entertaining story for those who are unfamiliar with Austrian Economics.
The story begins with explaining the nascent of an economy through Crusoe Economics. Economic growth is expanding the use of land and labor through production and savings by restraining present consumption for future consumption in support of more efficient uses by investing in
...more
Arun Mahendrakar
Nov 14, 2015 rated it it was amazing
The book discourses the subject of Economics in a highly comical way. The 'story', so to say, correlates with real life examples of the growth and fall of the US economy. I was disinterested / disinclined in Economics during my school days probably because my teachers made the arcane and boring subject it even more torturous. The authors on the other hand transformed it into a highly entertaining and enlightening topic.

The mantra "Productivity, not spending, is the key for economic growth" stand
...more
Zbyszek Sokolowski
May 07, 2015 rated it really liked it
This funny from the first impression book describes not so funny thesis. The US economy is not so stable as many people think. Years of spending more than they earn, living on a credit, not boosting economy and mainly production but only services. And increasing budget deficit and selling their debts to China and Japan can finish very badly. This situation can't last for ever. And panacea for trouble can't be further making debt. The funny fact is that Alan Greenspan frequently mentioned in the ...more
Hikmat Kabir
Apr 25, 2014 rated it really liked it
Pretty radical stuff this. Peter Schiff appeals for a lot of drastic ideas that can come off as a bit profound. I've felt this way more so due to the fact that this is my first time encountering the Austrian school of economic thought compared to the usual Keynesian theories I've been taught all my life. The writing is pretty simple and easy and can be finished in under an hour. The last few chapters are a bit complicated and could have used a lot more details. Anyhow, its a pretty good book on ...more
Jacques Bezuidenhout
Quite a fun little book. Really enjoyed it.

It is told in a fictional way based on the lives of some island people.

Is it over simplified? Probably. Who cares.
It explains what is needed in an easy to understand and fun way.

Combine this book with The Dictator's Handbook: Why Bad Behavior is Almost Always Good Politics and you've got yourself a lot of reason to be mad at government and politicians.

Probably not meant for everyone, but a sweet and short filler.
...more
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Peter David Schiff is an American investment broker, author, financial commentator, and was a candidate in the 2010 Republican primary for the United States Senate seat from Connecticut.

Schiff is CEO and chief global strategist of Euro Pacific Capital Inc., a broker-dealer based in Westport, Connecticut and CEO of Euro Pacific Precious Metals, LLC, a gold and silver dealer based in New York City.
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