How an economy grows and why it crashes is a book on economics, if you haven’t guessed already. The book was written by Peter Schiff. It deals the basics of economics and also stuff that is a little more advanced. It replaces money with fish, and inside the book, there are several pictures. This makes it easier to understand than other beginner economics books. The book also loosely follows some economics events that happened in American history later in the book. The book is also very short, so it doesn’t take that long to read.

I’ll give you some important points in the book.

  1. People spend, because an economy grows, not the other way around. The government thinks, the opposite and tries to give a stimulus for spending so that the economy’s position can become better, but they are puzzled when this doesn’t work.
  2. Savings is what allows people to create goods. If somebody is building a house they have to have accumulated savings. While he is building the house he can’t be earning money to feed himself at the same time. (His job is not a construction worker.) If he does not have enough savings he will most likely starve to death before he completes the house. This is why you need savings before creating goods or anything else that takes a considerable amount of time and other resources, i.e. infrastructure.
  3. In a free market, economy prices go down over time. This happens, because over time people get better at their jobs and use their savings, to improve the quality of the goods they use to produce their products. Or the producers figure out a cheaper alternative altogether. In shorter words, they are making the production process more cost-efficient. This means that they can decrease the prices of their product while still making the same amount of profit. The producers would probably be making more money because the lower prices of their product cause more customers to buy the product.

How an economy grows and why it crashes is great economics book. The writing is well done and easy to understand. Anybody who wants to start learning about economics should pick up this book. It is a great beginner book. It explains the basics while also covering slightly more advanced topics.

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