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How an Economy Grows and Why It Crashes

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How an Economy Grows and Why It Crashes


15 min read
10 take-aways
Audio & text

What's inside?

It’s no fluke: Read this fish firm’s fable to see why fiscal crises happen and how to solve them. Don’t let it swim away.

Editorial Rating



  • Controversial
  • Comprehensive
  • Engaging


Talk about economics for even a few minutes, and watch your listeners’ eyes glaze over. But tell them a story that grabs their attention and makes them smile – then you can teach them anything. That’s the tactic controversial Libertarian Irwin Schiff used to teach his sons – brokers Peter D. Schiff and Andrew J. Schiff – the basics of economics. The Schiff brothers have cleverly updated their dad’s “fish story,” first published in 1979, to show how decades of political and economic blunders have led to financial crisis. With cute cartoons and witty, though deliberately imprecise, characterizations, their picture book presents a fable about the ways that politics and human frailty can lead people to violate the rules of supply and demand – thus creating fishy fiscal headaches. Inserted “reality checks” relate the story’s ideas to current events to explain the tale’s metaphors to readers at all levels of financial sophistication. While some may disagree with the authors’ libertarian views, others may recognize underlying realities in their allegory. getAbstract recommends this fine fable to anyone seeking a simple presentation of a complicated subject.


“The Fish Story”

Economists haven’t achieved any feats nearly as monumental as those of scientists in other fields. If aeronautical engineers can send rockets to Saturn, for example, why can’t economists predict and prevent financial busts? The “dismal science” gets even gloomier as economists prescribe spending as the solution to current economic woes, piling more debt onto consumers and nations. Who’s to blame? Start with John Maynard Keynes, who in the 1920s pushed government spending and regulation as necessary measures to protect jobs. Governments eagerly snapped up the Keynesian worldview, which promised full employment and social benefits without increasing taxes or cutting spending. Banks profited from government programs and incentives to promote borrowing, and universities hired experts versed in Keynesian policies to teach generations of policy makers. The result: Easy access to credit and massive indebtedness – of individuals, businesses and nations – embroiled the world in a mess. Spending on stimulus programs, tax rebates and bailouts isn’t going to alleviate this predicament.

Libertarian Irwin Schiff had a different answer. Known primarily for his lawsuits...

About the Authors

Peter D. Schiff is the best-selling author of Crash Proof 2.0 and The Little Book of Bull Moves in Bear Markets. He is president of Euro Pacific Capital, a brokerage firm, where financial media expert Andrew J. Schiff is a broker and communications director.

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