How an Economy Grows and Why It Crashes by Peter D. Schiff
My rating: 5 of 5 stars
Life changing book. Hand's down one of the best finance books I have read in the year 2021. "How an Economy Grows and Why it Crashes" explains the birth of Capitalism in America and its inevitable decline if the government and its policies do not change their ways.
The strength of this book comes in Schiff's natural story-telling skills. I am a huge fan of his podcast "The Peter Schiff Show," and just like his weekly podcasts this book is highly entertaining. Schiff sense of humour kept me chuckling when turning the pages and the clever cartoon illustrations just added more of his dark humour to the text. It was interesting to see the analogies between the trade relations between China and the United States. The trading deficient has been declining over the past few decades and America's reliance on foreign goods will hurt them in the end. Schiff's stories give the reader a dark foreboding of the future but there is still time for America to change their ways. The book ends with a hopeful note, not only for the reader where they learn different techniques to prepare for the inevitable housing crisis and economic recession (or depression) but also the steps the FED and politicians can do to stop things before it is too late.
As I read this book the CPI has just been released for the month of June and the inflation rate is "unexpectedly" higher than anticipated. The price of oil is skyrocketing, and basic consumer goods like food are steadily rising. How much longer will it be before we see an increase in the price of rent, electricity, and the basic necessity that American's need to pay on a monthly basis? I live in a foreign country (Canada), and even I can see the price of consumer goods doubling in grocery stores in comparison to last year. Schiff predicted these events would take place, long before Covid-19 packed a sizeable punch in the world economy. Now that the printing press is spinning, you can't help but wonder what will happen next, especially as the US national debt is increasing month by month in the year 2021. I think Peter Schiff sums it up the situation nicely with the following quote:
"If our government won’t impose financial discipline, then our creditors, most notably China and Japan, eventually must. Although there are many forms in which this discipline could be delivered, the most likely method is that they simply stop buying our debt."
Dark times lie ahead of us, but there is still a chance to make things right. I look forward to reading more of Peter Schiff's works. Highly recommend this book for anyone that is interested in finances, investing in gold, or the importance of free trade relations without heavy government involvement.
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