How an Economy Grows and Why it Crashes – by Peter D Schiff and Andrew J Schiff, John Wiley & Sons, 2010

A preview by Rudi Filapek-Vandyck

Many of today's FNArena readers and subscribers know me from my three big calls in 2008: first ultra-negative on banks, then persistent on the issue that crude oil was in a bubble and next the warning that commodities were about to experience their most severe correction - ever.

As far as market calls go, I don't think 2008 will be beaten any time soon.

The same goes for Peter Schiff. Nouriel Roubini might have earned the title Dr Doom because of his persistent calls for a downturn in US housing well before it all started happening in mid-2007, Peter Schiff never received even half the recognition Roubini did, yet he had been making the same calls, for many years in advance.

Anyone looking for proof only has to type in his name in the youtube search engine. I personally like the responses from Wall Street experts when confronted with Schiff's warnings on live television. Also, observe how some journalists are unable to hide the fact they really do not take him seriously.

All of that, of course, instantly changed when the US housing market turned and those warnings hit home hard, again and again and again. Peter Schiff may never be able to compete with the rock star status of Roubini, but his name will nevertheless remain tied to the irrational exuberance -or should that be unbelievable ignorance?- that preceded the subprime bubble in US finance.

This year he took up the quest of getting elected into the US Senate and delivering his contributions for a more healthy government budgeting from inside the political system. It'll be interesting if he succeeds.

Otherwise, Peter, and his brother Andrew, offer investment services to American investors since 1996 through registered broker Euro Pacific Capital which describes its service as “helping everyday Americans diversify outside the US dollar” (you know, like into gold and gold coins).

Peter and Andrew co-wrote the book How an Economy Grows and Why it Crashes. It promises readers the same themes as Peter has been agitating against all these years: one cannot simply put printing presses to work and expect no long lasting consequences.

The final conclusion, on page 227, says it all: “For years we have been living beyond our means, and we must summon the resolve to finally live within them. If we can do that, and allow free market forces to operate unhindered, we can rebalance our economy and set the stage for a real expansion.

“However, if we choose to put our faith in debt, the printing press, and the promise of pain-free government solutions, we will all be fishing without a net.”

As indicated above, I haven't read the book yet. It's on top of my must read pile on the left hand side near my bed. Micheal Lewis' The Big Short (page mark in the middle) is right underneath it. I have little doubt that I will enjoy reading the Schiff brothers' take on the US debt machine, just as I have enjoyed Lewis's insights (so far) into the Wall Street pyramid scheme that ultimately became the global crisis of 2007-2008.

The book cover promises a “powerful understanding” of how an economy in essence works. Who could possibly explain this better than Peter and his brother Andrew? Recommended Retail Price $27.95.

This book has been freshly added to the FNArena Investment Shop, which means it can be purchased at a discount. Here's the direct link: http://www.moneybags.com.au/default.asp?d=0&t=1&id=6118&c=0&a=171

Two previous books by Peter Schiff are: The Little Book of Bull Moves in Bear Markets: How to Keep your Portfolio Up When the Market is Down and Crash Proof 2.0: How to Profit From the Economic Collapse. Both books can also be purchased at a discount via the FNArena Investment Shop.

Here's our Top Ten of Best Selling Books:

- Shares and Taxation

- Shares to Buy And When

- Trading from Your Gut

- Top Stocks 2010

- Way of the Turtle

- Trade Your Way to Financial Freedom

- Catherine Davey CFD Twin Pack

- Trading For A Living

- Trading in the Zone

- Secrets for Profiting in Bull and Bear Markets

For more information on these books/discounts available, see http://www.moneybags.com.au/default.asp?d=0&t=1&c=148&a=171

See also our previous book reviews this week:

Shares & Taxation by Jimmy B Price

The Big Short by Michael Lewis

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