HOW AN ECONOMY GROWS AND WHY IT CRASHES (BY PETER SCHIFF)
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- Опубліковано 7 тра 2024
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What are the fundamental forces that drives an economy forward? What are the mistakes that may cause it to crash? Unfortunately, what politicians do today in many modern economies is harmful in the long run, but it keeps attracting the votes of the people nonetheless.
Here’s a summary of 5 of the greatest stock market crashes in history: • A HISTORY OF THE UNITE...
Top 5 takeaways from “How an Economy Grows and Why it Crashes:
00:00 Intro
00:54 The primary goal: Increasing productivity
03:37 Savings benefit everyone
07:14 Comparative advantages
11:05 The role of the government
14:22 The function of banks
My goal with this channel is to help you make more money and improve your personal finances. How to become a millionaire? There are many ways to get there - investing in the stock market, becoming a stock trader, doing real estate investing, or why not becoming an entrepreneur? But whether you are interested in how to invest in stocks or investing strategies for creating passive income with rental properties - I hope to be able to provide you with a solution (or at least an idea) here. Warren Buffett - the greatest investor of our time - says that you should fill your mind with competing ideas and then see what makes sense to you. This channel is about filling your mind with those ideas. And in the process - upgrading your money-making toolbox.
Here’s a summary of 5 of the greatest stock market crashes in history: ua-cam.com/video/QIAWUXXSoQM/v-deo.html
I can only imagine how creating this channel and doing this content have super-powered your personal growth. Great job.
"An economist is an expert who will know tomorrow why the things he predicted yesterday didn't happen today. "
--Evan Esar
It is not spending that causes economic growth to rise but the growth which causes spending to rise.
That hit me pretty hard.
My dream was to study in Harvard business school then I found your channel , much better then that .
Your all videos are amazing..thank you 👌🏼👌🏼👌🏼👌🏼
My favorite economy book!!! Glad you did the summary for everyone
Thank you. Actually eagerly I was waiting for this kind of content
Understanding the debt cycle can help you understand the ups and downs a lot better too
I love Peter
Thanks for summarizing his works
Thank you so much!
Spending before saving is putting the cart before the horse.
Expenditure creates deposits and therefore savings.
Now that I've watched all of your videos, can I request that you do a Takeaway video over Peter Schiff's book Crash Proof 2.0? If not, I'll watch your next video anyway. Keep them coming
Weird people we are. Back in 1999 as a student I read "Money mischief" by Milton Friedman. And now I read it again - on my summer holiday. And I watch videos of a Swedish investor, instead of drinking cold beer by the sea shore.
Haha, Valentin Stoyanov I appreciate that you think the videos can compete with cold beers by the sea shore! Must be one of the highest compliments I've had, cheers man!
Economies are like an amazing machine full of small clockwork parts
We love your channel. ❤️
Another fantastic video Mr Sweedish Investor :)
Keep up the great work!
Thank you brother ❤
Very informative.
Nice one ! An investor must have knowledge on economy, money creation, etc.. Linking everything is key for more potential on our choices !!! Cheers 💪💪⭐
Great video. 👏💯. Explained well
I just finished the book and I have to say your video was a really good summary of the principles described in the book. The book basically describes it with the fish and island example to make it really simple, and I think the point Peter is making is whether you're looking at the macro or micro of an economy, the fundamentals remain the same
Good summary. I've read the book and it's good to refresh.
Question for those who have read the book or from this summary: Do you know of any country that has applied his principles ? It's obviously NOT the US
For those who have no idea about economics... this is the best book to start
I would agree on that!
500 working days for a house? I wish!
I thought the exact same thing XD
This was once a reality, and not even too long ago. The invention of the 30-year mortgage fucked this all kinds of ways up. Same with car mortgages. Watch some 1970s/early 1980s "The Price Is Right" to see what I mean.
Tony TheTGR is right.
Let me share a simple story that opened my eyes. I have a friend who I met in engineering school. After finishing, he worked as an engineer, just like me. After 2 years he lost his job. And so he moved back from big city to countryside, and started building a house (his dad carved him out a small piece of land just big enough). So how did he build the house? With his bare hands! His brother and cousin and a few neighbours helped out too. He essentially only had to pay for the materials from the savings he managed to acquire while working. Only the roof he had made by professionals. I came to visit him when it was done. I was amased. The house was big and awesome looking. How on earth could he afford it, being not even 30 years of age! He said "look, when I work on the house, I don't pay myself a salary. That means I don't pay tax. When my brother and my cousin helped me out, I didn't pay them either, so I didn't have to pay tax. The materials... well, I know a few people here and there, and through contacts, I got the stuff for cheap, because I paid with cash and I didn't "ask for a receipt" (that means, ahem, no tax).
The furnace to heat the house, I designed and built myself (he's an engineer after all!), so that was cheap too. So in the end, materials were cheap and labour was free. BUT! When my brother will be building his house, or my neighbours will need to fix theirs.. you know where I'll be spending the summer evenings".
THIS WAS AN EYE OPENER. And this is how it was done in the old days. No bloodsucking banks, politicians and their taxes got their cut on this house, that's why it took less than 2 years of 1 full-time worker and few part-time helpers, rather than 25 years of slaving away at some corporate job to pay off the mortgage. WAKE UP PEOPLE, JUST LIKE I DID!
(btw, I live in Europe. That's a solid traditional brick house that he built (not the American-style "cardboard" house that you can drive a car through - that he could probably build in half that time))
@@obiwankenobe3962 thanks for the story, made me think of Red dead redemption 2 house building, I'm in Italy, and own a little piece of land, sadly I can't build on it, I could and pay a big fine like most of us here do ahahah.
You know what I call that... Anarchism, where people work for each other and give a helping hand whenever they can, no government, no bloody greedy banks and corporations! Just humans being humans with each other
Love this content. My sweetish! Was fable for justice an embedded riddle?
I'm afraid it was just the first word that popped up that rhymed with the rest haha. Cheers though!
Would love to see ones on Phil town’s books, Rule #1 and payback time, also Mohamed El Erian, the only game in town. Love the vids man
"Time is money" made more sense when days were used in the illustration
Please which software do you use for your presentations ?
Can you do "Can't Hurt Me" by David Goggins?
Love it
Sir make summary on The little book of common sense investing by John Boggle
"A wise person should have money in their head, but not in their heart."
--Jonathan Swift
The first thing that i leaned that savings are very necessary for the growth of economy because with saved money people can
use this fund to invest in other parts of the industry.
Second thing is that people should do in which they are expert to do because inn this way they can save more time and use this time in other productive work.
@TheSwedishInvestor
Do you know who Max Goodbank (or Max Goodbank VII) was suppose to represent (which amalgamation of people who was suppose to represent)?
Most of the other characters I can figure out. Both Allan Greenspan's character and Chris Dodd character are utilised more broadly than what there real life counterparts could possibly have done, by the authors own admission, however I can not figure out who Max Goodbank or Max Goodbank the VII are suppose to be.
Please add subtitles also in video
The only way the Fed could not exist is if we let banks fail, which we have clearly shown an unwillingness to do.
I've been wondering what is he using to create the illustrations and the animation, does someone know ? The quality is very good and it helps to understand a lot
www.doodly.com/
Forgot to mention that King and Ling are subsidized to underprices the others. Cable doesn't wish to learn to code.
Can you please tell me the name of the software that you use for making these videos.
Videoscribe
"I always avoid prophesying beforehand because it is much better to prophesy after the event has already taken place. "
--Winston Churchill
Congratulations, Erik!
Watched the video again after reading the book.
Really appreciate how you changed the examples.
It shows you mastery of the subject and sense of humor!
PS:
In any case Peter's book is more interesting than the more repetitive podcasts, even if good comparisons are usually included there as well...
The point of saving is to withdraw consumption. You don't buy as much & get rewarded for it. This frees up resources & assets in the economy, which is then bought up for higher order production through sound lending with a sound medium of exchange.
This is Excellent! I have learned so much from SI. I came to learn more about stock investing, but I appreciate the range and scope of your book selection. I still don't understand why productivity has been so low in the last 50 years as the rate of technological innovation is so high. Perhaps you will review a book that address this at some point. Also, may I recommend books by The Motely Fool, especially Rule Makers, Rules Breakers. Keep up the good work SI! (Oh I already watched the review on 5 crashes, also great work. Another example of a book I wanted to read but would never have the time.)
I'm happy for your support William Bradley Vice! Thanks for the suggestions too.
sadly most of the productivity is currently impossible to get back, productivity requires land labor and capital and government has been constantly been regulating away all of americas industries, minimum wage laws, enviromental regulations, and probably the worst being worker protection laws all add up a lot of liable fees for your industry, just like when u see china workers working for dirt cheap on "precarious" conditions, american workers would need to work on similar enviroments with similar pay to get those industries back, the reason USA was able to hollow out their industries and maintain a relatively high standard of living was the world ability to support americans, the world saves and produces while america borrow and consume
of course that is a similar situation of you letting your uncle live rent free in your house and let him borrow money (he probably wont pay back) so that he can consume so while your uncle can live without working and rent free which is a great deal for him, you on the other hand have to sustain both yourself and him with your current labor, in this case america is to this day able to con the world, all built in the back of the dollar, while the dollar maintian it's relative strenght to other fiat currencies, in reality the US is just syphoning the worlds goods for relatively free since he pays their lenders with useless paper
when will this charade end? well, when other countries stop accepting dollar as a equivalent exchange and start demanding real goods either land or goods would do, sadly USA doesn't produce enough goods for that trade so it would cause a sharp inflation problem as all those imported good prices go tru the roof toghether with other assets
Great video like always! keep it up, let me add one thing, in forex / stock trading most traders think that "forex & stock trading" is a get rich quick scheme, professional traders treat trading as business and they understand that it's a get rich slow scheme, do not be most traders...
The best practice for that?
You must have system, plan and a set of strict rules to follow...
keep it up the Swedish investor, you are really doing amazing work.
we trade waves
More
Just 1 points if I may? What about the importation of cheap labour to carry forward the embedded growth obligations of the western economy? In doing so we prop up the economy beyond its means and deplete other countries of their workforce. This in turn keeps 2nd/3rd world countries below 1st countries as well as leaving baby boomers within western civilisation cosey with their retirement plan.
Economic education 😉
Sir can pls make video on Algo Trading ? How can we make our own trading strategy in auto mode ?
He won't
Javeec knew the answer before I did. Thank you for your suggestion Romil Patel, but there will be less and less advice about trading on this channel going forward as:
1. I practice long-term investing myself and that's where I can give the best advice
2. Mathematically, long-term investing (Buffett style) must yield a better performance for the average investor than any trading strategy. There are just too many expenses associated with trading. Empirically, this is supported too, as there are more examples of individuals who got rich from a long-term strategy than from a trading one.
What happens in the real world where a country of Ables can make everything faster than
Bable who lives in a straw hut? The example of this video is skewed to assume each individual has some
merit and does something well and does not do other things well when in reality, Most Ables do just about everything great
and there might be many Bables who fail at anything that they put their hand to. It is nice to think skills and abilities
and even intellectual abilities of talents and skills are spread out but that is not the case. Clusters and not even distributions are the norm.
In such a case, it would make sense for Able to simply get rid of all the Bables who consume valuable resources while offering little.
well in this case there wouldn't be trade, if you can't export you can't import.
in an less extreme example than no trade, the country with ables would have a stronger currency and the country with bables would have a weaker currency, that would limit trade, the ables country would be able to buy products from the bables country even if their production is not necessarily better in real terms but in terms of their own economy is their best product so the trade difference would still make an equitable trade, similarly the country of bables will have part of that cheap production limited so that they won't be able to just consume what other other countries produce.
You can limit your trade deficts that way or on a more realistic way trade deficts should indicate that a country is not producing enough so their money would slowly lose value relative to international markets to signal that the country is not as rich/productive anymore
Could you do Fan Li "Art of Business" the guy is said to be the first entrepenuer and wealthiest guy of his time in 500bc
To be true in the great depression hover and roosevelt tried to pay their way out of depression. In the end a war economy and developing quality products saved them.
I thought stocks only went up
In my opinion the government needs to work on what it needs to grow instead of the peoples political views. We are failing to peoples stupidity
5:12 c
"Forecasting is the art of saying what will happen, and then explaining why it didn't! "
--Anonymous
Decentralised finance ...
I was with him until 15:40 when he said the government in the US determines the cost of money. This is not entirely correct.
The Federal Reserve System is not a government agency, it’s a federation of banks. They work closely and cooperate with the Treasury dept but the government doesn’t “control” them or control the price dollars, let alone ALL money.
Second, the Fed interest rates are the rate at which bank deposits at the Fed accrue interest. This isn’t the rate banks must price loans to the public. That would be like saying OPEC controls the price of petrol. Fed interest rates are an input but it’s not a controlling factor.
Assume If the Fed interest rates are increased to 6% .The banks will definitely charge public more than the Fed rates as they are getting return from Fed without taking any risk .
@@YashwanthKrishna1 Agree, In Europe Banks can get Liquidity for -1% if lend out (receiving currency to loan out currency) but the lender typically pays more than 0% in interest.
Agree with the 2nd point but the first point happens only in law books and not in practicality.
They flood the economy with credit which suppresses interest rates by sending the false signal that there is more savings than there really is.
I dont know, except for house and car can get the rest in way less
How many pages do you read per day?
Summary the big nine by amy webb
Kan du i framtiden göra en sammanfattning på Why we want you to get rich av Donald Trump och Robert Kiyosaki?
A house cost much more today compared to 80 years ago ajusted to inflation. Does this mean the economy has worsen?
Hey tevex213! I wouldn't say that, necessarily. I probably has more to do with other things, such as:
- Interest rates being lower now (at least has been for a very long time)
- Less money having to be spent on essentials like food and electricity (as a percentage of income). Then that money can go elsewhere, and a house is one place where people seem to like to spent it.
- Maybe some sort of bubble-effects going on, at least I've felt that way about Sweden. In the eyes of the general public, housing has been a "surefire" bet during the last ~10 years as an investment, or at least that's what people seem to think.
Its more like 7500 to 10000 days for a house.
That's why international trade is so good for everyone. Each country produces what it is most efficient at. Never buy goods made in your country just because you want to support your home country! Yup, this will get some instant dislikes from the people who can't be bothered to think.
if your country produces only supercars what would your citizens eat when international trade collapses? you can't eat cars, can you?
@@woozyyt5573 Why would international trade collapse? I live in Japan and we export supercars amongst other things and have to import 60% of our food. No one has starved yet so I think you're worrying about a non-issue. Like my Prime Minister of New Zealand said when asked about war "We won't be preparing for that!"
If you think like that I challenge you to try just surviving on everything produced in your city. You'll soon realise that you have to trade with your neighbouring city if you want, for example, toilet paper. If you want bananas are you going to build expensive greenhouses so your local bananas cost $20 USD each? Economics 101.
@@kingeikaiwa the trade collapsed during The Great Depression. Germans had to sell their high tech industrial goods using threat to weak neighbors for food. for example they "sell" expensive microscopes to farmers in Bulgaria to get Bulgarian wheat.
Germans also tried to synthesize food. they made butter from coal. who knows maybe Japanese found a way to make butter from supercars.
@@kingeikaiwa lame analogy.
two cities are very similar. have the same language, similar culture, history. people can relocate from one city to another with relative ease. so they enjoy high level of trust.
two country have different language, culture and history. they also have borders, constructed by humans and geographical. you can't freely move from one country to another with ease. quite often they despise and hate each other. so the trust is low.
are you really expecting that people would trade food for supercars if Depression hits?
Why is consumption not good? No one will make investments & loans if there's no consumption
U cant consume what is not produced. U need production in order to consume. If everyone just consumed but did not produce, there would be nothing to consume. So its a short term option that politicians use in order to "boost" the economy.
Market crashes due to Interest rates.
It's funny how using comparative advantages takes more leisure than not using comparative advantages.. Selfish version of Bable and Cable is the winners👀😂
The principal issue I see with the ideas you're espousing is that it has a financial-productive equilibrium model (something like Say's Law) built into it, which historical data has largely contradicted. The reason MMT or even the Keynesianism of previous decades happened is because despite productivity increasing, economic growth failed to occur, largely because the justification of production requires sales, and every sale requires a buyer. When there is nobody to buy your product, you aren't going to produce it. When there isn't enough money to signal demand for the current product mix, or the wrong people hold it (because a few people have accumulated most of the wealth), then it's...not going to work.
If nobody wants it, than the resources you’re using to make it are wasted.
A quick correction. Consuming the savings is also good for the economy. Since one person's spending is another person's income. Higher spending > Higher revenue for the company > Higher profit > Higher budget for R&D > Higher productivity through innovative products.
It's a good point Mohan Davabhaktuni. I think this is partly true, but that it isn't always the case, and that it has some delayed effect compared to direct investments or business loans. Say that I sell you a day's worth of air for $100. Then the next day you sell me a day's worth of air for $100. We can go back and forth all year and it will show up in the consumption statistics of the economy, but it won't increase anyone's productivity. I know this is a silly and theoretical example only, but sometimes the spending doesn't end up in useful places quick enough.
@@TheSwedishInvestor That's a very good example. Let's put it this way, if all the Tesla owners, before they bought the car actually decided to invest the money instead of buying the car, the scenario would be different. Tesla would easily be able to borrow money from the banks but may not pay it back as there would be less or no revenue and Tesla's share price wouldn't have gone to the moon, if not going bankrupt. In short, we'll definitely need irrational people's spending to run the economy but yes investing is definitely more efficient than consuming.
@@mohandevabhaktuni9258 , you may want to refer to Ponzi schemes and MLMs regarding the problem Swedish Investor is hinting at.
Industries that provide consumption services are not productive and therefore resources they accumulate are diverted away from productive sectors. Present consumption at the expense of enhanced future consumption.
savings should be consumed by people that don't have the ability to create wealth nor invest their money in productive ways. So the money will go to people that can do it, which is exactly what happens in capitalism. Money likes to flow to people that can generate profits from people that can't
The swedish Capitalist😂
Since March im invested in Investment Latour AB.. I like their picks and positions. Good Ceo. Fam. is behind the company..
I didnt see any red Flags.. Even price was OK in March/April.
My question to you. Is there any bad talk about Holdings like them in the Media in Sweden? Maybe leaded by a socialistic party? 😏
LOL @ the roles of government in 2020
Sounds like 90's Neoliberalism
You could always decide to redistribute money in a less efficient way and create less growth in order to have a nicer society. At least nicer for some people.
WOAH cool it with the antisemetic remarks
my man just read it off of a freaking website -_-
Right... In theory, it sounds great! *In theory*, everybody uses their comparative advantage, work together, and everybody's quality of life increases. Instead of 10,000 days of leisure they would get 20,000 days of leisure.
In practice and reality, they continually inflate prices and deflate output thereby raising everybody's cost of living. So instead of 10,000 days of leisure, they get maybe 500; if they were born under the right star.
As we see with computers. We have every reason to be the most productive and most leisurely than ever. Yet, most of us can barely afford basic living, and those who can afford it end up living in their offices anyway.
All our electronics were supposed to save time and improve our quality of life, and just like what happened with tv, the opposite happened.
EDIT: spelling
The government increases prices and lowers standards of living lol, not the free market
Economics is not a science.
Prove me wrong.
You are wrong
It’s more like a form of engineering
Einstein is often credited with the Theory of Relativity, but it was Henri Poincaré who actually discovered it. Einstein received Nobel for his discovery of the law of the photoelectric effect in 1922.
Ground work. Maths. Poincare did a lot, but he did not formalize the physics of relativity.
Still cannot get my head around of why consumption is a bad thing. Hospitality, travel, content, tours are all consumption based industry and provides job.
I really like this channel, but this book is rubbish. Good job covering it though.
Capitalism is wonderful!
It takes 15 months of work and save all the money you make to buy iphone 11 in iran.😑
Wow! I did not know that Behrad baghaei!
Peter Schiff is a clown though.
Understanding the debt cycle can help you understand the ups and downs a lot better too