Peter Schiff provides a clear and enlightening illustration of how the economy grows and why it crashes.

Each type of savings has a different effect on the economy. Money saved for a rainy day does not help the economy grow, but money lent out to those in need can really help an economy grow. Money invested also helps the economy grow.

One way to think about productivity is by considering how having people specialize in specific fields is integral to productivity.

For example, imagine a society where everyone does everything themselves. This would be really inefficient and people would not have as much leisure time. However, if people specialize in what they are good at, and then trade goods with each other, they will be much more productive and have more leisure time.

Governments provide services that are important to the economy, like security and justice. However, when governments provide services like healthcare, infrastructure, education, and banking, it's important to ask if they can provide these services more efficiently than the private market can.

Politicians want to be reelected, so they sometimes spend money in a way that's not economically wise. On the flip side,  private lenders are more careful. If the government spends money in a way that's not wise, it can slow down or even crash the economy.

Banks are important in our society because they help us save money in a safe way, and they also help us invest money in more educated ways than we would know how to do on our own. However, the relationship between the government and banks can limit our productivity.

The government can interfere with the price and production of goods, and they can also set the price of money by deciding the interest rates. This can be harmful to our economies because it incentivizes spending instead of saving, and it also encourages the misuse of credit and leverage.