Blackstone co-founder Stephen Schwarzman reminds his employees to “Don’t. Lose. Money”, highlighting the importance of wise investment decisions in achieving long-term returns. The idea of “easy money” is debunked, as Schwarzman’s autobiography and experiences at Blackstone emphasize the need for careful consideration of capital allocation. Any investment by top private equity firms like Blackstone, Apollo, and Carlyle undergoes intense scrutiny to avoid losses that can significantly impact returns.
Wall Street Journal columnist Joseph Sternberg speculates about a return to “easier money” by some lawmakers, but this idea is unrealistic as the Federal Reserve cannot create easy wealth out of thin air. A government without resources cannot simply shower the economy with cash or lower interest rates to near zero. Similarly, the concept of “monetary stimulus” or central banks manipulating money supply has limitations, as the private sector ultimately determines economic activity through production.
The belief that money creation spurs production ahead of inflation is challenged, as production naturally leads to the circulation of trustworthy money without government intervention. Inflation, as a devaluation of the currency unit, is not solely controlled by central banks, as governments have historically manipulated the value of money. The notion that central banks are essential to manage inflation is a misconception, as inflation predates their existence, and does not solely depend on money supply fluctuations.
Overall, the key message is that there is no such thing as “easy money”, and prudent financial decisions are crucial for sustained returns. The importance of avoiding losses in investments is emphasized, as poor asset allocation can have far-reaching consequences. Schwarzman’s rule of “Don’t. Lose. Money” serves as a valuable reminder in navigating the complexities of the financial world, where understanding the true nature of money and production is essential for economic stability and growth.
