Fantasy economics and debt can destroy wealth in a hurry. From MN Gordon at economicprism.com:
In between the birth and death of capital there’s a wide-ranging succession. The lifecycle of capital generally follows that it is imagined, produced, consumed, and destroyed. How exactly this all takes place involves varying and infinite undulations.
One generation may produce wealth. While the next generation burns through it. Many aspects of a person’s capabilities, understanding, industry, and character can determine if they’re producers or consumers. The most determinant facet, however, is how one approaches their unique circumstances.
The July 21, 2014, edition of Forbes Magazine documented the Stroh family’s methodical rise and swift disappearance from the beer brewing business. The print edition of the article titled, How to Blow $9 Billion, began with the following remark:
“It took the Stroh family over a century to build the largest private beer fortune in America. And it took just a few bad decisions to lose the entire thing.”
What worked for the Stroh family was taking a long-term time horizon. Wealth was built by incrementally acquiring and growing a loyal and devoted regional customer base.
What didn’t work for the Stroh family was ‘going big.’ The debt financed acquisitions of Schaefer and Schlitz in the early-1980s, and the costly bid to become a national brand, was its ultimate demise.
