What if I told you the most powerful empires in history didn't fall in battle, they collapsed under the weight of their own success? Not from invasion, but from decay. From wealth that became entitlement, from finance that overtook production, from systems that got so rich they stopped being real. Rome, Spain, Britain. Three empires that ruled the world, most of the known world as we know it, and then, quietly, hollowed out from within. And if you're an investor today, especially in the West, you'd be wise to study how it happened. Because when the money starts to lose meaning, when finance replaces work, and when confidence in the system cracks, it's not just nations that will suffer. Your portfolio will too. In this episode, I'm going to walk through the fall of three great empires, and more importantly, what you can learn from them as a modern investor. Where did they go wrong? What signals did they miss? And how can we build resilience while living inside systems that might be quietly crumbling? Now, you might be asking why any of this matters. And if you follow me, you follow my LinkedIn account, you follow our sub stack, the Timeless Investor Newsletter, you'll know that we've talked about this topic quite a bit. We've covered Spain. We've covered the Potosi mines and the fraud that kind of destroyed the Spanish Piazza de Ocho over time and eventually led to the crown defaulting multiple times. We talked about Britain last week. It was a relatively controversial post. If you haven't seen it, go check it out. We talk about it a lot. And it's really important to understand because it's not just history. It's risk management. These things happen over and over again. One of my favorite phrases is, and the wheel turns ever onward. Life is a giant cyclical machine. And these things, they will keep repeating. unless we learn the lessons of history. And unfortunately, one of the lessons of history is that people forget. The first generation builds something great and builds a great country, a great nation, a great business. We have an old saying when I was in private wealth at Goldman Sachs that the first generation of wealth creators were the ones that got it done. And their children oftentimes had been raised in that environment. They understood it. And they continued the family legacy. But it's the third generation, the fourth generation, where things really start to fall apart. It's such a common thing. I don't know the word I'm looking for here. It's such a common thing in life that there is a phrase in multiple different societies to express the exact same sentiment, right? In three generations, like rise and fall in three to four generations, in families, in nations, like you name it. And this is really important because investors, all of us, we live in systems, whether they be monetary, political, or institutional. And the systems we live in shape our returns more than our individual skill. Individual skill matters, but understanding the systems, what's kind of, Ray Dalio talks about this a lot, understanding what's happening underneath you and the system you're in. If the system is rotting underneath you, even a great investment can become worthless. How do you protect yourself? How do you recognize what's happening? How do you as a citizen of a democracy do something about it, vote the right way, do the right thing, do the right thing personally, teach your children the right way? I try to teach my children the same things we're talking about here. How do you think about these things to create a better outcome? And it's not just about nostalgia. I mean, Rome, Spain, and Britain were all the dominant global powers of their time, just like the United States is today. All three of them made the same mistake. I think it took a slightly different permutation in every one of these situations, but they mistook wealth for resilience. I don't want to say this necessarily for Britain because Britain sacrificed greatly in multiple wars, but in the Roman case, for example, the common Roman citizens were stopped serving in the legion they outsourced civic duty service to nation to to mercenaries basically and the nation fell apart again every empire has its own tale but the tales start to rhyme the more you kind of look at them and walk through them so let's start with the roman empire and we're gonna you know the roman empire is one that we haven't actually written a long piece on we i wrote a piece two weeks ago on the byzantine empire which Those of you that know history know the Byzantine Empire was just the continuation of the Roman Empire, right? So Constantine the Great moved the capital to Constantinople. Now we know it as Istanbul. And the Eastern Roman Empire survived for a thousand years after the fall of the Western Roman Empire. And there's a lot to take away from that story, but there's a lot to take away from the story of the Western Roman Empire as well, right? So I hit on one point. As Rome grew more wealthy and more powerful, The Roman citizenry became entitled, became luxury addicted, no longer wanted to serve in the legions. Part of what gave Rome its strength, and there's a lot we can say about the negatives of Rome. I mean, the Roman Empire was effectively, and the Roman Republic, was effectively a nation that waged war for the goal of creating more slaves, right? I mean, the entire economy was driven by slavery. So there was a constant need to expand, to expand. One could argue that when the Roman Empire stopped expanding, its economy started to falter because it no longer had a fresh influx of slaves coming into the country. But there's a lot of other things to talk about here as well. Declining civic duty, rising decadence, over-reliance on mercenary armies. At a certain point, Romans in Italy ceased serving in the military. And you started having barbarians on the frontier that were the legions instead, right? And obviously, these new entrants to the military might not have had the same civic loyalty to Rome that Roman citizens would have had. And so when Rome ultimately fell, this is an important point, right? Another massive point that is the case in almost every one of these situations was the debasement of currency. So Rome had the denarius. The denarius started out as a solid gold coin, and the Caesars progressively figured out that they could debase the value of the currency and spend their way through the currency by continually debasing the currency. And eventually, the denarius was worthless. You compare this to the example of the Eastern Roman Empire. The Eastern Roman Empire didn't debase its currency. We'll write a piece on this as well. hundreds of years, the Eastern Roman Empire maintained a sound currency. And there's a reason, it's one of the reasons it survived this long. So debasement of currency, rising decadence, the lack of attention to civic duty, over-reliance on mercenary armies. I mean, there's many, many factors. And I think the reality is we will never in a 15 to 20 minute podcast be able to analyze every factor that led to the decline of the Western Roman Empire. But these are huge, right? So when systems inflate, When the government consciously debases currency and discipline erodes, the collapse isn't necessarily allowed, but it is slow and it is irreversible. And unfortunately, as a proud U.S. citizen living in the United States today, you can see some of these things happening, right? Let's talk about Spain. The Spanish Empire is one of my favorite historic examples. People don't know this in the United States that much, but the Spanish Empire at its height was one of the most powerful empires in the world. all of Latin America, all of Central America, all of the Western United States. It had colonies all over the globe. It had extreme influence in the East. It was a massive nation. The Spanish Empire fell prey to a couple big problems. It had too much success. It imported a dramatic amount of wealth. And somebody made a comment one time, imported wealth from Latin America is sort of a misnomer. They stole and expropriated wealth from the native people in Latin America. The point is, the Spanish had a massive influx of silver and gold. And that means that Spain became an importing nation. They imported goods from elsewhere because they could afford to buy it. So they hollowed out their domestic industry. They had imperial overreach, wars in the Netherlands, wars with colonies in the New World, and they were financing it with a continual flow of silver and gold. Yeah. they brought in so much wealth that domestic innovation sort of ceased, right? And the Dutch and the English at the same time built finance and shipping lanes while Spain bought status goods and started to devalue their currency. So here's the really fascinating piece of the Spanish decline story. So there was a mine in Bolivia called the Mines of Potosí, and I cover this in a different Substack article, which we'll link in this show notes. And the administrators of the Mines of Potosí figured out that they could debase the currency. So they were creating Piazza dei Ocho, which was the name of the currency at the time, and they started to debase the silver. And they were making a fortune, a fortune. So they would debase it by 10%, 20%, but they would sell it and ship it as if it was a fully silver coin. And for a while, it looked real, it felt real, it acted real. But eventually, merchants started to notice that that the currency was lacking in value, that it was short on silver supply. Now, this is a really fascinating anecdote because most of the time when a nation goes through a currency debasement scenario, they are debasing their own currency intentionally to finance the government. That's certainly what's happening today in the United States. This didn't happen in this case. It was unintentionally debased. But here's the thing that happened. The The debasement of the currency, they eventually figured it out because somebody started melting down the coins to actually figure out how much actual silver was in those coins. And they realized that it had been debased. This created a lack of trust in the entire Spanish currency system. Now, imagine if you're the Spanish crown. You are relying upon shipments of silver and gold to finance endless war, endless imperial expansion. and a domestic industry that is hollowed out at this point because you can afford to just buy everything you want. Suddenly, the value of your currency is called into question. And what happens when trust in currency declines? It is a disaster. And that is exactly what happened. Now, the Crown took decisive action. They sent people over to Potosi and they investigated everything. And it's actually an interesting side note. The first round of people they sent were basically bought off and convinced to get in on this great money-making scheme. But eventually, they figured it out. And all of the perpetrators of the scheme were drawn and quartered, which if you don't know what being drawn and quartered is, look it up. It's a horrific way to die. So the crown took decisive action, but trust was already gone. So the story of the Spanish empire's rise and decline is basically they had easy money. They didn't reinvest in infrastructure or productivity or innovation. So They had strength, but their strength was actually fragility. You just couldn't see it. And then the debasement of the Piazza de Ocho was the thing that shattered the trust in their currency. And the crown ended up defaulting multiple times on its debt obligations. So we look back and we say, well, how did the Spanish Empire end up losing all of this territory? And the answer is simple, right? I mean, it's simple. Like Spain hollowed itself out, debased its own currency. and eventually couldn't hold on to what it had achieved. The third empire we talked about last week is the British Empire, the empire on which the sun never sets. And Britain is a really fascinating story because there are many factors here, right? I'm not going to try to act like there's one factor that led to the decline of the British Empire. But one of the trends that I think is responsible and ultimately unhelpful is that Britain started as a trading nation, as a producing nation, and certainly as a colonizing nation. But as Britain grew, as it expanded, as the British Empire expanded, it became the center of global finance. The city of London was basically the World Bank. And at some point, Britain shifted from production to finance. And finance is very lucrative. I had a mentor, close friend of mine, who once said that many finance roles don't really produce any value. Think about that for a second. This guy was very, very, very successful in finance. He said, the best and brightest in the United States go into investment banking, but what do investment bankers do? That's a really I mean, that's a deep question, right? And the quick answer is they don't really do anything. They grease the skids of transactions that would have happened anyways. Now, there might be some instances where investment bankers maybe put together a unique combination that no one thought about, but most of the time, they serve a role in the system to allow transactions to happen. So if our best and brightest are going into investment banking, because investment banking is an incredibly lucrative job. I mean, I was at Goldman in private wealth, and I remember... I think I looked at someone's opening salary right out of college in the investment banking department. It was like$250,000 to$300,000 a year for a 23-year-old analyst. That's where you start. Imagine where you end in 40 years. They're making astronomical sums of money. But what do they do? And that's the issue that they ran into is the British economy became overly financialized, focused on making money with money, which... is very lucrative. But you have to ask yourself, what does it do? How is that helpful? And obviously, some colonial overreach. But the general premise here is that the British Empire was very successful and sort of a victim of its own success. And they failed to reinvest at home. Industry hollowed out. And so when World War I came, Britain was unprepared for it. Now, some people have pointed out fairly that Britain sacrificed greatly in World War I and World War II to stop the Germans, right? And that is a fair point, and I'm not going to take anything away from that. What happened in the lead up to and the start of World War I is that most of the world was on a global gold standard, which I will also link in the show notes, but was a period of unprecedented prosperity worldwide. And all of the belligerent powers in World War I broke from the gold standard at this point and went to fiat currency. The reason is quite simple. It is impossible to finance a war if you are on a strict gold standard. You simply can't do it. You have to tax your citizenry to pay for the war. Now, the thing that you should realize is citizens of a democracy would never stand for a war that they had to actually pay for. The way governments pay for wars is to finance the war by debasing the currency and sparking inflation. They're basically taxing the citizenry, but in a way that the citizenry does not realize as directly as when they are actually just taxed. So the British financial system became massively indebted as a result of World War I, and we know what happened afterwards because the war ended, Germany was placed under a massive reparations program, never went back on the gold standard, The British tried to go back on the gold standard. They tried to couple it to what it had been worth before. They couldn't do it. The economy started falling apart. But honestly, I think the end result is they had underinvested in production, in home industry, and were overly reliant on the Robesie's empire. And all of this sort of fell apart. So look, let's talk about today. So are we in the same cycle? And I'm going to repeat my quote again. The wheel turns ever onward. The U.S., one could argue, is a post-industrial economy. And I'm not going to sit here and say that we need to onshore all industry, we need to do all this kind of stuff. But I do think it's fair to say that the U.S. has become a country that is focused on making money on money more than necessarily focusing on productive industry, right? We have great productive industry, don't get me wrong. And I'm not going to sit here and say that the U.S. is directly headed down the exact same path. But there is a dominance of finance, right? I look at private equity as a good example. What does private equity produce? Private equity, for those of you that don't know, is the world of acquiring private businesses with capital and looking for a monetary return out of it. Most investment bankers do investment banking so they can get into private equity. But what does private equity do? This is the private equity playbook. They will acquire a business with debt. They will lay off a bunch of staff and they will cut costs to the bone and then they will try to flip it and sell it to someone else or make combinations or take that thing public. It is an exercise in financial engineering, more so than an exercise in trying to create something truly new and dynamic. Now, there's nothing wrong with that. There's nothing wrong with trying to make money. But the question is, are our best and brightest gravitating towards industries that make a lot of money through financial engineering? versus industries that are creating things of real value. Now, we have entrepreneurs in this country that are making things of real value, but you have to ask. We are exhibiting many of the similar traits to many of these empires. We have the overemphasis on industrialization. We are a nation of importers. We import a lot of our materials and goods. We're over-reliant on our trading partners, which we're kind of going through the pain of right now under the Trump administration with the tariff policies and all these things that are happening. And we're kind of seeing the pain of that. We're also a nation that is debasing its currency. Now, it's not just us, by the way. Everybody is debasing their currency. Almost the entire world is on a system of central banking and fiat currency and steady debasement of currency. I saw a stat that since we broke the gold standard with the Bretton Woods Accord, the value of the US dollar from 1971 to today has declined 87%. So... I don't know what you can call that except currency debasement. So the question we have to ask ourselves is, what is the system we're living in? And I'm not going to sit here and predict the fall of the United States or the fall of the US empire or any of these kind of things. I'm simply saying it's valuable to look at the cycles that have come before and try to understand what's happening. There are some big geopolitical things happening. The rise of China, the rise of the East, the rise of the global South. There's a lot of things happening and investors need to position themselves in a place that is secure and safe. And that to me leads to the argument for real estate and real assets. I'm not just going to say just real estate, but I think real assets are a hedge against imperial decline. So first of all, real estate and real estate investing is the one contraindicator, I think, to my argument against private equity. Because technically, real estate is private equity, private capital acquiring something. The difference is that I think money that flows into real estate is valuable for what it does. So think about it this way. When you look at a city like Berkeley that makes ownership difficult and restricts the flow of capital into a city, you can see that the city's housing stock starts to deteriorate. By contrast, When cities allow the free flow of capital, you can think of it like a perpetually rejuvenating machine for the city's infrastructure and housing. So real estate is a productive industry to be engaged in and to work in. It also supports businesses, it houses people, and it meets a tangible ongoing human need. So even when empires decline, people will still need shelter. That doesn't go away, right? The second piece is that real estate is anchored in scarcity. Land is and land and supply constrained economically productive areas is a finite resource. That means housing in places like Manhattan, San Francisco, London, Chicago, they become more valuable as economic systems to stabilize because the land itself is scarce, real, and hard to replicate. They also preserve purchasing power. So we saw that in Spain and Rome and Britain. Landowners retained their wealth It was the urban wage earners and savers who were wiped out by the decline of the empire. So owning real estate with pricing power and yield can help investors ride out inflation, currency devaluation, or policy instability. There's a lot of other things people look at, gold, Bitcoin, whatnot, but real estate has... some incredible value, and I think is a very strong hedge against a lot of the scenarios we're talking about. There's a lot of contrapoints to what I'm saying. If we go into imperial decline, the economy goes into decline, real estate will also be hurt. Just to be very clear, it will also be hurt because renters may not be able to pay their usual rent. Businesses may suffer. So there's pros and cons to what I'm saying, right? And that somewhat leads to people's argument for Bitcoin as well, which I'm not going to get into on this particular show, but it's important. So look, we have some really good stuff coming out this week. I hope you've enjoyed this episode. On Wednesday, we will be dropping another behavioral finance discussion, looking at the overconfidence bias and how it affects real estate investors. And this coming weekend, we'll be releasing a real estate deep dive. So I hope you're prepared for that. If you've enjoyed this episode, I would ask that you please share it. Please, please leave us a review on Apple Podcasts, on Spotify, whatever the system is that you use. It's very helpful to help the show. And if you haven't subscribed already, please subscribe to our sub stack, the Timeless Investor Newsletter, where we do deep dives into these sort of topics. And Just really get into the good stuff. I think we've been striking a real note here. Our Timeless Investor newsletter has grown rapidly. I started writing in February. And as of today, May 17th, it is over 1,600 subscribers. So we've gained about 1,600 subscribers in basically three months, which is awesome. And it's also, I think, reflective of the fact that we're writing some really interesting stuff. So I just want to say, you know, history doesn't repeat, but it does rhyme. And understanding the cycles that have come before us is really, really important to just understanding what's going on, right? I mean, you can sound smart at a dinner party, which is great. You can hedge. You can vote accordingly as a citizen. You can understand the issues better. But also, like, you just understand intuitively or instinctively or in a deep first principles basis what is happening to day and this wild system that we're living in and that we're all subject to and that we oftentimes have no understanding of. So I want to leave you with that. I want to thank you for joining us for the show today. I hope you found this useful. We will be releasing a deep study on the Roman Empire as well and its inevitable decline. Thank you again. Think well, act wisely, build something timeless. Thank you.