Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

Imagine standing on the deck of a great ship sailing the vast ocean of history. The tides beneath you are not just waves but centuries-long cycles that lift empires to towering heights and then pull them down into the depths. This is the Big Cycle — an eternal dance of rise, peak, and decline that has shaped the fate of nations and their currencies for hundreds of years. The swinging of conditions from one extreme to another in a cycle is the norm, not the exception.

From the Dutch Golden Age in the 1600s, through the British Empire's dominance in the 19th century, to the American ascendancy in the 20th century, this pattern repeats with remarkable consistency. These empires each held the world's reserve currency at their peak — the guilder, the pound, and the dollar — and each experienced a rise fueled by innovation, education, and expanding trade. But embedded within their successes were seeds of decline: rising debt, growing wealth gaps, and political strife.

Consider the Dutch, a relatively small nation that became a titan through maritime innovation and capitalism. Their ships circled the globe, bringing riches and ideas, and Amsterdam became the world's financial center. Yet, as their neighbors learned their secrets and costs rose, their dominance waned, giving way to the British. Similarly, the British Empire rose on the back of industrial revolution and colonial expansion but eventually found its vast empire costly and overextended, challenged by new powers and internal conflicts.

Peaceful and prosperous periods, when empires build their strength, typically last about five times longer than the disruptive phases of war, revolution, and economic depression. These shorter periods of upheaval act like storms that cleanse and reset the stage for a new order. The Great Depression and World War II, though devastating, ultimately led to a new global system dominated by the United States.

Throughout these cycles, human nature remains a constant force — driven by emotions like fear, greed, and ambition — pushing societies toward extremes and then pulling them back. These cycles are not random but governed by timeless and universal cause and effect relationships.

As we embark on this journey through history and economics, keep in mind that what we see today is part of this grand pattern. The current challenges echo those of the past, offering lessons and warnings. Understanding the Big Cycle gives us a lens to anticipate change and navigate the future with wisdom and resilience.

Let us now turn to the key forces that drive these cycles — the determinants of national strength and decline — to deepen our understanding of what powers this perpetual-motion machine of history.