Our money is burning.
Rome was a city built to burn.
At the end of the Social War in 87 BC, Julius Caesar sponsored the edict of Lex Julia, which offered full Roman citizenship to all people of Italian and Latin communities who had not revolted against the empire. And these new citizens flocked to Rome, seeking out a better life, and new opportunities.
But this new influx of immigration caused a rapid swelling of Rome’s population. Which in turn caused a housing crisis, the likes of which the city had never seen.
A solution was needed. And it came in the form of the insulae.
Insulae were a type of cheap residential building, designed to house a large number of people in one space. They were typically only one or two stories high, cheaply made of stone, and generally built on weak foundations. Building a large number of insulae was far from a perfect solution, but it was one that worked.
But Rome’s housing crisis continued to worsen, and insulae were increasingly adapted to cope—one or two extra floors were sometimes added to increase a building’s occupancy. Whereas stone was previously the favoured material to construct insulae, these new additional levels were almost always constructed out of wood.
Very soon, this turned Rome into a tinderbox.
The densely packed insulae, and the mass of residents within, meant that large fires became an almost daily occurrence in Rome. Especially in those districts where the population was mostly made up of the newest—and often poorest—arrivals to the city.
To most residents of Rome, the fires were an enormous problem. But to Marcus Licinius Crassus, this was the opportunity of a lifetime.
A century before Caesar Augustus would create the city’s first official fire brigade, Crassus established a private firefighting force of his own. Made up of several hundred slaves, his team was designed to respond to any alarm that heralded a fire, and be the first to arrive at the scene.
Crassus’ intentions weren’t egalitarian, however. Instead, they were powered by greed.
Upon arriving at the scene of a burning building, his brigade would simply wait outside and do nothing. And with the building’s owner in a frantic state at their blatant lack of action, Crassus would offer to purchase the property for a pathetic sum, as the inferno continued unabated.
If the owner agreed to sell, Crassus’ men would put out the blaze. If the owner refused, Crassus would simply allow the structure to burn to ashes. It was nothing more than flagrant blackmail, using fire as a bargaining chip.
Once purchased, Crassus’ slaves would restore the damaged building he had bought on the cheap, which he’d then rent out to generate income—sometimes, leasing them back to the people he had swindled them from. And by using these tactics, Crassus amassed an extraordinary amount of wealth during his lifetime.
By the end of his life, Crassus was estimated to be worth over 7,100 talents; around $14 billion USD in modern terms. However, what’s even more staggering is that his wealth at the time was equal to the entire annual budget of the Roman Empire itself, which was the amount needed to manage and administer the largest empire in history at the time.
Crassus used the tools of fire and chaos to become obscenely rich.
If you’ve been listening to any kind of financial news of late, you’ll be aware that we’re currently living in a time of chaos. And many believe that our economy is burning.
Right now, the stock market is at its lowest point since 2020, with twelve percent being wiped from its value in the last month alone. Inflation figures in multiple nations have once again hit record highs since May, with the most recent CPI number in the United States hitting 8.6%; the highest number in forty years. And speaking of record highs, we can also apply that to interest rates, which almost across the board are the highest they’ve been in decades.
And of course, we can’t forget that Bitcoin is now sub-$20K, and Ethereum has lost almost 80% of its value from its all-time high less than a year ago. Personally, this has meant that more than six figures have been scrubbed from my own crypto holdings, and has left crypto bros around the world probably feeling like they’ve woken up in one of the nine circles of hell.
But in real terms, what does all this loss of value mean for the average investor?
Well, if you’d invested your money into the S&P 500 a year ago, you’d be down more than 20% right now. If you had left it in cash, it would be worth almost 10% less due to inflation, depending on where in the world you live. And if you’d dumped it all into Bitcoin, you’d be over 50% worse off than you were before.
It seems like a dumpster fire. However, these figures only tell one side of the story.
If you had invested in major commodities a year ago, you’d likely be smiling right now, instead of having a financially induced panic attack. Oil is currently up nearly 52%, cotton is trading 70% higher, coffee has increased nearly 50%, and wheat is more than 91% more valuable compared to June 2021 prices.
Put your money in gold? In that case, you’d be up 5% from last year. Real estate would mean you’d be up to 25% better off, depending on what nation you had invested in. And by putting some money into art, you’d be up around 14% on average according to the All Art Index.
In fact, if you’d diversified equally across all the aforementioned assets, you’d overall be considerably up, not down. And at a time when the whole world is freaking out about an economic crisis, you would be sitting back calmly wondering what all the fuss was about.
It’s all about perspective.
In reality, it’s only people who are all-in on stocks, cash, or crypto who are feeling like it’s armageddon right now. So of course, that’s what the narrative is focusing on.
But if you’ve been paying attention, you should know not to trust the mainstream narrative by now.
It sometimes sounds like a hackneyed platitude, but I believe now is a good time to heed the words of Warren Buffet when he said to be “fearful when others are greedy, and greedy when others are fearful.” And considering how much fear is going around at the moment, it might be time to go on a shopping spree.
Stocks have never really been my thing. But if they are for you, it could be a good time to load up. Crypto on the other hand? I’m already buying more.
Just maybe, now is the very time to start thinking like Crassus.
I’m not suggesting for a moment that his actions were ethical, or admirable. And they certainly wouldn’t be legal in today’s world. However, you can’t argue with the fact that the man knew how to take advantage of a bad situation. So start thinking about how you can use the current economic climate to your own benefit, at a time when almost everyone else is only seeing a smouldering wreck.
If anything though, this should be another sign that if you’re not yet heavily diversified, now may be the best time to get that part of your financial house in order. Because the numbers don’t lie, and with each passing crisis it becomes increasingly obvious that it’s those who put their faith in only a few asset classes that suffer the most.
Don’t be a sucker the next time an economic calamity hits. And if you can, use this one to your advantage.
There are always opportunities in crises. And at times when it seems as if the world is burning, many people figure out a way to rise above the flames.
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Thank you very much.
Nice update and love the stories. Thank you