> it lost its wars and ended up with inflation anyway

Are you talking about Spanish Price Revolution or something else (e.g. the results of Spain losing its wars)? As far as the former is concerned the inflation was not confined just to Spain, but was Europe-wide. (And Spain enjoyed the Cantillon effect benefits in that arrangement.)

>or properly Britain

Yes, for sure. (I went with "England" because "Bank of England".)

>that would only happen in the 20th century.

Not exactly. The Napoleonic wars caused huge inflation in Britain and forced it to suspend specie redemption. Here is a piece I stumbled upon couple of years ago when I realized that I had no idea how Napoleon financed his wars: nber.org/papers/w3517

It can be argued that pre-Napoleon European wars had been relatively limited (see Clausewitz, for example; also McConkey mentions it in his latest book, I think he references Nisbet who quotes Tocqueville.) [Even in the Thirty Years' War it was the cumulative effect of societal destabilization that mostly caused the horrors and death, not directly the military action itself.]

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I absolutely agree, though, that sound money is not the only ingredient that makes a polity successful.

As a related aside, when reading The Wealth of Nations I skipped "Digression concerning the Variations in the Value of Silver..." I am thinking of reading it now.