Afford Anything - This Historian Says We're Living in the Best Era Ever, with Joseph Moore

Episode Date: August 25, 2026

#744: With about $200 and a crypto exchange, historian Joseph Moore turned himself into a legitimate billionaire — a stunt that says more about how money actually works than most financial advice does. It's also a preview of the 300-year argument he makes in this episode: that almost everything we're told about money is newer, and far less permanent, than we think. Joseph Moore, PhD, is a historian and the national bestselling author of How to Get Rich in American History: 300 Years of Financial Advice That Worked (& Didn't). His own self-experiments with historical money strategies helped him become financially independent in his mid-40s. In this episode, we discuss: How "never save your money" used to be completely reasonable financial advice Why bonds quietly beat stocks for nearly all of the 1800s How to spot when today's "obvious" financial rules are about to expire Why real estate booms always show up right alongside inflation spikes Why young people's unemployment is outpacing everyone else's — and what history says to do about it Why economic optimism and economic data have stopped matching up Why building more housing is the only housing-crisis fix that's ever actually worked This one's for anyone who feels like the rules of money keep changing under them — because they do, and always have. Understanding that pattern is the first step to building wealth in whatever era you happen to be living in. ⏱️ TIMESTAMPS Note: Timestamps may vary slightly depending on dynamic ad placements. (05:18) How a runaway slave built his own legal currency (06:52) How he legally declared himself a crypto billionaire (13:22) Why a fifth of the Smithsonian's money collection is fake (15:52) The bestselling book that told readers to commit fraud (20:10) The decades when bonds quietly beat stocks (26:04) How his grandfather secretly became a bond millionaire (31:09) Why that "$10K in 1929" chart is misleading (48:02) Why wages are up 50% and nobody believes it (1:06:39) Why most Americans once owned one shirt (1:23:48) The rent control law that backfired for renters 🔗 RESOURCES MENTIONED 👉 Build a Life of Financial Freedom with our free workbook: https://affordanything.com/fiire 👉 Joseph Moore's site — his book, essays, and more: https://www.josephmoorebooks.com 👉 Your Money or Your Life by Vicki Robin & Joe Dominguez: https://vickirobin.com/your-money-or-your-life/ 👉 The Latte Factor by David Bach: https://www.simonandschuster.com/books/The-Latte-Factor/David-Bach/9781982120245 Learn more about your ad choices. Visit podcastchoices.com/adchoices

Okay, pop quiz. We all know stocks for the long run, right? Stocks beat bonds over the long run. How long has that actually been true? Is the answer A always? Is the answer B for hundreds of years? Or is the answer C? That's only been true since 1945. In fact, throughout the 1800s, bonds beat stocks. And the two ran roughly even until World War II. Today we're going to learn some surprising economic history with historian Joseph Moore. And we're going to draw out some lessons we can learn from history, notably that the stock market doesn't owe anyone a return. There is no contractual obligation for the stock market to keep delivering what it has delivered since 1945. We talk about why the economy looks great

and everyone feels terrible. The chattering class gets paid to tell you that it's bad because negativity sells. We talk about lessons from history and how that applies to AI, like lessons from previous tech revolutions because historically in a tech revolution, the money is made by working in it, not investing in it. So we talk about canal investors in the early 1800s versus the people who learned how to dig. We talk about Atari and Commodore and Lotus. We talk more broadly about crowding. When everybody piles into an assumption, they often forget that it only worked because everyone hadn't. We talk about how nearly every strategy we follow today

was invented in this five-year window from 1912 to 1917 when America went from a century of zero inflation to prices doubling in five years. Gold bugs, real estate, even the first ever firebook, which was published in 1919, all of that showed up as a panic response to inflation. By the way, that's why bonds did so well in the 1800s, it was a zero-inflation century

and sometimes a deflationary century. So by the end of this episode, you're going to have a much stronger understanding of money, of economics, of the markets, placed into historical context so you can have some perspective on where we came from and where we're going. Welcome to the Afford Anything Podcast, the show that knows you can afford anything, not everything. This show covers five pillars, financial psychology, increasing your income, investing, real estate and entrepreneurship, acronym Double I Fire. I'm your host, Paula Pant. I trained in economic reporting at Columbia. Today's guest, Joseph Moore, has a Ph.D. in American History from the University of North Carolina at Greensboro and is the author of the bestselling book How to Get Rich in American History. He became financially independent in his mid-40s. And in this upcoming conversation, he shares lessons from history on how to become wealthy in the United States. Here he is, Joseph Moore. Hi, Joseph. Hey, Paul. It's great to be here. Thank you for joining us. Are you kidding? I love this show.

Oh, thank you. Well, I'm honored to hear that because you are a crypto billionaire. You know, as one is in this era. Actually, that is meaningless and does not represent your net worth, your real net worth in any way at all. And also net worth is meaningless, but we'll get to that in a moment. Tell us about how you are a crypto billionaire. When I started researching like the history of what people were told to do with their money, my expectation was everything we're told is wise and good now would probably have been wise and good then.

And I was wrong. And what I found was like in every era, what made sense then wouldn't make sense now and what makes sense now wouldn't make sense then. One of the things that is so different today versus the past is what money is. We think that crypto is the future of money. This is the dream we've been sold. And it looks very much like the past, actually. There were over 10,000 separate self-issued currencies in America at the dawn of the Civil War. 10,000. And they could be issued by anyone. The only entity that wasn't issuing money was the U.S.

federal government. There wasn't a U.S. dollar in that sense that we think of today. Banks could issue them, companies could issue them, people could issue them. My favorite example of this is a runaway slave named William Wells Brown. He runs away from slavery in Kentucky. He gets as far as Michigan. He gets stuck. He has no money. He has no friends. A local landlord takes mercy on him and says, I will let you rent cheaply this space and have a barber shop to get yourself on your feet. Fabulous idea.

Three problems. Number one, he has never cut hair in his life. Number two, he does not own scissors. And number three, no one in town can pay him. And he solves the first two. He doesn't tell anyone he can't do this. In fact, he paints a big sign that says, fashionable hairdresser from New York,

a city he's never been to. He borrows scissors. And then he goes to a printer and he says, print me money. good, basically redeemable for haircuts at my shop. Then he goes around town and this is what he uses to buy food, to buy lodging. And then other people start trading them back and forth because, well, I only need one haircut, but you'll need a haircut. So within a year, this is trading is legal valid tender in Monroe, Michigan.

Money issued by a runaway slave. Now, when William Wells Brown gets enough real money, he does get to New York and freedom, and all that money goes to zero. And that was what would happen regularly. And so as I saw the crypto craze take off, I thought, I've seen this before. This was exactly what money looked like in the 1800s. Anyone could issue it, and it was valid, it would be like if you went to work and you got paid in Dogecoin, and I go to work and I get paid in Fartcoin, like, what's the first thing we're going to do?

We're going to spend it because I have no idea how long this is going to hold its value. And that was the advice you found. So to kind of experiment, like, well, I want to issue my own currency, just like William Wells-Brown did, So I issued a token called billionarily, ticker BNLI. William Wells Brown is the image on the coin that I printed. My goal was just to kind of poke fun at the crypto craze, but also to kind of poke fun at the idea of net worth. We have this idea that somehow Jeff Bezos is worth all these dollars,

and he's somehow taking them from me. Instead of understanding that net worth is really just a multiplication equation, right? It's how many shares of this are there times the last price. That's the net worth. And so I created over a billion tokens and then I went into a crypto exchange and I swapped, this is what's called a liquidity pool, a few hundred dollars of U.S.D.C., U.S. dollarback coin,

for a few hundred billionarily tokens, which technically meant, since the only trade that it ever happened was $1 for one coin, all the coins must be worth $1. And I sat there and refreshed and refreshed, and sure enough, one of the crypto exchanges said, token value $1.1 billion, and I owned all of them. and I'm staring at my computer screen,

realizing like, this has happened, I've made this happen, and I just holler up at my wife, honey, we're billionaires, and she's by this point, totally unimpressed by anything I've done on this weird exchange of ideas. And so she's like, that's great,

but like the kids are at practice. So, like, you need to go get on. So it was an attempt to kind of understand what is money, what is it really, and what is net worth? And is it really worth what we think it is? And I think the answer in both

is it's more complicated than we think. And so to that, first question, what is money, what is it really? A major point that you were illustrating is fiat currency issued by a central government is actually a relatively new thing. When you tell the story of William Brown, it sounds as though initially those coupons that he printed up kind of started almost as barter coupons. Like here, this is good for a haircut, can I have some food? In that first exchange, it's almost a barter coupon. And then organically, people discover ways to make that more efficient,

it then starts turning into a more neutral medium of exchange. Yes, exactly. These were called shin plasters, and they were everywhere. I own some of them, just because I'm a nerd like that. Like, I just find it's fascinating that people could issue their own private currencies backed by anything. It could be backed by your wedding ring. It didn't matter. You could find something, and as long as you agreed to redeem it for that thing,

you could issue a currency. I mean, if we had this economy, you could go and pay for gas with Chucky Cheese tickets. We don't do that, but that was normal back then. And so because that was normal then, because money was different than what the advice around money was was different then. Right. And so as money has changed, where I like the needle, the crypto bros, is the federal U.S. Greenback dollar solved a problem that people had. And when people found the solution, they did not want to go back. Like once they had an actual dollar that they knew they could do two things with, I could pay their tax.

and they could pay their debts and no one could say they couldn't. So as long as I hold this, you have to take it to pay my taxes and you have to take it to pay my debts. And if you have that, this is better than what came before. And the crypto bros want to kind of go back to that world. And what I like to point out is people who saw the problems from the earlier era didn't want to go back. I try to like boil it down to how to people use it. Right. At the end of the day, whoever issued it, Fiat, government, individual backed by gold, not backed by gold.

gold, at the end of the day, it's what do people use to pay their taxes and pay their debts? Because that's what people trust the most and that they'll hold on to and then use in an exchangeable way that rarely loses its value. Now, you have hyperinflationary economies. That's a whole different world. But this is something Americans back then saw as a positive innovation to move to the greenback dollar. You say pay their debts. Would people pay debts in a currency that was different from the currency in which the debt was issued? Oh, this was a huge argument. through like all the 1800s and trying to convince

undergraduate students at an 8 a.m. class to care about this is like if you have that power you are a miracle worker. It's hard to explain to young people today this was a roaring debate that people had.

And so if you go back, you look at the silver currency debate and the debasement debates and like are we going to have a gold-back dollar or a silver dollar or how much gold or how much silver per dollar? All of this is basically an argument about what kind of money

do I use to pay back my debts with? If you have lent people money, you want that dollar to hold its value very strongly. If you have borrowed money, you want the value to go down, so you're paying it back with cheaper money. Those were the political debates of the 1800s. And we don't even think about those debates today. It doesn't even occur to us because we kind of, an earlier generation solved the problem. At the time, because there was no centralized currency, the advice was to spend. Can you bring us into that mindset? that because I think it's hard to sometimes make that leap of we don't have a very stable

currency therefore you should not save you should spend as fast as possible yes I remember being really surprised by this if my dad walked in and sat my girls down and said now girls whatever you do with money don't save it I'd tell dad to like dad lay off the bottle right like this is bad advice right now but that is exactly what grandparents would sit their grandchildren down and tell them whatever you do with money don't be foolish and try to save it because it's value. You can go, as we just talked about, like, it can literally go to zero overnight. And this happened to people, by the way, especially immigrants who didn't really understand how American money worked. They would save for a year thinking,

I've saved my money, and then whoever it issued that currency would disappear or go under and it was worthless. So the idea was, as soon as you get money, spend it. The best thing to spend it on is something that's tangible. Real estate, tools for your business, some kind of asset that will hold its value. So it's not that they're not saving. They're not. They're not saving cash and money. They want to move that money into something that will hold value. Absent that opportunity, even food in your belly is a better investment, especially for workers who need to get up and go to work tomorrow and spend all that energy on those very difficult jobs, even food in your belly is better than holding onto that cash. That is a world that is so

foreign to us. It would be like we got on a plane and went to a different country with everything was backwards. We'd think, how do these people live? But that was, in fact, there were European travelers who would come to the United States in the early 1800s ago, how did these people do this. And but Americans kind of came to understand it. And they just got, they got the sensibility about it. Like, as soon as you got money, you checked it to see how valid it was. There were a lot of counterfeits. 20% today of the Smithsonian's historic money collection, 20% is counterfeits. So like even the Smithsonian has a hard time picking out like when they go to get these things, which ones are real, which ones aren't. And so is it valid? And then how fast can I spend it?

And that was what people were trying to do. And that's a different world for us. And that's one of the real lessons of history. What always worked was always changing. And we have this sense that everything is stable, it's always going to be the same, the way it is today is the way it'll be tomorrow. That's not the lesson of history. The lesson of history is clearly what always worked is always changing. You have to be adaptable and have your eye on what is changing, and so you can understand where you fit in that process. You mentioned people would often spend money on real estate, and what that reminds me of is, even now, in times of inflation, and what is inflation, it is losing confidence in the purchasing power of a dollar.

Right. As people lose confidence in the purchasing power of a dollar, they tend to pile into tangible assets like real estate or gold or anything else that's physical and tangible. Is that an inherent principle or is it a historic holdover or both? No, we see it every single time there's a spike in inflation. Inflation is probably the most powerful force in shaping what people think they should do with their money. First I'll talk about real estate and I'll go back to kind of inflation more broadly. every era that you see a spike in inflation, you see people rush into real estate. And we have like, what, 4% inflation right now, I think where we are.

We're somewhere in the neighborhood of 4%. This is like laughably mild compared to earlier generations. It's like, you're worried about 4% inflation. Let me take you to 1981. You know, and things are insane. In the 1960s, when inflation really gets going, is when all the real estate investment gurus first start popping on the scene. It starts out of California where there's a big,

housing shortage at a World War II. And there's a guy named William Nickerson. He wrote a book called, I don't remember the title exactly, but basically how I earned a million dollars in real estate in my spare time. And he literally just bought houses, turned them into rentals, fixed them up a little bit, and did this for 20 years. And sure enough, made a million dollars where people began to flock to him to learn how to do this. And then, of course, inflation keeps taking off and going up and up and up. and it goes from single digits to high single digits to low double digits. And then it's the 1960s and 70s are just a wash in stress about inflation. By 1981, like the rush to tell people they can buy real estate with basically no money down

is like a race to the bottom. So that by 19, I think it's right around 1981 or two, there's literally a book that says not only can you buy it with no money down, you can kite the check at the closing table. You can just like write a check for which you do not have the money. Take the security bodies. Literally, this is in the book. Rush to the bank, deposit it so that you beat the other check that you deposit. Which is, by the way, completely illegal then and now.

This was a bestselling book. Wow. Now, why? Because when you have double-digit inflation, what everybody's thinking is, if I can just buy this asset, it's going to be worth 10% more this time next year. And 10% more than that the year after. And 10% more. So it doesn't matter how little.

In fact, I want to get it for as little as possible. because in a few years I can sell the whole thing and make wild returns. And people are making that money. They are rushing into real estate and then the tide turns. And so we see like every time there's really big inflation, people rush to get into real estate. Inflation doesn't just shape real estate. It shapes all financial advice.

So when I started doing this, I thought, okay, I'm just going to backtrack financial advice from today. People like Dave Ramsey, people like you, like people who are out there talking and sharing, like what to do. And I'm just going to backtrack this wise advice all. the way back to the, you know, all the way through history. And I'll end up with Ben Franklin and we'll all realize we should be wise. And I was wrong. Because in 1912, the trail went cold. It was like I was on a murder mystery and suddenly I had no evidence to figure out where the villain was. That was

because there's no inflation before 1912. So in 1912, if I go get a gallon of milk, it's 24 cents a gallon. Go back to 1812. Napoleon rules France. A gallon of milk is 24 cents a gallon. there's been no inflation for 100 years. There was actually deflation, and then it would come back up to normal, which meant that all the advice, kind of like we talked about with money, was different.

So what made sense in 1911 was what made sense in a world with no inflation. And then in 1912, which is the last year of that, it then goes from 0% inflation to 8%, 18%, 17, 15, 15, 15,

in five years. Wow. Prices doubled in five years. There was not a mother, a grandmother or a great-grandmother who had ever seen this happen. And so every piece of advice people had been given fell apart. It didn't work because it was all for a zero percent inflation world. And so people were buying four and five percent bonds, especially liberty bonds for the First World War, and they got crushed. And so all the advice we have today shows up in that

five-year period. Like there's always been nothing new since. I can pretty much find any piece of advice you would find today, gold bugs, stocks for the long run, real estate advice, the first Financial Independence Retire Early Book shows up in 1919. Like it all shows up at the same time because everyone is rushing to figure out how to beat inflation. So inflation is incredibly powerful. And even today, 4%, it still shapes like what we think we should be doing. On the subject of advice being different in different times,

what we commonly know as the stock market always goes up and stocks are always better than bonds, Right. That's only a post-World War II phenomenon. Right. Yeah, really first shows up right around this exact period around World War I. The very first book written by a guy who basically goes back and he picks a random selection of stocks. And he says, actually held for the long run, these beat bonds.

This book goes bonkers. Like everyone is reading it because everyone's trying to beat inflation. And he basically says, these stocks beat bonds. Now, as it turns out, it is a randomly selected group of stocks. It is not a comprehensive. so whether or not it actually was a good sample size is up for debate. But no one questions that after it's a bestselling book. And so that kind of runs all the way to kind of random walk down Wall Street and stocks for the long run.

So that advice gets started in the 19-teens. It takes a big hit on the chin in the Great Depression. Obviously, the crash kind of tempers a lot of people's eagerness for stocks. But then it comes back. We've lived with it ever since. I mean, I remember one of the first finance books I ever read was stocks for the long run. And it seems so obvious, like, oh, wow, look at all this data. Here's the problem.

We now have some scholars who've gone back, and they've done a complete data set of all the stocks that you could have bought. And as it turns out, bonds actually beat stocks for all the 1800s. They were tied until World War II. And so stocks beating bonds always, for the long run, is about as old as our last two presidents. It's kind of World War II to now. Now, that doesn't mean it's going to stop working. It just means that it's a fairly recent.

phenomenon. Right. You know, I'm a historian. That's a rounding error in my line of work. Right. And that surprised me, that surprised me a lot. You never hear that. There was a time period relatively recently when bonds beat stocks over a long period of time. Exactly. And now keep in mind, like, there was a period with relatively zero inflation and sometimes deflation. So that really was part of why it worked. We're not in that era now. But we do, I think it's really important for us to understand, like, the stock market does not owe us a return. There's not some contractual obligation that the stock market has to return exactly what it's done since World War II. In the same way that bonds did not contractually owe people a world with no inflation in 1912.

When we start baking into our assumptions, this is what always worked, so it will never change. That's a good indication that eventually something will change. One of the concepts I try to help people understand is one of the real tells in historical change is the more people who pile into an assumption, they forget that the assumption only work. because everyone had not piled into it. And once everyone is doing what everyone says you should do, the underlying assumption starts to change because the assumption was based on a world

where not everyone was doing that. From a historian's perspective, change over time is kind of what I do. Like, I look for things that don't stay the same. But from an investing perspective, we tend to be like desperately looking for the thing that always worked. And back to what I'd said earlier, like what always worked was always changing. And so you have to be adaptable.

Your playlist might get you through, the workday, but have you ever wondered how your ancestors spent theirs? What work helped them build a life? How did they adapt as the world around them changed? With ancestry, you can search select historical occupational records for free for a limited time and discover the stories behind the jobs in your family tree. You've got questions. We've got ancestors. Search free until August 31st. Visit ancestry.ca for details. Terms apply. Were people buying bonds as an investment or were people buying bonds in order to be patriotic? Was it purely a financial decision? Not purely. It was patriotic because they could have gotten 5% returns somewhere else.

So they basically took 4% returns instead of 5% returns to help fund the war. But still, 4% returns in a world that you expect will have zero inflation is not a bad deal. If you can get 4% after inflationary returns, there's also no income tax for most of those everyday people. I mean, there was an income tax that gets initiated in that 19-teens era, but it's mostly targeting the rich, which is, by the way, another historical lesson. They always tell you they're just going to tax the people at the top. Yeah. And then eventually they keep moving the top down and down until it eventually hits everybody.

But they were like, there's going to be this income tax, but don't worry, it's only for the millionaires. And so for most people buying a 4% bond, it's patriotic. I could get a 5% return somewhere else. I'll do 4% to support the war. It's also a pretty good investment. And it was actually most Americans' first paper investment that wasn't real estate or real estate loans. you would have been much more common to find a person, say, in Idaho or Iowa or Ohio, would have been much more likely to have bought a real estate loan,

that is to say have lent out money for someone else's mortgage, which was a very common thing to do back then, than they would have been to buy a bond. So they're like, I'm going to get into the investment world, I'm buying a bond, and then they get destroyed by the inflationary experience. I think the thing about the Liberty Bond movement was we forget how, unified America was around that. I mean, church services were like, religious groups that didn't agree on anything else would

come and have like a joint worship service. And at the end of the worship service, you would buy Liberty Bonds. And then there would be like big rallies where like workers would be released from work early. Like, I'm going to let you off early. Go buy Liberty Bonds, then go drink alcohol. There was William Howard Taft's niece agreed to climb up a fire ladder. Every time somebody donated up to $500, she'd go up another wrong. And so, being bluntly, so that men could kind of look up.

skirt. Like this was very patriotic, depending on your definitions of patriotism. But like, people were eager to buy these bonds. But they also thought it was a pretty good deal. Did she have to cling onto that ladder for like hours? I think it was, I think it happened pretty fast. I think people were donating money as fast as they could. I also think they only let it go so high for obvious reasons. Yeah, these are the things you find as a historian. You're like, I've got to use that somehow. I've got to use it. That is going in the book no matter what. Yeah, I wondered that when I read it. I was like, how long was she on that ladder, right? Yeah, this is a logistical problem for a young woman.

But all this is like people were, whether it was in civic contexts, working class content, everybody was rushing into these things. But nobody thought they were going to lose their money. Right. And yet pretty much everybody, in fact, everyone who did lost money on that investment. Right. When did tips come around? Tips like that.

Yeah, the Treasury Inflation Protect Securities. Oh, I thought you meant tips at the, at a restaurant. Oh, yes. Yes, Treasury, Inflation Protected Security. I don't know that I off the top of my head know the answer, so I don't want to give the wrong answer. Yeah.

I think they are reaction to the inflationary 60s, 70s and 80s when it's like, why would I buy a bond if I'm scared that it's not going to track inflation? Yeah, yeah. I thought of it immediately because I recently bought a 30-year bond. Yeah. And posted about it. And like my comment stream was flooded with people being like,

why didn't you buy tips? Yeah. And so even now, the moment you say I bought a bond, everyone immediately thinks about the inflationary concern, which to me is fascinating. I mean, it's accurate. Yeah, it's one of those things that we've, none of us, have lived through a zero inflation world. Now, you and I spent a good many decades living through like 1%, 2% inflationary world. I mean, I remember when bonds were getting you less than half a percent, like a U.S. government bond at basically just over 0%. who would do that?

Many people did because they thought, well, it's safe, we're going into a world with zero inflation, and inflation came back. So none of us knows the future. And there are people who, and as it turns out, my working class grandfather

who drove a beat-up station wagon Sands Hubcaps was a child of the Depression. And he was obsessed with saving. Like he was terrified of debt, obsessed with savings. And when he got Alzheimer's, my family went to go meet and figure out, like,

how we're going to use Medicare to get him into the nursing home. And they were very surprised to find out that he doesn't qualify for Medicare. He's worth $700,000. And the degree to which you could have knocked my entire family over with a feather with that information, he had, without telling anyone, been buying long-term government bonds in the late 70s and early 80s with over half of his paycheck, because he paid off his house in six years and never moved and obsessively saved all of his life.

And so he poured all into these long-term bonds when they were 12, 13, 15 plus percent. And here we were in the late 90s, and they had compounded at that rate. There are times when people who find the crest of inflation lean into those bonds have done very, very well. Right. You recall even the book Your Money or Your Life

by Joe Dominguez and Vicky Robin, which was published in 1992. advocated a very bond-heavy strategy, which Joe Dominguez later then lost a lot of money because he did that. Yeah, he died in a really rough circumstance, both for health reasons, but also basically his fate in the bond market, which was, again, he was a product of the 60s, 70s, early 80s, when that was actually a really smart strategy.

This gets back to what always worked was always changing. For Joe Dominguez, what always worked was a solid faith in bonds to have a passive stream of income. And then it stopped working. even those things aren't that long ago, that something that everyone assumes has to be a certain way, doesn't have to be that way. Right.

What then, given what you've just said, one of the things that is new about this era of economic history are the number of people who participate in passively managed index funds. Oh, yes. That's un... I hate to use the word unprecedented, but that is unprecedented. It is, and I actually would love to pick your brain on this, so I might turn the microphone around a second.

I truly want to know what your thoughts are. I have index funds, be very clear, and I'm not offering anybody advice to get in or out of index funds. And I think they're an incredible revolution. And it's very ironically American revolution. They literally come out the year of the bicentennial in 1976. So it's a peculiarly American phenomenon that Bogle comes up with and others jump into. It actually starts at Wells Fargo, but it's, you know, getting past all the details, that the average everyday American could buy the whole stock market.

That was new in 1976. It was also a world in which less than 10% of Americans own stocks. It makes perfect sense. Right. You know, it's the ant on the back of an elephant. There's this massive market that does all the work of price discovery for you, and all you have to do is this small participant is buy the whole thing and let it do its job. Don't try to beat the index, be the index.

We don't live in that world anymore. Right. 60-something percent of Americans now own stocks, index funds depending, and there's a a tiny corner of the internet where there's a raucous debate going on and in academia about what percentage of the market now is passive? Is it teens? Is it 20s? Is it 30s? What do you do with active managers who are getting crushed and decide, well, I'll just act like the index. And so they do what's called shadow indexing. Basically, you put your money with them, but then they basically act like an index anyway. Even Bogle said there is a tipping point.

Jack Bogle, who came up with the index fund. He said there is a tipping point where it If you get past it, the market goes, hey, wire, because there's no buyer. Because everyone is basically in the same index fund boat. So there's no one to buy when you sell, right, if you tip over. Now, to some people, there's some really wise people like Jason's Wig and Wall Street Journal and others who would say, that may happen in theory, but we are way away from that moment. I think they're probably right. But I call that whenever that happens, I call that when the index funds turned from an American Revolution.

to a French revolution, and people start losing their heads. Right. Because then things go haywire. Like same idea, same brilliant idea. But if the context changes, tea parties aren't guillotines. So once it enters a new era and a new phase and new participants and a new reality,

doesn't have to behave the same way it always did. My favorite example trying to explain this to people was something that happened to me, and I think it happens probably to you. It happens to everybody else. Which is, you've decided I'm going to be a grown-up, and so you go to a financial advice. because I guess that's what grownups do with money.

And they slide you what I call the chart. And the dates change, right, depending on who you are, when you go. Yeah. But the point is always the same. The one I saw the first time, and this guy thought I was going to be so impressed with this because I like history, it was like if you'd invested $10,000 in 1929 at the peak of the bubble before the Great Depression, and you didn't reinvested all the dividends until now, you would have $10 million. And he steps back and like waits for me to talk about like, wow, that's brilliant.

And I was like a severe disappointment. And it was like, houses did not cost $10,000 in 1929. So you mean to tell me somebody put their life savings into the stock market. It lost 80% the next year. They fought Nazis, feared nuclear holocaust, lived through double-digit inflation, cried when Ross and Rachel got back together. Never once touched that money. Did the macarona.

Yeah, all the things that we did in the night. 90s and yeah, never once. Right, yeah. That's not real life, right? Like somebody's got to live on that money. But the other point that I made to him is like, you couldn't do that. There's not an index fund in 1929. It doesn't exist.

To do it, you would have had to buy 100 shares of every stock in the index, which would have cost back then a million dollars, which is like 12 to 18, 20 million dollars today. You're already rich. You don't need money. And so, like, you couldn't do it. even if you got the returns, you couldn't reinvest them the way we do today. Like, you just click buttons on your Robin Hood app or Schwab or whatever, and it's like, sends the money back into the stock market.

That wasn't a button anyone had. You had to reach a threshold, and you had to tell your broker, then your broker took fees, and the fees were hot, like 5%. So that was a world that didn't exist. But we have this illusion of history that isn't the real history. Right. And then the issue is, when you make that comparison, but you strip out all of that context, it's not a fair comparison because you're...

It isn't. Because you're on the front lines of all this. I'm just curious like what your thoughts on all this, with this shift to index funds and how people have rushed in. And I mean, it is an incredible invention. Where do you see it fitting right now in the real world? Yeah, you know, this is a topic where I have more questions than answers because I've wondered this for a long time.

We talk about the Great Depression and how severely, to make an understatement, how severely that impacted people. and yet market participation at the time of the Great Depression was incredibly low. And as you just said, even in 1976, when the index fund was invented, market participation, even at that time, 50 years after the Great Depression, was still 10%. And now what we've seen, we've got fee-free trading. Like, even I remember e-trade charging $14.95 a trade. Yes. And that was a revolution.

Like just $14? Yeah. People were blown away. Right, right. I remember 2008 paying, I think, $7 or $8 per trade at E-trade. Yeah. And people give Robin Hood a lot of grief. I know there are a lot of anti-Robinhood people out there because it encourages trading.

But Robin Hood is the reason we all have fee-free trades. Yes. And that wasn't until, what, 2012, 2013, 2014, somewhere in that zone. Oh, extremely recent. Yes. Yeah, 2015. Somewhere in that 2012-15-ish era. And so what we have right now is zero cost trading, fee-free trading, which means there are no barriers to trading, which is great.

But it means market participation is a heck of a lot higher. And more people are going into index funds. And now with the 530A accounts, we now have this entire class of babies, babies born between 2025 to 2028, who are all investors, which is, again, great, but what's going to happen with the, what do we call them, Gen Beta? I don't know. I don't know. But they're richer than we were when we were infants. Yeah, exactly. So what are we going to do with all these, like, wealthy infants? When Gen Beta grows up and they have astonishingly high record numbers of market participation, I mean, there are a lot of different ways that it could go, because on one hand,

one thing that I have often thought about is the discrepancy between, economic data and consumer sentiment. That is probably the single question that has occupied my mind the most this year. Because we have a stock market that is going gangbusters. Every shred of economic data is like bull run, bull run, bull run. I mean, from 2009 through today, with the exception of a minute in 2020, we've basically had a non-stop bull run. We're living in year 15 of what is a 15 year bull run.

with the exception of like a fraction of a second in 2020. You're coming on the heels of this incredible bull run. Unemployment is at record lows. You have all of this very, very positive economic data. And yet the overwhelming sentiment is pessimistic. I've thought a lot about how to square that circle. And I think part of it is this K-shaped. Some people are asset holders and some people are not.

And if you were an asset holder, particularly if you held, if you started a 401k or an IRA or best of all bought a home prior to the pandemic, you've seen some real gains. And you might only be 29 years old, but even at the age of 29, prior to the pandemic was only six years ago. So you could have been like three years deep in building assets, even pre-pandemic. And so even people in their 20s, in their late 20s, could still have seen some huge gains if you owned assets.

And so I've kind of long held this hypothesis that what we are seeing is the difference between people who own assets versus people who don't, particularly if they acquired those assets pre-pandemic. And so the optimist in me wants to say, all right, now that we have these 530A accounts, now that we have a whole generation of babies who are asset holders, maybe that means that bifurcation will no longer be there. Maybe it means we just create this generation in which everyone holds assets, and so everyone participates in the upside. That's what the optimist in me wants to say. But then, you know, I hear the warning about what's going to happen if we be that tipping point of index fund holding. I don't know. I will tell you my gut instinct, which, you know, isn't necessarily advice anyone should.

This is not advice, no much follow it all those things. But my gut instinct is this will get better before it gets worse. I do think there's a long runway, and there's a lot of running theories about why we keep staying in this everything bubble. You know, Jeremy Grantham keeps telling us it's all going to pop, and then it keeps not popping, and here we are, you know, 20 years later, still waiting for it to pop again,

and it would just, and like what's going on, and plenty of people have pet theories on this. But without saying one thing explains at all, I do think this explains a lot of, or part of, why we keep having such a resilient market. There's so many more people who are asset holders, and every single week, another billion dollars of passive index fund buyers

enter the market from everybody's paycheck, right? Paycheck, and especially after the Save Act, where it's like you're automated in, so millennials are saving at higher rates than ever, in part because they've seen some of these anxieties, but also in part because they're automated and at work. And so every Friday, a billion dollars flows to Wall Street and says, buy more index funds.

and that has created a next marginal buyer for every single day or every single week. I would not panic about it. I really don't. Now to this like meta point about it, we're all, everyone who thinks about this is trying to square the circle. Right. Like, why is everyone so down about an economy that is historically doing fine? And, you know, I don't have the magic answer either. I love Nick's, Nick McGuilly.

Nick McGuilly. Nick's article on like, there's. they didn't make more MX lounges, which I think is hilarious because I was in an MX lounge. I'm very new to being rich. This is a very new experience for me because I did not come from where the money is. Like rural South Carolina is not where they meant millionaires.

All the trappings of it are new to me. And so I end up in an MX lounge, and it is packed. I mean, standing room only millionaires, and a seat comes open. And I watch multiple women, one of whom I'm married to rush for the open seat and I watch a woman take her never full bag

you know the big Louis Vuitton and she hurls it out in front of the other women and it lands on the seat to like claim the seat and I remember when I read Nick's article going that makes sense right so a lot of people have come into money but we didn't make more of the things that the money buys I do think that's part of it

I think you're right another leg of that stool is there are people who aren't asset holders and so they're seeing this thing take off and going, well, I'm not on that ride. Historically, though, most Americans weren't on that ride. We forget that 100-something years ago, most Americans were renters, not owners.

Most American real estate was rental real estate. So if you go to like Muncie, Indiana, kind of ground zero for Middle America, most of the homes in Muncie in these famous studies of like, what is Middle America like in the early 20th century? Most of the homes are rental properties. It's like most Americans weren't asset holders,

and yet they were more optimistic about the world they were in, which was much harder to live in, much harder to succeed in than we are. I wrote an essay on it on my substack called something basically along the lines of like, it's never been better and everyone is miserable. I think everyone is trying to figure this out. But I think you're on to at least a big part of why. Right, right. And to your point about the Amex Lounge is mass affluence, that's the term for it.

It's a relatively new concept. We now have acronyms The Henry's, the high earners not rich yet There's the mass affluent It's like this new category of people Who I guess the bar just keeps rising The bar keeps rising

And the marginal utility between mass affluent versus truly ultra wealthy Like that marginal utility kind of decal Like what's the difference between one bag versus another bag? What's the difference between I suppose in terms of the comfort and convenience of your travel, that's where I see the greatest utility.

You know, flying commercial versus flying private, for example, or even a lay flat seat on an international flight versus a not lay flat seat, right? Like, I suppose I can see some real utility there. Beyond that, baseline is already so comfortable that there's not a whole lot left to aspire to. Right. Yeah. In a world where everyone is telling you it's getting worse, I would argue his story. historically, it's never been better.

It's never been easier to get ahead. And that gets me in a lot of hot water with people when they hear that argument. But I just argue historically, if I could take you any win, not anywhere, but any win, you'd rather be 30 right now than 1981 when inflation is mid-double digits. And a brand-new mortgage in 1981 cost 52% of median household income. That's a husband and a wife working, takes over half of the paycheck to buy a new house. That house, by the way, is smaller, you know, not well insulated, all these things. I can take you in every era and show you what it was actually like to live a life, and you would pick being 30 right now.

This is a wonderful time to be alive, but we have this, this, I call it big woe, this despair industrial complex. Well was me, well was you, no, you know, that's very much incentive-based. There's no clicks for journalists. There's no votes for politicians. There's no tenure for an academic like me, like running around telling you the world is getting better. But like I can have those things if I tell you it's getting worse. My incentive is to tell you it's bad. Their incentive is to tell you it's bad.

You are actually, if you're listening, you are actually penalized for listening because you're more likely to go, well, I can't get ahead. So you're less likely to take the steps that you actually need to do to get ahead. Now, that's been forever. I can take you to the 1600s and show you people saying this

and people going, oh my gosh, I can't get ahead anymore. You know, I showed up to America too late in 1676. I can show this to the 1800s. I have a book on my shelf. Remember Howard Ruff? Do you ever remember? You ever remember? He was a gold bug from the 80s.

He had a book sold 100,000 copies in 1984 saying the baby boomers can never retire and the middle class will be gone by 1992. And it sold almost 100,000 copies. So like it's in every era. That's not new. What's new is the amplification. And I think when COVID hit, not only do we have it in our, you know, buzzing in our pocket and on every screen, but we also took the time to really listen.

And we saw a world that had for the first time in our lives really broken down and we didn't know what it would look like. And I think that just turned the dial to 10. And so something about Big Woe's microphone has just gotten louder and louder and louder. And people are convinced 60-something percent of kids under the age of, I think, 30. So not kids, but young people under the age of 30. Say the American dream is not possible for them. Statistically speaking, like six in 10 children born in the bottom get out in America. Now, it's not perfect mobility, which would be 8 and 10.

Still a lot. Like, historically, it's actually more than it was in the 1800s. One in 10 go all the way from the bottom, all the way to the top. And that, by historical standards, is crazy. And there's a lot of places of the world. People could not fathom one in 10 children born at the bottom getting all the way to the top. We have more mobility than we think we do. And I worry about the pessimistic age we're in is not helping anybody.

Can you build out for anybody who's listening to this right now who believes that that pessimistic argument, can you build out that counterpoint for them? Because you mentioned 1981 median household income, 52% of that went towards that home payment. That new mortgage, yep. That new mortgage. And that's in part because mortgage rates in 1981 were, what, 18%. Yeah, it tops out just under 20.

Yeah. I mean, can you imagine? Like, people are getting at six and a half a day and thinking that it's, you know, how had this happened? Well, this is actually slightly below normal. Right. Yeah. But when you point out that today's mortgage interest rate

is historically quite normal. People are very quick to say, yes, but look at the price of housing. Yes, exactly. So today's mortgage interest rate is layered at top high-priced housing. So give us the argument as to... Yeah, and they're not wrong, by the way.

These are historically high at home prices. Let's take the issue of housing first and then like the broader economic, like optimism second. Like on the issue of housing affordability is a real problem. House prices are way too high. I wrote an essay on my subset called, please make me poorer, or I wish I was poorer, because I own a lot of real estate. I've been millions of dollars in real estate, and I would be happy to get poor right now,

because I want people to build more houses. I would rather own a smaller slice of a bigger pie than the current slice I own. To do that, we know how to do it. Now, why do we know what to do? Because this is neither the first nor the worst housing crisis we've ever had. In 1948, statistically, the housing shortage was double today's, double. so much so, a young man comes home from World War II veteran, and he decides to run for Congress.

And his number one platform issue is the housing crisis in America and getting more housing, especially for young people of his generation. His name is John F. Kennedy. That was what got him started in politics. And we're seeing this politically animate this generation now. The 1890s, the 1870s, in New York, it's like every 10 to 15 years. Like there's always a housing crisis in New York,

but there's been national ones as well. We know the solution is build more houses. Like every time we've had a crisis, we've built our way out of it. And I think one of the things that's happening with the NIMBY movement, not in my backyard, is like they have ground that to a halt. And then politicians have come along from both ends of the political spectrum, who are pointing out a very real problem and all giving you very bad solutions. Right. The solution is to build more houses. That's how we got out of it in the 40s and 50s. That's how we'd have to get out of it today. So we can get out of it while you wait for the politicians to save you

and get comfortable, what are you going to do? And so what I especially talk to young people about is one of the clear lessons of history. It is not what type of economy would you build? It's what are you going to go build in this economy? Because the goalposts are currently set where they are, you have the ball where you are in the field, and you have to run the play, and you get one lifetime to do it.

Really, statistically, you get two lifetimes. Yeah. Right. Your ancestors, like the life expectancy of the old West was 45 years old. So you're getting a little about two lives. Was that skewed by child mortality, early childhood mortality? It is somewhat skewed, but even the life you were expected to live once you hit 18 was still dramatically shorter than it is today. And in fact, our stats today, people often say, well, Americans die before Europeans. It's actually because of guns and automobile accidents, which disproportionately skew young. If you survive into your 30s, you're highly. likely in America to live till 87.

I'd heard also that because we have a declining life expectancy as compared to a decade ago, that obesity and fentanyl were major drivers of that. Yes, I'm a big, here's a pivoting to optimism. Here's one of my big optimisms on life expectancy. Waymo and Ozympic to the rescue. Because obesity is one of our overarching problems in American society. That seems like we have a solution now, yay technology. And automobile accidents are one of the reasons,

Americans die younger than everywhere else in first developed world countries. I've been in a waymo. I love them because it's clearly better than what my previous Uber drivers were doing. I have held tightly to both sides of the car hoping we make through this Uber trip in New York. Waymo seems like it gives an opportunity there to lessen mortality rates. Do you know who the number one attacker of Waymos are right now in the lobby industry? Hit and run lawyers. the law lobby is against them

because this is their whole bread and butter we make money by all these mistakes and people getting hurt anyway moving on to like the broader optimism everything that it takes to get ahead in American society with the exception of housing which will grant and we need to solve that

everything is easier to do today than it was in previous years we just talked about it's cheaper to start investing you can invest when you're a baby your wages are higher and I say that and people say oh no or not, you don't know, the rich are getting richer. I didn't say the rich weren't getting richer. I said the poor were getting richer. From the 1970s to now, wages are up 50%. Now, nobody believes

that because nobody hears that. Even left-leaning groups will tell you they're up 29 to 30%. And that's like, they don't even want to admit it, but they're like, yeah, I guess you've got to admit somehow that wages are up. Wages are higher in the United States. Is that inflation adjusted? Inflation adjusted. Inflation adjusted, they're up roughly 50%. $37 a day is usually the line, not for poverty, but for like a survivable life, right? Like be a little above poverty you can make due with $37 a day. A higher percentage of Americans live on that than in Great Britain, France, Italy, Japan. Americans don't understand how wealthy we are.

It's just the water we swim in. Right. And so the access to markets is cheaper than ever before. We have an unemployment rate that's in low single digits. You can move. Like one of the primary ways to get ahead in America was mobility. It once took the U.S. Army two months to go from one coast to the other. It was the first time the U.S. Army had ever tried to go coast to coast.

It took them over two months. You could put everything you own in a U-Haul right now and be on the other side of the country in 48 hours. You live in the largest, most successful free market zone in the history of the world. Like let that sink in the history of all of human life. There's never been a bigger, more successful free market zone than the United States. There is an opportunity for you somewhere. You might have to go get it.

It's probably not found on the couch you're paying 20% interest on. So you might want to get up from that. But if you are willing to get up and go after it, the opportunity is historically incredible. Often when I make the optimistic case to friends, their response is what about income inequality? How would you address that? So I am less animated by the inequality debate that I'm supposed to be. In part, that's because I've been on both sides of it. So, you know, my dad made $14,000 a year, and my mom stayed at home, like, trying to raise us.

Like, my dad crawled, it was an electrician. He crawled under mobile home, expected electrical wiring. I come from the middle of nowhere, South Carolina. I never thought about money because nobody I knew had any money. So, you know, where I came from, our parents did not dream we would. get rich. They dreamed we would not go to jail. Having been in a world that didn't expect to make any money and then actually having moved through the middle class and like some level of financial success, my view is what is the quality of life with the people at the bottom? And overwhelmingly,

it's better and better and better and better. Eliminating poverty was literally not a goal anyone had ever stated until about 100 years ago. Like it's about 100, 110 years ago when the first people stepped in, could we end poverty? Is that something we can even think of? Because poverty was so pervasive. Roughly one in three Americans in 1920

was at or below the poverty line. One in three. This is before the Great Depression. One in three. It's still almost, I think it's like one in five, right around 1950. Today it's just over 10%.

So poverty is going down. Jeff Bezos did not take money out of anybody's pocket, but there's less and less people below the poverty line. So I don't personally get animated by this sense that someone somewhere is wildly wealthier than I will ever be. What I get animated about is, is the life of the people at the bottom getting better, and are there opportunities to have a better life?

getting more numerous. And historically speaking, like back to the every win, if I take you to every win in American history, the opportunities for the people at the bottom are better today than they've ever been. In fact, if you took all of Amazon's shares that Jeff Bezos owns, and you sold them tomorrow,

and pretend they won't go down in value, which they would, because you're selling everything at the same time. Right. Every American gets roughly $4 to $500. Like, you're just going to distribute every penny of Jeff Bezos's wealth to every American,

all get about 500 bucks. Has Jeff Bezos made a $500 or better impact in my life? Absolutely. Like, I remember when you had to go to the store and they didn't have the thing and then you had to go to the other side of town and they didn't have the thing and you had to come back without nothing and you've lost four hours. Like, I've absolutely lived a better life because Jeff Bezos came up with Amazon. A lot of people have found work. There's a lot of people who talk about inequality, who are themselves really not from the working class. I think you're incredible. You're increasingly seeing this right now as the, and again, I try to stay apolitical. Right.

Because I tend to think of like horseshoe theory. It's not left and right. It's like a horseshoe and they bend. And so like the people on one extreme and the people on the other stream look very similar to me. Yeah. When you know, like you strip apart like what hat they're wearing. They all kind of have a lot of similar ideas. And I find a lot of people who are kind of in the DSA world tend to be upper middle class.

They tend to have gone to college. They tend to have read a lot of marks, which I know I used to assign marks as a college professor. but they actually have very little experience with the actual working class. And if you actually go talk to most working class people, what they want is a fair shot at a decent life. And believe or not, that is still on offer today. Much more so than the press would have you believe. And so I'm not animated by the inequality debate,

which I see is coming from a group of people who are themselves relatively inexperienced with what it means to live a working class life. All of that is a way of saying, inequality to me is the secondary issue of the bigger issue, which is is the life of a person at the bottom getting better and are they getting more and more shots to get to the top? Why is there a growing divide between the perspectives of the college educated versus the not college educated?

My instinct is that we have overproduced elites. And this is not my theory. I think this is a theory that's floating around right now pretty actively, this idea of like we overproduced elites. We had all these incentives to go to college. Not only that, we had a booming economy where you could actually decide, I don't want to do maybe an engineering degree.

What I really want to do is kind of make a difference in the world and because of the affluence of my family and the boomingness of this economy, I can probably get this advanced degree in this relatively unuseful field and still go out and make a difference in the world. There's just only so many of those spots available and the more and more people who are promised,

and I do wonder to the degree to which there's a lot of buyer's remorse from the people who were told this was their way to kind of a useful life in a thriving society, only to find out that they're working two part-time jobs with a master's degree, and that can animate a lot of people

to thinking, like, I'm part of the working class. You probably are not if you have a master's degree from Columbia. Like, you're probably not, but you feel that way. You feel like you kind of were downwardly mobile. And I think what we have is a downwardly mobile set of very angry people. And by the way, this is usually historically where most of those types of movements come from.

If you go back to study like communism in the early 20th century, if you look at, I mean, even in Cuba, like in China, like most of the people actually leading these movements are not themselves from the bottom. They're downwardly mobile frustrated elites. And they see their struggle as kind of a global struggle against the people. this unfair world they've encountered. Now, that's way outside of my area of expertise. I don't pretend to be a scholar on that. But that is one of the baseline truths of those kind of political agendas is they tend to be fomented by elites on behalf of the working class.

They would argue that that's because the working class is unable to foment their own revolution because they're too busy working. Yeah, I've seen some pretty angry working class people before. I don't know that that's true. Well, I guess historically, have there been uprisings that genuinely did come about from the working class? Because if so, that would disprove that theory. Well, it's interesting to me that, like, we're seeing so much of, I think it was Tyler Cowan that said, like, we're living in an era when all the bad ideas showed back up at the same time. Populism is arising and, like, you know, socialist ideas are kind of rising all in the same basic historical moment.

But then I got to think about it was like, actually, if you go back, there was a lot of conversation. in the late 19th, 30th, and 20th century, that populists in what we call today the flyover states, they weren't flying over, there wasn't that many airplanes, but in kind of the West and Midwest, that populists, agrarian populists, and urban progressives were a natural coalition politically. And what they found is they were very awkward bad partners,

because when you got out outside of cities, like what it meant to have an agenda for everyday people, didn't look the same. I can't think off the top of my head of a highly mobilized political movement of the working class for the working class that was entirely kind of the brainchild of the working class. I think it tends to be something that elites

bring on offer and say get behind this platform. And that makes for kind of awkward bedfellows. It always has. And a lot of this gets into like all kinds of the complexities of the histories of regions in America. So I mean, this may be more detail than anybody wants. But like a lot of times these foster racial antagonisms and class antagonisms and then these things kind of war on each other. But they never end anywhere good. What tends to be the best thing for the working classes of booming economy over and over and over and over again.

It's when we have an expansion of the economy. We have more jobs than ever before. More people have uplift. we're living in an era when like we actually have a lot of those things and I hope we don't screw it up was prohibition a working class no it was no prohibition was an elite like led by especially religious elites especially led by business leaders who wanted a more sober working class huh they didn't want people showing up to their factory jobs a little bit tipsy and getting themselves hurt in the equipment and then shutting the line down, which tended to be, I mean, they were both humanitarian about it,

but also like this is ruining my productivity. Where's my sober workforce? That was very much an elite reform. Wow. I did not know that. Yeah. I'd always heard that it was grassroots. And I knew it had close ties to the women's suffrage movement.

Right. Like, I had always heard that it was wives were tired of their husbands coming home drunk. And so it was a grassroots movement. The women's advocacy part of this, of that movement, is true, but even those women tended to be themselves somewhat elites, you know, like which women have the time to kind of take on that mantle, right to your earlier point. But no, a lot of the funding for it was from the business community that really wanted to sober up that American workforce. And historically, Americans spent, what, four times more on alcohol than they do today?

Yes, we were wildly more drunk in the past than we are today. In fact, there's actually a pretty interesting historical argument that Prohibition worked more than we think it did. Believe it or not, You take the line of prohibition, that's about the most Americans ever drank. And then when it becomes legal again, Americans just don't drink nearly as much as we used to. Who knows all the reasons for that? But a large part of it was the whole generation went a long time without having a lot of alcohol. And so a lot of the social traditions built around that, they also became kind of like, oh, well, that's something we don't do.

Right. It was a sign of elevated class that if you did drink, you drank kind of socially, the idea of social drinking, but that it wasn't kind of the, that was something maybe the working class did, you know, too many beers, you know, too raucous in the evening. And so there were all these reasons that people, when it became legal again,

even when people embraced it, there were still, there were now kind of like new lines that you didn't want to cross that in the previous eras would have been normal. Right. As a percentage of income,

I remember you saying, today it's if you want to save, you know, it's don't buy lattes. Yes. But back then it was don't buy beers. Oh, yes. So there's a whole, there's a whole literature of David Buck's the latte factor argument, right? The latte is what's keeping you from your million dollar retirement.

And I, by the way, all props to that book, because it's been a lot of good in the world. And a lot of people have embraced it and used it. And that's been a great tool for them. And so I've no way disparaging Bach or the book. However, there are plenty of something factors in every era, like this idea that like if you just stop spinning on X, you would then compound your way to wealth is very old. And there's a pamphlet from the early 1900, like 1905, 8 somewhere in there, that says basically, if you stop drinking this many beers,

which it was like, you're drinking four beers a day, guys. If you cut out the beer and you invested that money, at this point, it was like in banks for like, again, back to a no inflationary environment. Like if you got like 5% returns with no inflation, that would compound out to you could buy a farm in like, I think it was like 15 years. So this was like the beer factor before the Lante factor. We see this over and over and over again. But yeah, people were drinking a lot.

At the point that if you just stopped drinking the beer, you can be wealthy. That was a lot of beer. It was also more expensive. It's also gotten a lot cheaper to make alcohol than it used to be. We wildly underestimate how expensive it was to live a life. In 1870, 91 cents of every dollar, an average person made, went to rent, clothing, food. Just those things.

Not vacations, not education, not leisure, not hobbies, nothing. Food, rent, clothing. Clothing was wildly more expensive. The average, one of my favorite historical statistics I've ever read, the average American in 1870 owned one and a half shirts. I don't know how they were able to come up with that, But I like verified it before I put it in the book. They took all the garments available for Americans,

divided them by the population, and it came to 1.5. And that was actually pretty normal in that Americans would talk about their wardrobes as you would have like one set of clothes that you were to work. One, one set of clothes. And then you might have, if you heard of the Sunday best,

this idea, you might have this one pair of clothes that if you were going out on a social occasion, you know, religious events, showing off your children to potential mates at some kind of social party, like you would have maybe one night, set of clothes. But many people went to their whole lives wearing the same shirt, wearing the same pair of pants. You might have a second shirt if you had a little extra money. So it tells you how

expensive clothing was and to make, to repair. A lot of women's lives were spent like repairing clothing because it was the only shirt that dad had to go to work in or that the girls had to go to school in. The idea that you could walk into your closet, and I challenge anybody to go to this right now, go into your closet and just count. How many shirts do you have? How many pants do you have? How many pairs of shoes? I've got a buddy of mine who is a shoe collection,

a sneaker collection. And I bet most people hearing that go, well, of course, that's a cool thing to do. And there's a certain generation that feels like sneaker collections. Of course I'd have one. There's even a term, sneaker heads. Yes, yes, exactly.

This is not something anyone would have understood a hundred plus years ago. And so we live in an air of so much abundance and it's just the water we swim in. And so we don't pay attention. Isn't there the Mississippi has like the same GDP of France or something? Higher. Higher.

Higher. There's a debate on Twitter right now roaring about this because a bunch of pro kind of Western Europeans are like, this isn't true. It's absolutely true. The GDP per capita of Mississippi is higher than Great Britain, France, Japan, Italy. If any of those countries came into the United States

is a state, they would be 51, 52, 53, 54 in wealth. Now, people like, oh, but the quality of life. So there's a whole other statistic you can run that adjust for absolutely everything. How much does everybody make in these various countries? How much leisure time do they have? You get government funded, tax paid health care in Europe. You have it privately funded here. You do all of the math. Americans still make more and keep more at the end of the work week than everywhere else in the West. Western world. I think there's like one, maybe it's like Norway. It's like a tiny bit ahead, but I like to point out, like that's the size of Phoenix, Arizona by population. So we're not comparing apples to apples. Americans are wealthier than almost any place on the face of the

planet. And we take it for granted. We just don't, we don't know, we don't think that it's abnormal to be this wealthy. It absolutely is. Given that it is so abnormal to be this wealthy, given that it is so abnormal to have this level of disposable income or discretionary income, and given that this is also recent, again, I hate to use the term unprecedented, but it is all relatively recent, what does that create when you've got a country this big with a huge population that has so much disposable income? It creates a lot of jobs in areas we didn't think we'd have. You know, what am I, if you follow the blog, Marginal Revolution,

One of my favorite themes that they have there is those new service sector jobs. Would they just find the most obscure way that people are finding work and things to do? There's an entire group of people who have found a niche in the economy helping pack for kids going to summer camp. Like, we will expertly pack your children's summer camp apparel so they have everything that they need for the affluent parent who does not have time for this. It's created a world in which you have jobs that were unimely. imaginable in earlier generations. I mean, if you want to go like way, way, way, way back in human history, like 1500s, nine out of ten people in any society have to work on food for the other, it's between like

90 to 97 percent. So like maybe three to ten people in the society could do anything else. Fight wars, be kings, you know, have specialty jobs. Now it's inverted. Like three to five percent of Americans work on the food supply and the rest of us work on everything else. So that world of abundance has created all these professional lives. Think about the ambitions we have, how many writers we have, how many entrepreneurs we have.

It's created a world where you can think of a way to do something to make money that would have been a fantasy to people not that many generations ago. And also this is partially, you come from the working class, especially the rural working class. My mother, my mother was the sixth child born to a house with no flush toilet. my dad also didn't have a flush toilet Yes, most of us don't remember how recently our own family histories walked into this world of abundance and I think we need a little more awe at it

at all the good that we've been kind of fortunate enough to show up in that's not a message that goes for clicks but it is a message that is historically true Yeah, it is a contrarian message well and I say as a caveat so my dad didn't have a flush toilet they had an outhouse, but that was not in the United States.

So I can't really cite that as part of U.S. history. But globally, globally even more normal, right? Like even to this day. But, yeah, not in Pickens County, South Carolina. Yeah, yeah. I mean, you know, with your story, with your mother, I mean, that is South Carolina. Like, that is here. It's not that long ago.

And you go to South Carolina today, and the economy is booming, right? Like, South Carolina's economy is on fire. And the whole Carolinas is on fire. The whole Southeast, as you know, I mean, you know, the Southeast economy is where live is a world my ancestors could only dream their great grain kids would get to live in and we're living it now are there problems of course there's problems like no nobody's going around saying there aren't any problems but I would defy you to pick their problems over yours you know I think you'd want to pick your problems and solve those and historically speaking the problems we keep facing tend to be more and more

solvable if we have the will to solve them one of my favorite historical speeches ever is frederick Douglas, the famous abolitionist. And the speech everyone knows, because we teach it in schools, and we should keep teaching it in schools, is called What to the Slave is the Fourth of July, famous epic American speech. Interestingly, though, in his own lifetime, not even close to his most famous speech, everywhere Douglas would go, people would beg him to give the same speech called self-made men. Now it's a gendered time. He means people. He doesn't mean gendered just to men. but in self-made men, the crescendo of that speech is, and he's a black man of the 1870s, speaking to a crowd that's half-white and half-black, and the crescendo line is,

maybe I can't be president, I can be prosperous. Our motto is go ahead. That is the speech that everywhere he went, people would holler from the back like it was a rock concert. Do self-made men. A audience that is half, half a half of, of them used to be enslaved, are excited about the chance to finally go ahead. And they are up against a far steeper climb than anything you are. I will ever even hint at. That spirit of like the go-ahead spirit of America, this idea that everyday people, given a fair shot, can go ahead is one of the most important legacies this country gives to the rest of the world. And it's the reason that Mississippi is richer than Great Britain, France, and Italy, and Japan.

I'm in Atlanta. There's a huge African-American middle class in Atlanta. My neighborhood is affluent and very racially diverse. The average African-American family today earns more and is wealthier than the average family in France. That's mind-blowing. But again, we don't understand how far we've come. It's easy to look at the past and misunderstand it and not let the pretext. present be the kind of miracle that it is, we live in an incredible time to be alive and not a

perfect time, just an incredible time. You mentioned earlier that many of the jobs that exist today could not have existed a hundred years ago because back then many more people were needed to work on the food supply. Right. And if you were to go back there and tell them, hey, guess what, in the future, as little as 3% of the population is working on the food supply, they might infer, oh, that means everyone's starving. Yes. Not, we're going to have this world of incredible food abundance where we have more food than we need. Right.

I'm not saying it's perfect food. You know, certainly. But like, it is a world they would not have understood. So given that, right now there's a lot of trepidation around AI. Oh, yeah. The major discourses will AI take all of the jobs? You take a look at the unemployment stats for people between the ages of 22 to 28, I think, or 22 to 29. And that age cohort, unemployment for that age cohort is outpacing unemployment for the general population, which means it's worse for people in their 20s as compared to the general population.

And rightly or wrongly, much of that is attributed to AI. That's certainly a contributing factor. Based on your study of history and based on your study of disruptive technologies, do you have any ideas about how this may play out? or is it truly different? The general rule of thumb in history is that most of the money in a technological revolution is made working in it,

not investing in it. I see people like rushing out to get an AI type of stock. And I'm like, I don't know if I'd do that. I'd probably like really bone up on my AI skills, especially if I'm younger. So let's go back through

the kind of the technological revolutions we've had. In 1800, the big tech revolution was canal building because here in New York, they built the Erie Canal, proof of concept. Now any city would the will be power can build a canal into the interior and everybody's going to get rich. And so in Boston,

in Baltimore, in Charleston, like every city is like, we're going to build canals. And all the investors in those canals lost their money. Like all of it was gone. They literally just stopped digging when it ran out of money years later. What year was this? This 1800. So the Erie Canal is what, 1800, 1801, so the early 1800s. And then every city after that rushed in the canal building phase. When was the Panama Canal? That was late 19, 32nd. into the early 20th century when it's like really thriving. And it's also, you know, obviously in Panama. But like people are like the canals are going to revolutionize the American economy.

There's all these dreams of canal cities all across America. None of it comes to fruition. Only New York really succeeds at this. Who made money were all the people who went and got those canal building jobs. There's suddenly this huge demand for people who know how to do this. And so wages shot up. We see this over and over again. You have these tech revolutions.

All these investors rush in. They're going to make all this money. They lose a lot of money. The future does eventually get here, but it tends to take its time, and it takes a lot longer than you probably think it will. The people who make a lot of money tend to be those who master the technology that is in that time and work in that field. So if you go to the computer revolution, everybody wishes they could go back to 1986 and

buy Microsoft at the IPO and get like 24% annualized returns. And that's great. Sounds awesome. But what I tell people is, if I took you to the stock exchange and I'd pointed all the stocks, which one's going to be the computer future? Well, there's Atari, there's Commodore, there's Lotus, there's Mips, there's Wang, all of them go broke before the future gets here. You don't know who's going to win the race to the future, but you can make a lot of money building the road there. And I think for young people, especially

today, like, I would lean in heavily, like if that's a world you can understand and inhabit, like the better you can get at being in that field so that you can adapt as it changes, you're going to make a lot more money being in it than investing in it. You're right. We do have a kind of interesting blip in time when young people have a higher unemployment rate than we tend to see compared to older cohorts. We had this once before. It's one of the reasons we have the push for the New Deal Social Security retirement structures.

We think of the rise of the New Deal and Social Security as like a wonderful gift to the work, you know, the aged working class. who are going to finally get to lay down their tools, actually go to the debates they're having. The New York Times does an expose in the middle of the Great Depression. And the point of the investigative reporting is not how evil we're treating these old people. It's all these old people who won't leave these jobs

so these young people could finally get their chance. Because the issue is like, you're holding onto this job, and there's some 19-year-old who really wants it. And so we've had some of this before. you know, what the political solutions are are beyond my capacity to comment on. But it's not the first time we've seen it. And I would really encourage especially young people

to go back to this idea of mobility. We're not as mobile as we used to be. In 1950, one out of every five Americans changed addresses every year. Every year. Every year. It's higher in the 1800s. It's one in three. 1950, it's still one in five Americans changes addresses every year. By the way, in New York City, where we are,

May 1st was called Moving Day. Every lease in New York used to expire on the same day. Oh, interesting. Today, when New York does its tenancy vacancy survey, it's a point in time analysis that's aimed at, it's always measured April 1st. Okay. So springtime.

Close. Yeah, one month off. That was when all leases expired. New York was a traffic nightmare. I know it still is. But it was a traffic nightmare of horse-drawn carriages or horse-drawn moving carts moving everybody's stuff because everybody was either going to cheaper rent,

getting closer to work, going to where an opportunity was, maybe there were more jobs on one side of the city. This was constant. Americans were mobile. Today it's one in 13, change addresses every single year, and a lot of the one is old people going to Arizona and Florida.

So the actual mobility rate of young Americans is less than it's probably ever been. And I really encourage young people to, to kind of step back and be in awe like there is this massive economy out there. I guarantee you there's an opportunity somewhere. You probably will have to get up and go where it is.

That stickiness of where the young people are today is interesting to me. I don't know that I have a solve or an understanding of exactly why. It seems like there's a kind of risk aversion, but I don't know. I don't have like statistics behind that. I know I was given a talk

and it's mostly like middle-aged people like me. So I had a lot of nodding heads. Yeah, sure. You know, the middle-aged guy, he's probably right. But I had some young people in the crowd. And one young woman said, you know, I hear what you're saying. You might not be wrong. But I was raised in New York.

Went to college in New York. I live in New York. If I were to take a job in insert state, you know, flyover state here, it would be like admitting to all my friends that I was never going to make it, never going to succeed. Even if that job paid well, meant I could buy a house, Like there was like a social cost that she would pay to moving out where the opportunity was. And I wonder about that because Californians who move out of state start saving almost 700 more dollars a month.

And their chances of homeownership go up 50%. So mobility, I don't know why it's become a problem, but I know it's probably part of the solution for what young people are up against. And they are up against something. I'm not dismissing it. Houses cost a lot. their student loans for a lot of them cost them a lot. I think you're seeing a lot of them wisely pivot to more state schools and more affordable educations.

But mobility is probably part of the answer. That's really interesting. We, again, just interviewed Kenny Burgess from the New York Apartment Association and one of the things that he discussed is in New York specifically how the policies entrench the incumbents because with rent stabilization, the longer you remain in a place, the cheaper. it gets relative to market rate rent. And so if you're in the first few years of living somewhere,

you're essentially paying market rate. But if you've been somewhere 10, 15, 20 years, you are now paying so significantly under market rate rent that you don't have any incentive to, not only do you not have incentive, you would be severely economically penalized if you were to leave that place. Yes. And that happens over and over every time this happens. There's this famous event called the People's Republic of Santa Monica. You've heard of this? There was a rent, like, uprising in Santa Monica, California, which was exorbitantly expensive in, I want to say it's the 60s or 70s when this happens.

I think it's the 70s. Somebody will correct me in the comments section for exactly when this happened. But it's this like, they literally have signs. The People's Republic of Santa Monica. We are going to take over Santa Monica. We're going to get rent control in Santa Monica and get living affordability under control.

And where's one of the most expensive zip codes in America today? They actually successfully get rent state. It's still there today. Rent control is still there in Santa Monica today. and makes it more unaffordable. If you were the first generation of people to get the rent stabilization or the rent control in place,

you win. Everybody behind you in line loses. And this is where I'll get a little antagonistic. You would struggle, not that you couldn't, but you would struggle to outworking class me, especially for an academic. Don't tell me this is about the working class. This is about you.

You want to get a rent-stabilized department. And even though every academic study, ever done shows that it's going to hurt the people behind you in line, you're going to get yours. I don't for one second buy that that is a policy that is for everyday people. It rewards incumbents. Now, it is good for real estate investors to know, though, for people who are involved in real estate investing,

you've got to be aware that that can happen to you. I think I have a line in the book that's like, rioting tenants is not in the drop-down menu of any real estate software I've ever seen. Right. But there actually have been rioting tenants in every era. And so in New York, in the 1800s, 1830s, I think, there was something called the anti-rent war. And so, like, all these New York rents, you know,

this is more rural than it was urban, but they like have a big, like, they elect a new president, a war chief that they call Big Thunder. This is, by the way, all Caucasian folks, this is not like Native American in any way, shape, or form, except kind of like tea party like they're dressing up. And they actually have a battle with the landlords, a physical battle with, like, the,

police and the militia and the renters and big thunder wins. And like, this is like, this is not something most real estate investors when they think, I'll buy a rental property. They don't think that they're going to end up in the anti-rent war fighting big thunder. But this is something that has been going on over and over. It is not new. We're in a battle that others fought before. Sometimes, many times, the desire for a solution is pointing to a real problem. We have a housing affordability problem in America. And New Yorkers have it worse than most. But we know the solution.

Long Island used to be all farmland. Like Queens used to be farmland. I remember reading somebody's like travel journal. They like hop across the sound to go to Long Island. And they're commenting on like how pastoral it is here. How green and how much farmland. And like half of the people you meet are just old businessmen on like a hobby farm. because they have nothing else to do.

And now it's all suburbia. It's all queens, right? It's houses as far as the eye can see. We built our way out of the last one. And the only way to get cheaper rents for everybody is to build your way out of this one. And I think that's the things like nobody really has the political will for that.

They'll have the political will for all the wrong solutions on both sides when we know the solutions. Build your way out of it. Supply. It's supply. You mentioned earlier. Very few people can outworking class you.

I guess I don't know too much about your early childhood, but I do know that when you were 40 and a professor, you were for extra cash slinging Christmas trees into trucks. Yes. This has been a long circuitous route to becoming a multimillionaire. It was not in the plans. I have failed upwards way beyond anything I ever thought I was going to do because I wasn't trying to get rich.

I was just trying to understand what American economic life was like. my father comes from a long line of people who voted communist in the South, which is not normal for those who don't know. Like, in the rural working class South, that's like risking your job if you tell anybody. Like, Dad, don't tell anybody that we'd. But there were these mill workers who had, much like the issues we're talking about here, had struck, it's a famous event in Marxist literature to this day,

called the Loray Mill Strike. And my great grandmother was born in the Loray Mill Village. So, like, my family were the strikers, and they lost. It was really bad. So I come from this kind of long line of kind of antagonistic, pretty angry, working class southerners. Because I didn't know anything about money, wasn't really an ambition I had, I wasn't pursuing it.

One thing led to another, and I got through, living through the 2008 financial crisis, I got really interested in, what was all this money advice? Oh, and you, by pure circumstance, Yes. Happened to sell a house right before the big crash. Yes. So I'm a lefties humanities professor. I come from the working class.

I read all the stuff. I'm getting a PhD in history. This is like 2006. And they said, well, the lesson of history is clear. Rinting is throwing your money away. And so instead of thinking like a historian for like even a minute, just nodded my head. And my wife and I signed a mortgage in which they let us use the student loans

to qualify as income for the mortgage. Wow. It's as bad as the movie say it was. And I remember asking the guy at the closing, like, how is this, is this, he's like, just sign. He literally just sign. And so it's like 2006. So fast forward to 2008,

a friend at church wants to offer a personal finance class for families. I'm like, I'm not going, right? I'm getting a PhD in history. What do I need to know? And he says, would you come as a favor? just so it's not an empty room. So we go and make us fill out a budget. I did not sleep the entire night.

Just pace the house. Who gave us a mortgage? We have no money. This makes no sense. And so we put a house in the market. It sold on a Saturday. And I remember that distinctly because the following Saturday,

my neighbor put her house on the market and it didn't sell. Like the last two people off the Titanic. And so we're like sitting in the metaphorical rowboat of the collapsing economy. And I'm going, I just got saved and it had nothing to do with anything

I'd ever read in history. There has to be a history here. And so I went to look for the history of like what were people told to do with their money and no one had written it. And so I just became obsessed with like, I want to know. It was morbid in a way of like,

I thought what I was finding was, you know, everybody was being scammed. You couldn't believe any of this stuff. Nobody really gets ahead. I mean, I was, all the things we're sitting here, I'm critiquing. Oh, I used to be in that team. Like, I changed teams.

That was your early hypothesis. Yeah, my hypothesis was it's a scam. Nobody really gets ahead. And it's meant for the working class to not look at their chains. You fast forward 10 years of research. And like at some point, you can't torture the evidence but so hard to try to make it say what you wanted to say. And I started to realize, like, people really did get ahead.

Some of this stuff really did work. And so I started like self-experiment. And one of the things that we were doing was trying to get out of student loan debt, you know, on a small salary. Being very working class, my immediate thought was not. earn more money, my thought or just make more money in my career and outgrow it, my thought was to go take a second

job. We forget how old side hustles were. Side hustles are not new. They are not a sign the economy is broken. People have been doing this for 300 years. There was a movement for palm hats. They were like woven palm leaf hats. They were kind of the antecedent to the

cowboy hat. But you had to hand weave them. You know, a farmer hat kind of thing. This became wildly popular. It was like popular as driving for Uber is today. Like families would sit on like, do this at night. Like, make more hats. Make more hats. We're going to sell some hats. People have been side hustling forever.

One of the things I really wanted to do was like take on any strategy I found in the past in the present. One of the primary ways Americans paid their mortgages off early, especially immigrant families, was to rent out the rooms in the house and use the renters to pay off the mortgage. House hacking. House hacking is very, very old. And so, bless my wife for a brief time, I was able to like have a house and, like, have a house and like rent out all the rooms in this house just to see what that was like. And you slept on the couch.

I looked on the couch. Now, so this is, to be fair, my wife had a job. We'd moved. And so I had this house. It was like, what do I'd do with it? I'm living here while I'm working. And it got to be so profitable. It's like, heck, I'll just sleep on the couch.

Like, what do I care? And so I sleep on the couch, rent out all the rooms. And that was, for a while, as I started to get to real estate investing, that was actually my only profitable house. Like, I was losing money. It's like the only idiot losing money on rental real estate in the, you know, mid-2010s. But eventually, that there was, you know, money in real estate

turned into that. So it was meant as experiment after experiment, after experiment, you know, there was a rage to figure out who could own the moon. Oh, yeah, you own some land on the moon. I was one acre on the Sea of Serenity. Because these two competing organizations still claim that they own the moon.

None of them have any rockets, but they claim they own the moon. And so I bought an acre on the Sea of Serenity. I have a huge, like, D of land, right, from one of them. And it was advertised as having phenomenal Earthviews zoned for tourism. And I thought, well, that's great, because if it was zoned for heavy industrial, you would ruin the airfews. And so it's, you know, yeah, it's one of those, like all these things that I would try to experiment

with. But the more I encountered this, the more I had to start running, especially real estate, like a business, because as you well know, real estate is not so much an asset class unless you want, if you want passive returns, then it can be an asset class. But if you want good returns, it's a business. You have customers. They're called your tenants. They have expectations, and you've got to meet those expectations.

And you have contractors and you have agents, you have all these people, these relationships, and I had to learn to run a business. And the more business people I met, the more business people in the past I met in their biographies and their papers. And the more I had to run a business, the more I realized you don't get rich solving your problems. You get rich solving somebody else's problems. Yeah. And I started to just realize, maybe I'm wrong.

Maybe actually most of the people who get rich are people who figured out how to solve somebody else's problem and they do it really, really well. and I started hating the rich a lot less than I'd been told to hate them. And then one day I woke up and realized maybe I was one of them. And that was an awkward moment to have as somebody who thought that it was evil to be rich and that you were somehow taking from somebody if you had it. And then I realized I haven't taken, I actually built something someone else wants and needs and I'm trying to serve that need.

The wealthier the economy gets, the more there is for everyone. The pie does grow. It's not one pie that you have to slice out for who's going to get what. It's a pie that bakes and gets bigger. and you want to like encourage that process. It was definitely eye-opening for me to start this journey thinking the American dream is a scam, nobody gets ahead, and to end on the other side of it,

not only living the American dream, but like trying to tell other people they can too, it was not where I thought this was going. To anyone who still believes the American dream is a scam, it's impossible to get ahead. Do you have any final parting words of advice? Yeah, no, I think it's a very easy and seductive thing to believe. because it makes you feel better about not having to do anything

because why would you do something that's going to fail? I tell people, in general, I can find people saying the American Dream is dead about 300 years before the phrase American Dream shows up, which is in the 1930s, interestingly in the Great Depression. But in the 1670s, the colonists of Virginia burned their capital to the ground,

but working class anger because they said, nobody gets ahead anymore. In the 1870s, there were these rallies with speeches, and they said the rungs on the ladder to success were sought off by the people who got here, just before you did. Like you showed up just a minute too late to live the American dream. 1940s, we see it again.

1980s, we see it again. Like every era is told they were too late. The system is broken. It's corrupt. You can't win. The only people who get rewarded from that message are the people telling you. It's not you from listening. It's them from telling.

And at some point, you have to decide, what are you going to build in this economy, not what type of dream economy would you build? You have more opportunity than your ancestors did, and they dreamed of a day you would have these kind of opportunities. So you don't get one American life you get to,

because they lived into their 40s, you'll live into your 80s, don't waste them. Beautiful. Well, thank you. Where can people find if they'd like to learn more? I'm happy to talk to anybody online. I'm on social media,

Josephmorebooks.com is my substack, where I try to write about an essay a month on some of these ideas of like history and the world of finance, and what does it really mean? And I'm on Instagram, I'm on Twitter. You can find me pretty much all those places. Excellent.

Thank you. Thank you so much for having me. It is truly an honor and a joy. When I first started in the research process, of course, I started downloading all the podcasts. You were one of the very top, and I really enjoyed listening and learning, and I have through the years recommended people

to listen to your show, especially who are interested in real estate and investing from a distance and like, oh, you should listen to Paula Pants. So the chance to have gone from, what is this world of capitalism? And how can I learn about it? To being here is wonderful.

and I really thank you for the chance. Wow. Thank you. Thank you, Joseph. What are three key takeaways that we got from this conversation? Key takeaway number one. The chart your advisor shows you describes a person that never existed. Every financial advisor has some version of this chart that's like, if you would have invested this much back then and never touch it,

here's what you'd have today. And Joseph's point is that nobody actually lives that way. And no one could have because there was no index fund back in 1929. Index funds didn't exist back in 1929. So those like, well, if you had put all of your money into a broad market index fund, that didn't exist. You would have needed to purchase 100 shares of every stock in the index. You would have needed to manually do it. And that would have cost you a million dollars back then.

That's roughly 20 million bucks in today's money. and you couldn't just automatically reinvest dividends. You would have to wait until you hit a threshold and then call your broker and then hand over 5% in fees. The whole idea that you could step back in time and have done this thing that is available to us now, it's not a thing that actually existed.

The one I saw the first time, and this guy thought I was going to be so impressed with this because I like history, it was like if you'd invested $10,000 in 1929, at the peak of the bubble before the Great Depression, and you'd have reinvested all the dividends until now, you would have $10 million.

And he steps back and waits for me to talk about, like, wow, that's brilliant. And I was like a severe disappointment. And it was like, houses did not cost $10,000 in 1929. So you mean to tell me somebody put their life savings into the stock market. It lost 80% the next year.

They fought Nazis, feared nuclear holocaust, lived through double-digit inflation, pride when Ross and Rachel got back together. Never once touched that money. So that's the first key takeaway. Key takeaway number two. In a tech boom, the reliable money is in the work, not in the stock. So right now we're all watching the AI boom unfold,

and we're wondering what to do, how to position ourselves, what to invest in. Joseph's read on history is that most people aim at the wrong target. So he talks about canals in the early 1800s. So the Erie Canal proved the concept. Every city that had ambition started digging, and investors got wiped out. There were crews that literally had to stop mid-dig because the money ran out. The people who did really well were the people who learned how to build canals

because demand for that skill exploded. And he saw the same pattern in the computer era. Everybody wishes they could go back to 1986 and buy Microsoft at the IPO and get like 24. and get like 24% annualized returns. And that's great. Sounds awesome. But what I tell people is, if I took you to the stock exchange and I pointed all the stocks, which one's going to be the computer future?

Well, there's Atari, there's Commodore, there's Lotus, there's Mips, there's Wang. All of them go broke before the future gets here. You don't know who's going to win the race to the future. But you can make a lot of money building the road there. That is the second key takeaway. Finally, key takeaway number three. Pessimism has a business model. Joseph refers to this as the despair industrial complex.

The thing is negativity, you know, there is an inherent negativity bias that we as humans have. And for good reason, a survival instinct is to pay attention to negative news, right? If we were out on the savannah and the news was, it's sunny and nice today, that's great. But if the news was a saber-tooth tiger is coming, that's something we really need to pay attention to. And so we do have an inherent negativity bias that's part of the human condition. It's how we scan for threats. The problem is in media, journalists and content creators and influencers get clicks when they, we focus on negativity. Politicians get votes when they focus on negativity.

professors get tenure and get funding for their research. But the consequence of being surrounded by this surround sound pessimism is that when you deeply internalize that pessimism, you stop doing things that actually move your money forward because investing is by definition an act of optimism. Investing by definition is a bet that the future will be better than the present. you need to be optimistic in order to make money, in order to become rich. Optimism is a necessary prerequisite.

It is not sufficient, but it is necessary. We have this, I call it big woe, this despair industrial complex. Woe was me, well was you, that's very much incentive-based. There's no clicks for journalists. There's no votes for politicians. There's no tenure for an academic like me, like running around telling you the world is getting better. But like I can have those things if I tell you, tell you it's getting worse. My incentive is to tell you it's bad. Their incentive is to tell you

it's bad. You are actually, if you're listening, you are actually penalized for listening because you're more likely to go, well, I can't get ahead. So you're less likely to take the steps that you actually need to do to get ahead. Those are three key takeaways from this conversation with historian Joseph Moore, author of How to Get Rich in American History, which by the way is a very, very funny book. I highly recommend really enjoyed reading it. Thank you so much for being part of the Afford-Anything community. If you enjoyed today's episode, please do three things. First, we have a free workbook that helps you think through the five pillars of growing wealth, financial psychology, increasing your income, investing, real estate, and entrepreneurship. It's a free workbook, interactive,

fill-outable, downloadable, completely free. You can download it at Afford-anithinging.com slash F-I-I-R-E. That's F-E-W-I-I-R-E. Please download it, fill it out, the double-I-fire workbook. Again, afford-anything.com slash F-I-I-R-E. Totally free. Number two, please chat about today's episode with members of the community, afford-anthing.com slash community. Number three, share this episode with the people in your life, friends, family, neighbors, colleagues, journalists, politicians, professors, historians. People who love canals. People who cried when Rachel and Ross got back together.

Share this with all of them and more, because that is the single most important way that you spread the message of F-E. Thank you again for being part of this community. This is the Afford Anything podcast. My name is Paula Pant, and I'll meet you in the next episode.