A hearty welcome to “Grandma’s Wealth Wisdom” with your neighborly hosts, Brandon and Amanda Neely. This is the only podcast that helps you take charge of your cash flow and leverage your assets, simply and sustainably, the way Grandma used to.
Brandon: Hey, I’m Amanda Neely, and welcome to our Grandma's Wealth Wisdom, where we help you break through to a smart, stable financial future, with the tried and true wisdom Grandma used.
Amanda: Howdy, I'm Amanda Neely, and if you're catching this episode right when it comes out, Happy New Year. It's our first episode of 2022. Welcome to 2022 officially.
Brandon: From us, officially from us.
Amanda: Yeah. This is Episode 98 and we're going to be asking the question that's in the title. “Is 2022 the new 1922?” [00:55.0]
Brandon: Spoiler alert, though. We aren't going to answer that question for you, but we're going to tell you some things that were happening 100 years ago and their abouts and how that might affect you. We think you'll be inspired to reflect on where you are today because of this story, and you know what they say, those who don't learn history are doomed to repeat it.
Amanda: Funny you should mention that cliché, Brandon. I looked up the original source in the context. It was first used in a book called Life of Reason, or The Phases of Human Progress that was written in 1905 by George Santayana—sorry if I'm pronouncing that name wrong. He's a Spanish philosopher—and I thought I'd read the couple sentences that come before because I think it's actually pretty powerful, the context that he shares that lesson in, and, of course, he's a philosopher, so it's written in very philosophy ease. I promise it's short. Here we go. Quoting George. [02:02.8]
“Progress, far from consisting in change, depends on retentiveness. When change is absolute there remains no being to improve and no direction is set for possible improvement: and when experience is not retained, as among savages, infancy is perpetual. Those who cannot remember the past are condemned to repeat it.”
Brandon: Wow, that is pretty powerful, Amanda. Thanks for sharing that context. I've got another spoiler alert for you. At the end of today's episode, we're going to tease some very exciting news for this podcast and for our listeners in 2022, so be sure to listen to the very end to be in the know of what's coming with our podcast.
Amanda: Oh, yeah, and as you might guess, since this is Episode 98, we've been dreaming about Episode 100 and beyond and that exciting news is related to that. [03:02.3]
Brandon: For now, let's start with the story about 1922. The story centers on the state of Florida, but it's really a national story. In 1922, the Miami Herald newspaper was the heaviest newspaper in the nation, heaviest due to its massive land advertisement section.
Amanda: I think I remember reading it was as heavy as an infant. That's a big newspaper.
Brandon: Not heavy content. Heavy to read. Heavy in weight.
Amanda: Pounds, yeah.
Brandon: Yeah. Starting in about 1922, Florida experienced a land boom. No, new land didn't appear, but there were two important elements that inspired a massive shift and forever changed how the world thinks about Florida. [03:57.0]
Amanda: First we need to understand some of the context. World War I had just ended in November 1918. About 14 months later, a recession started that lasted for almost two years until July 1921—and if you're re remembering, we've talked a lot about 1918 recently because, yes, there was the pandemic of the Spanish flu that started in 1918 and returned in waves into 1920, about two years, if you're keeping count of Spanish flu and its waves.
The recession didn't actually start until January 1920, well into the pandemic and then outlasting the pandemic. Now, there were other factors like high unemployment as soldiers came back from war, looking for jobs. Some even say the recession was the result of unnecessary contractionary monetary policy by the Federal Reserve Bank—but we digress and get a little too complicated. Let's get back to 1922 just after this recession had ended. [05:01.4]
Brandon: By 1922, Americans had things like paid vacations, pensions and fringe benefits that were less widespread prior to them. There were also the automobiles, which gave the chance to travel to places like Florida during those fun paid vacations.
Amanda: There was also this widespread mindset of materialism and prosperity. It seemed anyone could become rich by investing in the proper instrument of instant wealth, and Florida land looked like one of those instruments of instant wealth. Plus, credit was easy to come by if you had a good job, so to buy that land, it was really easy to take out a loan.
Brandon: Thus began a new Florida with middle-aged, middle-class Americans and their families visiting. Journalists started reporting on stories of how land investors had doubled their profits within months. [06:00.0]
Amanda: We found this one story of an elderly gentleman in Pinellas County who was committed to a sanitarium, old speak for an insane asylum, by his sons for spending his life savings of $1,700 on a piece of land in Pinellas County, right where he lived. When the value of the land reached $300,000 in 1925, the man's lawyer was able to get him released and sue his children. Yes, you heard that right. This man took $1,700 and turned it into $300,000 through having land in Florida.
Brandon: Do you really think he got 300,000 in that time? That's a lot.
Amanda: I mean, I hope he sold it.
Brandon: That's a lot of money for that time.
Amanda: For those who don't know Florida very well, Pinellas County is right by Tampa on the west side. Clearwater is the capital or the county seat of Pinellas County, so a very hot area.
Brandon: Yeah, that man was the exception, though. Remember how the Miami Herald was the heaviest newspaper? Two thirds of land buying in Florida was sold by mail to speculators who had never actually visited Florida. [07:14.8]
Grandma always said, “Eat your vegetables. Look both ways before crossing the road, and never risk your financial future on elements of the market you can’t control.” That Grandma, always good for some tried-and-true advice, and although some of her wisdom seems to have skipped a generation, you don't have to be left behind.
Download “Grandma's Top Tips for an Independent Financial Future” absolutely free, when you visit Grandma’sWealthWisdom.com. Don't wait. Get Grandma's best tips today.
Amanda: This brings us to the other side of the story. In this creation of the new Florida lifestyle, a lot of people also lost a lot of money. There is an article that was published in January 2020, a couple years back, that was analyzing the Florida land boom and subtitled “The Florida boom of the 1920s and how it brought on the Great Depression.” [08:15.8]
Now, if the Florida land boom did or did not because the Great Depression is up for debate, but we do know a few things and we'll share those with you now.
Brandon: By 1925, 7,000 people seeking new life and a potential fortune arrived in Florida every day.
Amanda: But some of what was sold was not exactly what was advertised. What was dubbed as a fast-growing city of Nettie turned out not to even exist. What was built as suitable land to build a home and do some farming on turned out to be swamps, and so on and so forth.
Brandon: In time, nearly 90 percent of Florida's real cities defaulted on the loans they took to support the land boom and influx of residents, so Florida itself defaulted on loans because of it. [09:06.2]
Amanda: Yeah, the municipal bonds unheard of defaulting were being defaulted on as the boom turned into a bust. Here's a quote from a well-written article that we found and I loved the way this person wrote it. Quote:
“Entirely missing are the hapless (or, if you prefer, foolish, or credulous, or maybe just plain greedy) individuals who climbed aboard the bandwagon—earnest dreamers who thought they were buying a retirement haven on a beach but ended up with a patch of fetid swamp; small-time speculators who made some fast money, then crashed while reaching for yet more; the thousands upon thousands you can find lingering at the finishing line of any speculative mania, left holding nothing but scraps of worthless paper.”
Brandon: And included in that definition of “hapless” or, if you prefer, “suckers” are several developers who ended up broke. One who had an estimated net worth of $100 million in 1926 lost everything by 1930. [10:08.6]
Amanda: Will Rogers’ analysis of the Florida land Boom was that the powers that be, quote, “discovered that sand could hold up a real estate sign,” end quote.
Brandon: One developer of the day put it this way: “We just ran out of suckers.” In fact, by 1926, sellers were having trouble finding buyers. Then two major hurricanes hit in 1926 and then in 1928 and investors turned their attention to Wall Street, and we all know what happened there in 1929.
Amanda: What does all this have to do with 2022? We'll simply ask you, what is the new Florida?
Brandon: The truth is get-rich-quick schemes always exist and have existed in some way, shape or form, sometimes on smaller scales and sometimes on big large ones. You're probably bringing in several into your mind right now, as we even say that, and we're going to refrain from examples to protect the guilty, but we do want to make this practical for you. [11:16.6]
Amanda: Yeah, so here's the main question we invite you to spend some time answering for yourself. What are you hoping to solve all your financial worries? And what characteristics does that have that I shared with Florida from 1920 through 1928?
Brandon: The wisdom of centuries past is that no one thing can solve all of your financial worries, especially something that is outside of your control, meaning it can be affected by natural disasters, stock market collapses, city governments in the hysteria of masses, or I don't know, anything else.
Amanda: A Reddit forum.
Brandon: Yeah, a Reddit forum, who knows? Whatever.
Amanda: Yeah, a sub-question might be this. Will what you're buying into now have a market to sell to in four or five years, or even 20 to 25 years? Right? Just because everyone is buying it now, are they going to be buying it later when you're ready to sell it? [12:10.5]
If your answer is maybe, then you've got a Florida-land-boom-like investment, unless you're willing and able to hold it for however long it takes to get your money back and maybe even make a profit. That could even be a decade or longer. I mean, remember the stock market didn't recover from the 1929 crash until World War II.
I tried to find what happened to Florida land values after they crashed, after the boom busted in 1928, what happened to them later, and I couldn't find the answer in my own research, but I imagine they're probably similar to what happened with the stock market after the 1929 crash. I mean, who was going to be buying land in Florida during the Great Depression?
But World War II helped the stock market recover. I imagine, who was going to be buying homes and going on vacations in Florida during World War II? It probably took longer to recover. Are we willing to wait that long for whatever we're buying to actually keep its value or grow? [13:08.8]
Brandon: To wrap up, we don't share this to scare you, but like Grandma, we do want to give you a time-tested healthy dose of reality, so that you can make better choices for your own financial wellbeing. That's the point of even our own podcast. Now I want to go into what we are doing next. Here's where we get to the teaser.
Now, we're about to hit our 100th episode in February and we're thinking a lot about what we, Amanda and I, are really about. Sure, we love Grandma, but even Grandma did some things wrong. Yes, she did. In fact, the middle class of the Greatest Generation might have been the most susceptible to the Florida land boom and bust—so, we're thinking of dropping the “Grandma” part of our podcast name and to focus more on the “wealth wisdom” part. [14:05.0]
There's plenty of wisdom to thinking like Grandma, but there's also more wealth wisdom than can be encapsulated by just Grandma. We're going to share more in the 100th episode, so make sure you hit that subscribe button and share this with your friends.
Amanda: Ooh, I can't wait to share more. I'm so excited about what we've got in store for the year to come, and, of course, we've got one more episode before I get to do the big reveal. In the next Episode No. 99, we're going to be doing a recap of what we've learned thus far, so stay tuned and be sure to subscribe and check out that episode where we're going to share some of our best lessons learned.
Brandon: Which is a lot, so maybe it should be 99 things we learned and …
Amanda: No … no, no, no.
Brandon: I don't know. That's long. That's going to be a long episode.
Amanda: We could do that. We're going to just share the best, not all.
Brandon: Okay, not 99 things. Until next time, keep building your wealth simply and sustainably, so you can break through to a smart, stable financial future—and build your house on solid ground, not just on sand. [15:12.0]
Amanda: Or swamp.
Brandon: Or swamp. Yeah, let's not build your house on swampland.
The topics presented in this podcast are for general information only and not for the purposes of providing legal, accounting or investment advice. On such matters, please consult a professional who knows your specific situation.
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