Abigail Adams Beat Warren Buffet’s Rate of Return and Ben Franklin Loved Debt: Personal Finance Lessons From Colonial America
Many so-called timeless beliefs about money pitched by financial advisors today (compound interest, real estate, index funds, retiring early) are not timeless pieces of wisdom, but a set of ideas invented within the last century, mostly by accident. In fact, the biggest financial dangers come from building a financial strategy around government rules that seem like they’ve existed forever but can change overnight. In 1913, when the income tax was created, interest on debt was explicitly excluded from taxation. For 70 years, savvy investors borrowed as much as possible and deducted the losses. Then Ronald Reagan changed it in 1986, in one legislative stroke. Hundreds of thousands of investors found themselves buried under debt they'd structured around a rule that no longer existed
Today’s guest is Joseph Moore, author of How to Get Rich in American History: 300 Years of Financial Advice That Worked (and Didn't). We dig into the counterintuitive lessons hiding in plain sight across American history: why Abigail Adams was arguably a better investor than Warren Buffett; how Benjamin Franklin preached against debt while secretly building his printing empire on borrowed money; why one-third of American families once rented out rooms to boarders as their primary wealth-building strategy, until the government outlawed it; and how Dave Ramsey's entire financial philosophy was forged in a single day when the government changed a tax rule and wiped him out. Another lesson with modern parallels is that the FIRE movement — Financial Independence Retire Early — has deep roots in American history, but its most celebrated practitioners were almost always hiding a financial subsidy. Henry David Thoreau, patron saint of anti-consumerism, built his cabin on someone else's land and had his mother bring him food. He later returned to capitalism and ran a successful factory.
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