Last Cast Letter #35: 1926 vs. 2026

Hi All - Happy Saturday. It’s the last day of the month, which means it’s time for the Last Cast Letter.

I’m not a big Reddit guy, but last week a post on the site caught my attention. In r/RealEstate, user Prestigious_Mine_321 wrote:

The argument is that the 1929 stock market collapse was preceded not by a mortgage crisis, but by the Florida Land Bust of 1926. Real estate cracked first. Liquidity drained quietly. The broader market followed later.

I’m not sure I agree with the comparison 100%, but it’s interesting nonetheless. And honestly, I had no idea about “The Florida Land Bust,” so I went down a rabbit hole on my flight back from Austin, Texas, yesterday. It was a great way to pass the time.

And before we dive into today’s edition, I want to clearly state that I leaned heavily on AI during my 2.5-hour flight to both write and research this. I’m actually wondering, do you care? It’ll be helpful to know for other parts of my business:

Moving along.

When we think about a systemic crisis, a lot of us think about subprime mortgages and bank failures. This is what happened “last time,” so it’s fresh in our minds and an easy comparison. But financial crises rarely repeat in identical form. They reflect the leverage structures and narratives of their era.

The deeper I dove down this rabbit hole, it was remarkable how many parallels there are between now and then. All I could think about was the quote from Mark Twain: “History Doesn’t Repeat Itself, but It Often Rhymes”.

With that in mind, let’s begin with the boom.

Florida Euphoria

In the early 1920s, Florida became America’s speculative frontier.

Railroads expanded south, tourism surged, and Miami was marketed as a Mediterranean paradise. Investors projected endless growth onto swampland and sandbars. Optimism was not subtle; it was engineered.

Speculation moved at astonishing speed. Buyers put down small deposits and resold contracts days later without ever intending to take ownership. Some lots changed hands multiple times before construction began. The goal was not development, it was velocity.

Hotel lobbies functioned as trading floors. Artificial islands were dredged and pre-sold. Promotional brochures depicted glamorous resorts that existed only in sketches.

Fraud flourished in this atmosphere.

Charles Ponzi himself, already infamous for his 1920 Boston scheme, attempted to rehabilitate his image through Florida real estate ventures and was later implicated in fraudulent land dealings in Jacksonville. The environment was ripe for operators who understood that enthusiasm outruns due diligence in a rising market. When prices are climbing daily, skepticism is scarce.

By 1925, Miami building permits reportedly exceeded those of New York and Chicago combined. Property values in certain areas had multiplied several times over within a few short years. Taxi drivers and waiters speculated in lots between shifts. Banks extended credit on rapidly appreciating collateral. The boom had become self-referential, feeding on its own momentum.

It was not fundamentally about shelter. It was about perpetual appreciation. And like most speculative episodes, it looked unstoppable, until it wasn’t.

The Strain Beneath the Surface

Like most bubbles, the Florida land boom did not collapse because optimism vanished overnight. It weakened first, slowly, in ways that were easy to dismiss at the time.

By 1925, the sheer velocity of development began overwhelming the state’s infrastructure. Railroads, responsible for transporting nearly all building materials into Florida, became congested with lumber, cement, and steel destined for speculative projects. Freight cars sat idle in northern yards while construction sites in Miami waited for supplies. The physical capacity of the state could not keep pace with financial ambition.

The railroads eventually imposed embargoes on certain shipments into Florida to manage congestion. That decision, logistical in nature, functioned as a financial tightening.

Projects that relied on continuous material flow stalled. Developers who depended on rapid turnover to service installment contracts suddenly faced delays that compressed margins and strained cash flow.

Credit conditions tightened almost imperceptibly. Banks that had extended loans against rapidly rising land values grew cautious as transaction velocity slowed. Appraisals that once relied on fresh comparable sales became harder to justify when turnover decelerated.

Installment contracts proved particularly fragile. Many buyers had no intention of holding property long term; they intended to flip before the next payment came due. When resale activity cooled, those daisy chains broke. A missed payment in one link reverberated backward through the structure.

Defaults initially appeared isolated. But speculative markets are reflexive. Once the assumption of constant resale broke down, buyers became selective. Selectivity in a velocity-driven market is tightening.

Banks were increasingly exposed not only to developers but to local entrepreneurs who had borrowed against anticipated land profits. Small institutions, heavily concentrated in Florida real estate, carried balance sheets tied to a single narrative. When land stopped appreciating at exponential rates, loan books looked far less robust.

Speculative capital began retreating north. Northern investors who had treated Florida as a winter trading desk grew cautious as headlines shifted from overnight fortunes to stalled developments.

Liquidity rarely vanishes in a single day. It thins. It hesitates. It becomes conditional. When leverage, logistics, and optimism are all stretched simultaneously, it does not take much to break the system.

That “not much” arrived in September 1926.

Irrational Exuberance, Exposed

The Great Miami Hurricane of 1926 struck South Florida with devastating force. Winds exceeding 125 miles per hour tore through Miami and surrounding communities, destroying thousands of structures and causing widespread loss of life. Infrastructure hastily erected during the speculative frenzy proved especially vulnerable. Developments that existed mostly on paper were exposed to physical reality.

The storm did not create the bubble, but it punctured the illusion of inevitability. Insurance losses mounted. Investors who had treated land contracts as liquid assets suddenly faced destruction and uncertainty. Capital retreated quickly.

By late 1926, the Florida real estate market had effectively collapsed.

Two years later, in September 1928, the Okeechobee Hurricane compounded the damage. The storm breached dikes around Lake Okeechobee, killing an estimated 2,500 to 3,000 people and devastating agricultural regions already weakened by the land bust. Regional banks absorbed further losses. Economic distress deepened.

The 1928 hurricane did not cause the speculative collapse — that damage had already been done. But it ensured there would be no swift rebound. If the 1926 hurricane punctured the bubble, the 1928 disaster sealed its fate.

Three years after the first storm, the broader U.S. stock market would collapse in 1929.

The Broader Collapse: 1929 Was Not a Surprise

When the stock market collapsed in October 1929, it wasn’t a sudden anomaly. It was the inevitable release of pressures that had been quietly accumulating for years.

Speculation had become rampant across Wall Street and Main Street.

Investors, both institutional and retail (more below), routinely borrowed up to ninety percent of a stock’s purchase price on margin, meaning that even a modest decline could wipe out their equity and force liquidation. Rising markets made leverage appear safe. Slowing markets turned it into a trap.

Stock prices had drifted far above underlying corporate earnings. Optimism, reinforced by years of gains, overshadowed fundamental valuation. The market was no longer pricing productivity alone. It was pricing momentum and belief.

Banks were deeply entangled in the cycle. Many institutions lent aggressively to speculators while simultaneously investing depositor funds in the market themselves. When prices fell, margin calls cascaded, loans could not be repaid, and banks were left holding illiquid collateral.

The Federal Reserve, concerned about speculation, raised interest rates in the late 1920s. Borrowing became more expensive. Liquidity tightened. The tightening did not create the bubble, but it accelerated its deflation.

None of these dynamics were foreign to Florida. Rampant speculation. Easy leverage. Inflated asset prices. Banks concentrated in a single narrative. Tightening credit conditions.

Florida had experienced the cycle in miniature. By the time the national market cracked, the pattern had already been rehearsed.

In that sense, Florida was not an isolated tragedy. It was a regional preview.

Fast Forward to Today: Florida Again, A Century Later

Fast forward to 2020.

Florida once again became a magnet. Remote work untethered high earners from traditional financial centers, and a wave of migration flowed south. Hedge fund managers, tech founders, crypto entrepreneurs, and remote professionals relocated to Miami and Palm Beach. The narrative was unmistakable: low taxes, warm weather, and digital capital converging.

Interest rates hovered near zero. The Federal Reserve flooded the system with liquidity in response to the pandemic. Mortgage rates reached historic lows, accelerating demand. Asset prices rose almost everywhere at once.

Miami leaned into the moment, marketing itself as a crypto capital. Conferences filled convention centers. Influencers launched tokens from yachts. Digital speculation and physical real estate speculation shared the same liquidity backdrop.

Speculative excess extended beyond property. Meme coins surged. SPAC issuance exploded. Retail leverage expanded. Remember NFTs? The one below titled, “The First 5000 Days” by Mike Winklemann, sold for $69m in 2021.

Then the regime shifted.

Beginning in early 2022, the Federal Reserve tightened policy at the fastest pace in decades. Liquidity reversed and the cost of capital reset.

The speculative layer cracked first. NFT markets collapsed. Many altcoins fell dramatically. SPAC issuance dried up. Venture funding slowed.

Real estate did not implode statewide, but velocity cooled materially. Outside major coastal hubs, certain Florida markets saw meaningful price corrections from pandemic peaks. Even in major cities, listings lingered longer, and price reductions became more common.

Insurance premiums rose sharply. Affordability tightened. What had been a momentum-driven market became selective and conditional. The pattern rhymes.

Speculation, Then and Now

If Florida was the canary in the coal mine in the 1920s, speculation was the fuel feeding the fire.

By the late 1920s, Americans were not just investing; they were participating in a cultural event. Brokerage offices installed ticker tape machines so crowds could watch prices move in real time. Margin accounts allowed investors to control large positions with minimal capital. Market participation expanded beyond the traditional elite and into the middle class. The stock market became a spectacle.

Today, the mechanics are different, but the tone often feels familiar.

Retail investors can open brokerage accounts in minutes and trade complex derivatives from their phones. Zero-commission platforms have lowered the friction to speculation dramatically. Short-dated options allow participants to control significant exposure with limited capital. Online communities amplify momentum in real time.

At the same time, prediction markets have surged in popularity, allowing users to wager on elections, economic data, and cultural events. Legal sports betting has expanded across much of the United States, normalizing risk-taking as entertainment. The cultural line between investing and gambling has blurred.

None of this guarantees a crash. Financial access and democratization can be positive forces. But widespread speculation changes the psychological temperature of markets. When participation becomes gamified, when leverage is easily accessible, and when price movement becomes social currency, volatility can amplify quickly.

In the 1920s, speculation did not cause the hurricane. It magnified the consequences once confidence cracked.

The question today is not whether retail traders or prediction markets are inherently dangerous. It is whether an era of normalized risk-taking makes the broader system more sensitive when stress arrives.

But Why Speculate? It’s the Same Now as it Was Then

In the late 1920s, speculation was not driven solely by greed. It was also driven by disappointment with traditional savings.

Bank deposits and conservative bonds offered modest returns, while stock prices seemed to climb steadily year after year. For ordinary households, the contrast was stark. Money sitting safely in a bank earned little. Money placed with a broker appeared to compound rapidly. Participation widened accordingly.

Middle-class savers who had never considered themselves speculators opened brokerage accounts. Margin loans made it possible to amplify relatively small stakes. The market became not just an investment vehicle, but a perceived opportunity to accelerate beyond the slow grind of interest-bearing accounts.

Today, the context is different, but the emotional undertone may be similar.

For many households, wage growth has not kept pace with housing costs, healthcare expenses, or lifestyle expectations shaped by social media. Even in a growing economy, large segments of the population feel financially stuck. The traditional path — work steadily, save incrementally, invest conservatively — can feel insufficient to produce meaningful change.

Against that backdrop, speculative assets offer asymmetry. Crypto tokens promise exponential upside. Prediction markets compress time. Short-dated options magnify outcomes. Legal sports betting delivers immediate gratification. The attraction is not purely analytical; it is psychological.

Speculation becomes a perceived shortcut. Not necessarily because participants misunderstand risk, but because the alternative feels slow.

In both eras, the dynamic is less about charts and more about aspiration. When conventional saving mechanisms feel inadequate, people search for acceleration.

That search can fuel innovation. It can also magnify fragility.

So, Will 2029 Be a Repeat of 1929? No, It Might Happen in 2028 According to Citrini

There certainly seem to be parallels.

A regional real estate boom that cools before the broader market. Expanding leverage and easy access to speculation. Widespread participation driven not only by greed, but by aspiration. Tightening monetary conditions after a prolonged period of easy capital.

History does not move on a calendar, but the symmetry is difficult to ignore.

What makes the comparison more unsettling is that we now have a new variable that did not exist in 1929: artificial intelligence.

On February 22nd, Citrini Research published a provocative memo written from the vantage point of 2028. In their hypothetical scenario, the economy does not collapse because of housing, nor because of margin debt, but because AI-driven productivity displaces labor faster than income can adjust. Corporate margins initially expand. Markets rally. Capital floods into compute infrastructure.

But the underlying consumer economy weakens.

In their framework, unemployment rises sharply. Wage growth falters. The S&P 500 falls nearly 40% from its highs. They call it a “human intelligence displacement spiral” — a negative feedback loop in which firms replace workers to protect margins, displaced workers spend less, and demand contracts.

Whether that scenario materializes is unknowable. But it introduces a layer of fragility that did not exist a century ago.

In 1929, leverage amplified speculation. In 2028 — if the thesis proves correct — productivity itself could amplify imbalance. It would not be 2029 repeating 1929. It would be 2028, repeating something entirely new.

Final Thoughts: Listening for the Rhyme

Perhaps none of this plays out. Perhaps Florida stabilizes, speculative excess burns off without systemic damage, and artificial intelligence becomes more complementary than disruptive. The modern economy is larger, more diversified, and more institutionally resilient than it was a century ago. We have deeper capital markets and real-time data that didn’t exist in 1929.

And yet, fragility rarely announces itself loudly.

The Florida land bust did not initially resemble the Great Depression. It appeared regional, even isolated — a speculative episode that simply went too far. Only with hindsight did it begin to look like a preview of broader structural weakness. The cracks showed up first in liquidity, in tightening credit, in overextended balance sheets, and in narratives that had outrun reality.

What makes the present moment intriguing is not the calendar symmetry, but the layered similarities.

• Periods of easy capital followed by tightening.

• Broad participation in speculative assets.

• Cultural enthusiasm that blurs the line between investing and gambling.

• And now, a technological shift in AI that could meaningfully alter labor, income, and corporate margins in ways we are only beginning to understand.

If 2028 or 2029 ultimately delivers a serious downturn, it will not be because history mechanically repeated itself. It will be because leverage, optimism, and structural imbalance once again moved faster than the system’s capacity to absorb stress.

And if it doesn’t happen, then this exercise remains useful for a different reason: it reminds us that cycles exist, that narratives can harden into consensus, and that complacency is often the most expensive assumption in markets.

History does not move on a schedule. But it often leaves clues. The real challenge is recognizing them before they are obvious to everyone else.

As always, send any thoughts, ideas, or articles my way.

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— Brooks