Opinion
By Steve Nicklas, 2-12-24 (received 3-6-24)
Stephen Moore knows more about the U.S. economy and the financial markets than our Greek ancestors knew about shrimping.
In the early 1900s, Greek shrimpers and boat builders forged the tiny town of Fernandina Beach into the “Birthplace of the Modern Shrimping Industry.” Most of the majestic shrimp boats have left for a friendlier harbor in Mayport. Nonetheless, shrimping is stitched into our city’s historic fabric.
Recently, Moore has shared his insightful financial philosophies at events sponsored here by the U.S. Constitution Scholarship Foundation. The group teaches students in Nassau County about the constitution.
The passionate Moore preaches fiscal discipline like Martin Luther King Jr. preached equality. And Moore is equally fervent about it.
Appearing on Larry Kudlow’s self-named show last week, Moore took aim at the $6 trillion in U.S. government spending last year. “I regard it as a snake swallowing a bowling ball,” Moore said. “And it’s trying to make its way through the system. We will be paying for this excess for decades.”
Moore doesn’t blame only the Biden Administration. He also criticizes the Federal Reserve. The Fed chairman is appointed by the U.S. president.
“What the Fed did was raise the amount of money on its balance sheet that it owns,” Moore said. “It was buying up assets, which pumps more cheap money into the economy.”
The Fed’s balance sheet ballooned from $4 trillion to $9 trillion last year. It’s come down slightly since then. Such is life on a trillion-dollar credit card.
“But that’s a lot of money that’s just sloshing out there in the economy,” Moore said. “I want to see the Federal Reserve reduce its balance sheet.”
Former president Donald Trump relied heavily on Moore’s insights as an outside financial advisor. Kudlow worked inside Trump’s administration as the director of the National Economic Council. The two helped craft the wildly popular and beneficial “Trump tax cuts,” still in place today.
The wise and ageless Kudlow can dive deeply into the murky depths of government spending. Even the favorable employment numbers are being affected.
“Unfortunately, a lot of this (employment growth) is because of government spending and government jobs,” Kudlow said. “Not private sector investment and private sector jobs.”
None of it adds up, without government intervention. “If you took out the government spending part, the Biden performance of the last year ain’t that good,” Kudlow quipped.
Actually, the government is spending more than consumers right now. “And government spending is inflationary,” Kudlow said. “You’re not producing goods, just temporary demand stimulus.”
The superfluous government spending has also driven up the Gross Domestic Product (GDP) numbers. The GDP is the sum of goods and services produced by the U.S. economy. Moore shudders at the premise.
“We should talk about private sector GDP,” Moore said. “Government spending is a negative, especially when you’re running a $2 trillion deficit.”
Unfazed in his beliefs, Moore rattles off more startling statistics. He does it in a cadence. He and Kudlow are two pearls in an oyster.
“The two biggest components of growth in the economy and in employment have been government and healthcare,” Moore said. “Half of the healthcare system is paid for by government (Medicare, Medicaid, etc.). So we’re not growing the economy where we want it. Where’s the investment in new business?”
Instead, massive layoffs are announced almost weekly. Prominent companies like UPS, Amazon, Microsoft, General Motors, Pfizer and Goodyear are laying off thousands of workers. Yet the government-produced employment reports and unemployment rates have not declined. Go figure that one out.
Meanwhile, the federal government rarely endures layoffs, only new hires. Like local government. The unmanageable federal government now has almost 3 million employees.
In contrast, “Private business may well be in recession,” Kudlow said. “It’s interesting that the government is distorting these numbers.”
Despite experiencing layoffs, technology companies are producing most of the U.S.’s economic growth. However, they have come under the bureaucratic microscope of federal officials.
“Our technology companies are just blowing away the competition,” Moore said. “And what does the Biden administration want to do – break up these companies. When is ‘profit’ a dirty word?”
The conversation switched to President Biden’s impromptu national address last week. Biden wanted to celebrate his exoneration over willingly holding classified documents. (By the way, Trump is being prosecuted for the same offense.)
Biden appeared angry and frazzled over the investigative report, which depicted him as “an elderly man with a poor memory.” The report was hardly complimentary. Biden proceeded to snap at reporters, who asked about the findings.
In retrospect, Kudlow made a bold and surprising prediction. It was based on observation. “That’s why Biden was so angry last night,” Kudlow said. “He knows it’s over. I really believe that.”
With Moore nodding in agreement, Kudlow continued, “The country’s broken. Nobody wants to talk about it. He’s bankrupting the country.”
Steve Nicklas is the managing partner of Nicklas Wealth Management in Fernandina Beach. He is also an award-winning columnist. His columns regularly appear in weekly newspapers in Northeast Florida and in Southeast Georgia, and on his website at www.SteveNicklasMarketplace.com. He has published a book, “All About Money,” of his favorite columns from the past 20 years. The book is available on Amazon. He has also done financial reports for area radio stations and for National Public Radio in Jacksonville. He can be reached by email at [email protected] or by phone at 904-753-0236.
