Attention, Investors: Are We Seeing the Return of Reaganomics?

In preparation for my talk at the 50th anniversary of the New Orleans Investment Conference, I reviewed my private journal entries for each year I attended the “granddaddy of hard-money conferences.” I’ve been a speaker at nearly all of them, starting in 1977.

Here’s what I wrote about the New Orleans Conference in 1980, directly after the election of Ronald Reagan: “The election on Nov. 4 was most gratifying. It was the largest crowd ever in New Orleans, with over 3,000 attendees. I was most impressed with the new conservative, anti-government movement in Congress.”

But then, I was surprised by the attitude of many of the speakers, including founder Jim Blanchard: “I was shocked to witness the inability of many hard-money speakers to see the impact of this shift. They didn’t think anything had changed! They still recommended gold, silver and Swiss francs.”

But things had changed. I wrote in my diary: “Gold was down sharply, and the dollar was strong. That could last for some time if inflation rates drop under Reagan.”

Sound familiar?

After Donald J. Trump was elected last week, the dollar soared along with stocks, Tesla stock and Bitcoin. Meanwhile, gold, silver, oil and other commodities declined.

King dollar is back!

Déjà vu! Could the Next Four Years Be Reaganomics II?

After the Reagan victory in 1980, I started writing my investment newsletter, Forecasts & Strategies. It’s still going strong after 44 years!

I wrote my first promotional copy with the headline, “The Financial Shock of 1981.”

You opened the envelope and it said, “Reaganomics will work! Sell your gold and silver, and buy stocks and bonds.”

It was a surprise to most investors. Gold and silver declined for the next 20 years while stocks and bonds went on a 40-year bull market!

Four Goals of Reaganomics

Reagan is remembered today for his four policies:

1. Cut taxes.
2. Cut government spending.
3. Deregulate the economy.
4. Adopt sound money.

Overall, he succeeded, especially with regard to cutting taxes and reducing price inflation (thanks to the efforts of Fed chairman Paul Volcker under Reagan).

As George Gilder, my Eagle colleague, states, “The great lesson of Reaganomics was how thoroughly tax policy dominates all other economic policies. The Reagan era tax cuts — including the deep cuts in capital gains taxes that preceded his presidency — are the principal reason we have seen 40 years of good-to-excellent economic growth and robust employment combined with declining inflation and interest rates.”

The New Trump Era

What can we expect under the second Trump administration?

I see the following policy recommendations:

1. More tax cuts, especially the corporate income tax rate down from 21% to 15%. Trump may also favor tax cuts for the middle class and investments. Perhaps we will see a reduction of the capital gains tax back from 23.9% to 15%.
2. Efforts to downsize government by eliminating waste and making it more efficient. Trump is creating a new Department of Government Efficiency to be led by Elon Musk and Vivek Ramaswamy.
3. Deregulate the economy and reverse the aggregative antitrust actions of the Department of Justice under Biden. This means approval of more mergers and acquisitions. His recommendations have resulted in financial stocks such as Goldman Sachs soaring.
4. Expect inflation rates to decline further if national output increases to 3-5% under Trump. Much depends on Fed chair Jay Powell taking a strong stance against inflation as did Paul Volcker under Reagan. I wouldn’t be selling my gold any time soon.

A Fly in the Trump Ointment: Protectionism!

The only downside to Trump’s version of Reaganomics is his “America First” agenda that includes sharply higher tariffs on imported goods.

My supply-side friends argue that Trump threatens the use of tariffs as a bargaining negotiation tool against China and Mexico to get them to change their own domestic policies.

I understand his strategy, and it may work. But Trump’s call for a 20% increase in tariffs is a different animal, and a threat to economic recovery. It could derail his plans to “make America great again.” Hopefully, this is one recommendation that won’t make it through Congress.

A new paper by economists at the National Bureau of Economic Research contradict Trump’s protectionist policies. According to George Mason University Professor Tyler Cowen, “It shows that tariffs probably did more harm than good… One core finding is that industries with higher tariffs did not have higher productivity — in fact, they had lower productivity. Tariffs did raise the number of U.S. firms in a given sector, but they did so in part by protecting smaller, less productive firms… Not only does it slow economic growth, it also keeps workers in jobs without much of a future.”

I hope Trump’s economic advisors are listening.

How to Make America Great Again

For the past dozen years, the United States has seen its Economic Freedom Index decline, as the following chart demonstrates.

Courtesy of the Heritage Foundation.

Let’s hope the Trump administration can reverse this trend. One of the core principles of economic freedom is free trade.

The New 11th Edition of ‘The Maxims of Wall Street’ Is Out!

Yesterday, I spoke at the Wisconsin Forum in Milwaukee about the November elections and was hosted by money manager and friend Noaman Sharief. He took me to breakfast at the “Maxim’s Restaurant,” which is famous for its “Maxims” quotes on the wall.

Noaman has a good quote of his own on p. 63 of the new 11th edition: “Hindsight may be 20-20, but foresight is still 50-50.” So true!

The new edition of the Maxims of Wall Street is now available for the holidays at www.skousenbooks.com.

Upcoming Appearance

Liberty International World Conference, Nov. 15-17, Embassy Suites DFW, Grapevine, Texas: I’ll be a keynote speaker on my popular speech “What’s Better Than Democratic Socialism? Democratic Capitalism!” Other speakers include Ken and Li Schoolland, Tom Palmer, Ron Manners and Chase Oliver, the Libertarian candidate for president. For details and registration, go to https://liberty-intl.org/liwc2024/.

New Orleans 50th Anniversary Investment Conference, Nov. 20-23: This is a biggie! I’ve been speaking every year since 1977 at the famous “gold bug” New Orleans conference and will give a unique talk, “My Life-Changing Highlights in New Orleans.” Other speakers include James Grant, Gary Alexander, Adrian Day, Alex Green, Robert Prechter, Mary Anne and Pamela Aden and Brien Lundin.

It will be memorable. I’m bringing copies of my new 11th edition of “The Maxims of Wall Street” and will be signing a special “50th Anniversary Edition” in memory of the 50th anniversary of the New Orleans conference and my being 50 years in the investment world. A keepsake!

For more information and to register, click here. Be sure to mention you are a subscriber.

Good investing, AEIOU,

Mark Skousen

You Nailed It

FEMA Fires Official Who Told Hurricane Relief Workers to Skip Trump Homes

by Mark Skousen

The establishment media is always quick to add the adjective “false” to any claim by President Trump or Republicans about the elections, politics and the economy.

For example, on Oct. 4, the New York Times ran a headline, “Trump’s False Claims about the Federal Response to Hurricane Helene.”

But then when the Federal Emergency Management Agency (FEMA) fired the official who told hurricane relief workers to skip homes that “advertised Trump,” the Times was forced to print a retraction.  (See below.)

FEMA Administrator Deanne Criswell revealed that a supervisor had been fired after she ordered federal employees under her supervision to “avoid homes advertising Trump” as they canvassed Lake Placid, Florida to identify residents who could qualify for federal aid. These instructions were given both verbally and in writing, multiple government employees revealed.

“More than 22,000 FEMA employees every day adhere to FEMA’s core values and are dedicated to helping people before, during and after disasters, often sacrificing time with their own families to help disaster survivors. Recently, one FEMA employee departed from these values to advise her survivor assistance team to not go to homes with yard signs supporting President-elect Trump,” Criswell said in a statement. “This is a clear violation of FEMA’s core values and principles to help people regardless of their political affiliation. This was reprehensible.”

This episode came to light when a whistleblower sent a copy of an internal FEMA communication to the media.