We have all heard the saying from Mark Twain, “History doesn’t repeat itself, but it often rhymes.” Since the election I have spoken to many of you and continue to compare this election to the election of 1980 minus early voting, mail in balloting, and the billions spent by both sides to harvest ballots.

What does it mean – When comparing the election around policy that actually effects society, the similarities are astounding. Like 1980, this election was an election of more “Big Government nanny state policies vs. Limited Government tax cutters and personal freedom.”

While the policies America voted for are very similar to the ones championed by Ronald Reagan in 1980, the markets are almost completely opposite and have almost nothing in common. For example, in 1980 the Federal Reserve was raising rates and fighting runaway inflation. Today, inflation is on still on the march, but the Fed is now cutting interest rates. Prior to November of the 1980 election, the Price-Earnings ratio of the S&P 500 was 8.6. Prior to this election in 2024, the PE ratio was 27. In other words, valuations are far different from what we saw in 1980.

DOGE- Department of Government Efficiency…Under normal circumstances anything that the government does and includes the word efficient would amount to an oxymoron. This department reminds me of the benefits of a line-item veto. Better yet, if congress only voted on single issue bills and actual budgets, we may not be in the situation we are in. I can’t wait for Elon and Vivek to go through the budget with a red pen and turn thousands of pages of nonsense in to something the American taxpayers can be proud of and feel like government is actually working for them.

What does it mean – Hopefully it will do what its name implies. Create efficiency and shrink government!!

Remember President Carter created the Department of Energy and Education only to watch these two behemoths grow and expand beyond what they were intended to do. Now both departments are anchors tied to the necks of taxpayers and struggle to actually perform their duties and mandates.

First Trust made a very good point and highlights that, “every dollar the government spends is taken from the private sector, and the government taxes and borrows nearly 5% more of GDP today than it did seventeen years ago.” Brian Wesbury and his team at First Trust went on to say, “from 1990 through 2007, real GDP grew 3% per year. From 2008 through the second quarter of 2024, real GDP has only grown 2% per year.” For voters and most importantly you, it was the economy that was the number one issue.

When all is said and done, two percent annual growth is stagnation. It is why Americans rejected big government policies and the advice of noted economists like Mark Zandi, Austan Goolsby and Paul Krugman. All of them supported massive government spending. These are the very folks that argue that government spending has a positive multiplier, yet they are unable to tell you the exact multiplier is but will proclaim that $1 of government spending creates more than $1 of GDP. If that was the case and now $36 trillion in debt up from $23 Trillion prior to covid, our economy should have seen massive economic growth. In fact, our COVID response from the second quarter in 2020 to the end of 2024 the US increased its debt by a whopping $4 trillion and spent nearly $2 trillion a year more than it brought in during the last 4 years. This alone should have created massive GDP growth but in reality, all we got was massive inflation!!!

Let’s take it a step further. Add the massive government spending to the fact that the US has invented unbelievably productive new technologies in the last 20 years, adding to massive productivity gains and new markets. Under these conditions one would assume or expect to see the economy booming. Especially with the Fed holding rates at zero for nine of the last 20 years. But it hasn’t. The simple truth – Government is too Dam BIG!!! Here is a look at US Debt from 2008 to 2024.

 

Here is a look at what Government actually costs the American taxpayers before the cost of the military and defense.

In 2024 your government will cost you over $3 trillion a year. Government has grown exponentially since Johnson’s Great Society, yet, one can easily say the quality of government has fallen just as fast as the costs have risen to build a society dependent on government.

By all accounts according to the government’s own numbers and testing, we have more people today on welfare, more people in section 8 government housing, higher crime rates, an education system controlled by government that is going backwards every day and blames low test scores on racism or sexism instead of insisting on math, English, science, and civics. Our health care is worse today and less accessible to the average American than prior to Obama Care. We have fewer college graduates choosing medicine due to government control of our medical industry. Many of our emergency rooms have shut down throughout our country due to costs created by government bureaucracy and regulation. The results are exactly what free market economists said would happen but then again government “experts” know better. These are just a few of the issues that have arisen from the massive growth of government, no accountability, and the expansion of the nanny state.

At the expense of every Californian, the California legislature is once again proving how stupid they really are…Voters are kept in the dark until it is too late. Gas prices going up in CA.

What does it mean – The CA legislature voted 12-2 to raise the cost of fuel. According to the University of Pennsylvania’s Kleinman Center for Energy Policy, UPENN’s Kleinman center reported, “that the regulators have distanced themselves from their own initial assessment and even suggested it is not possible to project cost impacts going forward. To fill the resulting analytical void, UPENN’s Kleinman Center for Energy Policy update the regulator’s original cost calculations based on the latest regulatory proposal. If Low Carbon Fuel Standard (LCFS) credit prices reach their maximum allowed levels, as has occurred in the past, then retail gasoline price impacts could be $0.65 per gallon in the near term, $0.85 per gallon by 2030, and nearly $1.50 per gallon by 2035. Folks, this is on top of what is already the most expensive gas in the country.”

Bee’s kill META’s nuclear dream…In our last letter we highlighted the amazing opportunity for Big Tech to invest in clean nuclear energy. This past week we learned that the Dept. of Energy and environmentalists have frozen META or Facebooks ability to move forward with investing in nuclear energy to power its servers. You just can’t make this stuff up.

What does it mean – Yes, the small-winged insect. According to the Financial Times and META, “Big Tech’s massive electrical demands of new computer data centers to back artificial intelligence (AI) development has literally been shut down by tiny little bees.” What is amazing is the very same environmentalists who fought Facebook are committing mass annihilation of bees and effecting crops in Southern CA, NV, and AZ, in the name of wind and solar, as they back massive wind farms and solar farms that kill the very same bees, numerous insects and birds. There are some scientists that have actually pointed out that the solar farms and wind farms have hurt pollination of fruit and vegetables that further hurt and reduce food sources for those animals that depend on the bees. In Germany, according to the Global Warming Policy Foundation and their study by Michale Kruger, German wind turbines kill 1,200 Tons of Insects Per Year. Where is the outrage? We need to explain to these people how the birds and the bee’s work.

META is not alone. The very same week, the Federal Energy Regulatory Commission rejected a request to increase the amount of power the Susquehanna nuclear plant can dispatch to an Amazon data center campus. Hmmm. One has to wonder how a department of Energy founded in the 1970’s dedicated to making sure our country is energy independent can justify environmental regulations that increases the cost and eliminates access to power and technology to all Americans based on unproven environmental concerns that are actually killing tons of insects and harming our food supply. And they want you to eat more insects.

Let’s roll America!!!

Doug De Groote, CFP®, MBA, CTC
Managing Director

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