Make Kitco Your Homepage

'I'm really nervous about the housing market'; Former Trump advisor says another housing bubble is possible as 'red hot housing market' cools - Stephen Moore

Kitco News

(Kitco News) - In addition to high inflation and a looming recession, the United States can add a housing bubble to its list of possible economic woes, said Stephen Moore, Chief Economist at FreedomWorks and a former Trump economic advisor.

"I'm really nervous about the housing market," he said. "We've had a red-hot housing market now for five or six years. And I pray we're not facing a bubble like we did in 2007 to 2008."

He implied that bad economic policy is to blame for much of the economic malaise.

"Our big mistake was just spending so much money that we didn't have," he explained. "The debt binge is very worrisome to me."

Moore spoke with Michelle Makori, Editor-in-Chief and Lead Anchor at Kitco News, at the FreedomFest 2022 conference in Las Vegas.

COVID policy

Although Moore is mainly critical of Biden's spending on infrastructure and green energy, some of the spending that Moore criticizes is due to COVID relief.

Moore has long been a critic of COVID-19 shutdowns. He defended President Trump's plan to re-open state economies on May 1st, 2020 and warned of collateral damage from lockdowns.

"What we've seen, in terms of the American recovery from COVID, is that states that did not shut down their economy… have had a full recovery," he said. "The states that shut down… have all had a really tough time getting back to normal. It's almost a tale of two countries."

Moore is the co-author of a National Bureau of Economic Research report that claims that lockdowns hurt U.S. states, while conferring few health benefits.

"Hopefully the lesson that we've learned… is that lockdowns were a catastrophic mistake," said Moore. "Shutting down schools especially had an extraordinarily negative effect on our children, with virtually no health benefits."

Research from epidemiologists like Stanford's Jay Bhattacharya, Oxford University's Sunetra Gupta, and former Harvard professor Martin Kulldorff, has confirmed that lockdowns and mandates were misguided.

Inflation Woes

When Joe Biden appointed former Fed Chair Janet Yellen to become Treasury Secretary, he said, "No one is better prepared to deal with this crisis."

The crisis Biden was referring to was the COVID pandemic, yet the administration failed to foresee inflation, said Moore.

"At that time, [the start of 2021], the Biden administration was not worried about inflation," Moore recalled. "They were saying it would be transitory. But here we are now, a year later, with 9 or 10 percent inflation, and that's even worse than I thought it would be."

He linked Biden's spending to worse inflation outcomes.

"Through the whole COVID experience, over the last two and a half years, we've spent and borrowed almost $5 trillion," he explained. "That's an enormous amount of money, and it's still in the system. So now the Fed, to get rid of this inflation, is going to have to sell off some of its balance sheet, because a lot of those government bonds are owned by the Fed."

Inflation will remain high until 2026; 'You don't need a recession to bring down inflation,' says Ex-Reagan advisor – Arthur Laffer

Expertise in Washington

Moore said that a "regime change" in Washington is needed to change economic policy.

This month, Moore and his colleague Jon Decker released a survey of top Biden economic officials. The survey finds that 62 percent of Biden appointees working in economic policy, regulation, commerce, energy, and finance have no practical experience in the private sector. The vast majority of Biden's team consists of professional politicians, lawyers, community organizers, academics, lobbyists, and government employees.  

Moore's report looks at 68 Biden top officials responsible for economic policy, starting with the President himself.

The study analyzes the work history of Biden's cabinet, regulatory officials, and White House advisers, and finds that their median years of business experience is zero. By contrast, the Trump cabinet averaged more than 10 years of business experience.

Moore's report suggests that this explains the Biden administration's economic mismanagement.

"You have people who don't have a clue about how the economy works, and how business works," Moore said. "Biden has to bring in a new team, in my opinion, if he wants to save this Presidency."

To find out which policies Moore supports to reduce inflation, as well as his forecasts for the 2024 Presidential election, watch the above video.

Follow Michelle Makori on Twitter: @MichelleMakori

Follow Kitco News on Twitter: @KitcoNewsNOW

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.