The nation's economy is very strong, and the tax cut bill is energizing business, so the stock markets will be "just fine," despite record drops this past week, economic analyst Larry Kudlow told Newsmax TV Friday, and he'd buy and hold stocks as they grow cheaper.

"Investment profits are very strong," Kudlow, the Reagan administration economist who also advised President Donald Trump's campaign, told "Newsmax Now" guest host Kirsten Haglund.

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There is some interest rate turbulence as well, he continued, but "people shouldn't panic," said the radio host of "The Larry Kudlow Show."

"Stocks are gonna be cheaper and I'd buy them as they go down," said Kudlow, a Newsmax Finance Insider. 

"I'd buy them and I'd hold them. Stocks for the long run, that's always been my philosophy," said Kudlow, who served as the Trump campaign's senior economic adviser.

Many of the algorithmic changes that have occurred are driven by computers, not humans, Kudlow also said Friday.

Meanwhile, the boundaries on the CBOE Volatility Index (VIX), often referred to as the "fear index" were exceeded, said Kudlow, pushing the index up to almost 50 at one point, which triggered a lot of selling.

"That's what happened today," said Kudlow, who worked as Reagan’s budget deputy between 1981 and 1985. "It's not humans. It is computers. It's the world in which we live. These things happen."

Ironically, good news for the economy can also be bad news for the stock market, said Kudlow, a CNBC senior contributor.

"Real interest rates go up, investment returns are rising in the economy, so the stock market requires a higher real investment rate," he said. "It's inflation, that's what spooked the stock market," said Kuldow, author of "JFK and the Reagan Revolution: A Secret History of American Prosperity," written with Brian Domitrovic and published by Portfolio.

Meanwhile, Kudlow said he also agrees with the president's call for more defense and military spending, but he's still sorry that the new spending bill did not include cuts to domestic spending.

"The Democrats insisted that whatever we spent on military had to be also spent on domestic," he said.

"It's a lousy deal. I think there's a lot of reforms that need to be done. I don't think it's a catastrophe but I think you've got to have a stronger budget outlook."

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