American Consequences - January 2020

If No One Has to Work, No One Will

Welcome to the End of Hong Kong

The Fountain of Youth

AMERICAN CONSEQUENCES

I D E A S T H A T M A T T E R

E D I T E D B Y P . J . O ’ R O U R K E

Behind the scenes with the advisor and portfolio manager to some of the richest and smartest men on Wall Street

AUSTIN ROOT

THEWEALTH WHISPERER

JANUARY 2 0 2 0

ADVERTORIAL

Former Hedge Fund Manager Warns: “Get Out Of Cash on February 12th” Why this date could have a huge impact on your wealth

On February 12th, a financial PhD with one of the best track records in the industry is issuing a historic prediction about the future of the stock market. Dr. Steve Sjuggerud has worked in finance for over 25 years. He has been a hedge fund manager, broker, mutual fund vice president, and is now the Senior Research Partner at Stansberry Research – America’s leading independent financial research firm since 1999. Since 2011, Dr. Sjuggerud’s research has produced annualized gains of 22% . That’s double the S&P 500’s return in the same time span. He’s also credited with major predictions such as the peak of the dot-com bubble, gold’s historic 2003 rally, and the bottom of the stock market in 2009. On February 12th, Dr. Sjuggerud is issuing his next big prediction about what’s going to happen next in the market, and when it will all come crashing down. He’s staging one of the largest online events in history to warn Americans about the specific actions you must take with your cash right now.

His prediction for February 12th has attracted one of the most prolific stock-pickers in America to weigh in – and share his method of pinpointing 10X stocks. You’ll likely recognize him from Fox Business , Bloomberg , Yahoo Finance , and CNN . (You can read more about him at www.SteveStockMeltUp.com ). “ The stock market is on the verge of soaring higher than you can ever imagine, faster than anyone realizes . But if you’re holding ordinary stocks, you’re making a big mistake,” says Dr. Steve Sjuggerud, who’s spent five years preparing for February 12th. In fact – the stocks you probably have in your portfolio right now are NOT the ones you should be holding, warns Dr. Sjuggerud, who’s helped ring the opening bell at the NYSE three times. “I’ll show you exactly what you need to do prepare. And I’ll give you the name of a stock I believe could be one of the biggest winners,” he says. “It has the potential to soar 5x higher if things go right.” Ä This free event is open to the public. No investing experience required. But you must register today. You can reserve your spot for February 12th at www.SteveStockMeltup.com .

Dr. Sjuggerud’s work has helped attract a national following of over 513,000. Go to www.SteveStockMeltUp.com today to see Dr. Sjuggerud’s surprising prediction for the market this year, and when he predicts stocks will finally crash.

CONTENTS

JANUARY 2020 : ISSUE 31

LOST? CLICK HERE

18 70

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56

22 28

AMERICAN CONSEQUENCES

4 Inside This Issue

48 Welcome to the

BY STEVEN LONGENECKER

End of Hong Kong BY KIM ISKYAN

6 Letter From the Editor BY P.J. O'ROURKE

Editor in Chief: P.J. O’Rourke Editorial Director: Carli Flippen Publisher: Steven Longenecker Executive Editor: Buck Sexton Managing Editor: Laura Greaver Creative Director: Erica Wood Contributing Editors: Martin Cohen, Dr. Davig Eifrig, Mohamed A. El-Erian, Kim Iskyan, Frédéric Leroy, Joel Litman, Rand Paul, Kenneth Rogoff, John F. Wasik Cartoon Director: Frank Stansberry General Manager: Jamison Miller Advertising:

56 The Dark Side of Plant Based Food

BY MARTIN COHEN AND FRÉDÉRIC LEROY

12 From Our Inbox

18 The Global Economy's Luck May Run Out

60 If No One Has to Work, No One Will BY RAND PAUL 63 Notes From a Conversation With Rand Paul BY P.J. O'ROURKE

BY MOHAMED A. EL-ERIAN

22 Skip the Fad Diet

BY DR. DAVIG EIFRIG

25 The Fountain of Youth BY JOEL LITMAN

66 Government Debt Is Not a Free Lunch

28 Held Up Without A Gun BY JOHN F. WASIK

BY KENNETH ROGOFF

36 The Wealth Whisperer

70 The Final Word

Ricky D'Andrea, Jill Peterson Editorial feedback: feedback@ americanconsequences.com

BY STEVEN LONGENECKER

BY BUCK SEXTON

Cover Photo By Brent Kline

American Consequences

3

INSIDE THIS ISSUE

T his January, we’re looking at the year ahead... from the U.S. election to the stock market to the global economy. Editor in chief P.J. O’Rourke gets us started with why he’s still hiding in bed under the blankets as he imagines the worst-case scenario for 2020. As he puts it... “The Democratic Party isn’t a political party... It’s the name of a den of thieves whose single point of agreement is that they want to break into the national cash register and swipe the booty. When it’s time to divvy up the swag, all hell will break loose.” And U.S. Senator Rand Paul shares why if no one has to work, no one will . He writes: “It is an immeasurable calamity that tens of millions of Chinese had to die before the Chinese discovered the horrors that come when a government tries to enforce complete socialism.” Plus, make sure you read Rand Paul’s interview with P.J. from when he was considering a presidential run – and the difficulty of being “libertarian-ish.” And if you want to make money in 2020, our cover story on portfolio manager Austin Root is a must-read. Root has worked with and advised some of the most powerful names on Wall Street – and his tales from the billionaire-trading trenches are fascinating. Globetrotting journalist Kim Iskyan brings us a story from the other side of the world... and

details why what is happening there means the end of Hong Kong as we know it. Then, we have a few “healthy 2020” reads. • First, Dr. David Eifrig recommends skipping the fad diet if you want to be healthier in 2020. • Joel Litman may have discovered the fountain of youth... and he says it’s nothing short of a medical miracle. • Lastly, if you’re interested in “meat alternatives,” you might be interested to know that they’re hiding a significant dark side. John F. Wasik has the personal tale of how he was held up by cybercriminals... and how you can protect yourself. Mohamed A. El-Erian shares why the global economy’s luck may run out in 2020, while Kenneth Rogoff details the things that can go wrong with the massive amount of debt our government has taken on. And executive editor Buck Sexton has an exclusive interview with Sean Parnell – Afghanistan-combat veteran and Republican candidate for the 17th Congressional District of Pennsylvania – about the biggest threats facing America. We’ve uploaded a PDF suitable for printing to our archive page. And tell us what you think at feedback@ americanconsequences.com. Regards, Steven Longenecker Publisher, American Consequences

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January 2020

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From Editor in Chief P.J. O’Rourke

IF YOU SET YOUR ALARM FOR 2021...

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January 2020

LETTER FROM THE EDITOR

Dateline: January 1, 2020, still in bed, hiding under the blankets with my laptop.

New Year’s Day – when the “Over” meets the “Hang.” The two thousand-teens are over (thank God), and the two thousand-twenties (oh, God) dangle before us. Last night, I had resolutions and solutions for the coming year. But the solutions turned out to be 80 proof. And I’ve already broken my resolution not to bet Michigan over Alabama in the Citrus Bowl. Today, my stirring hopes have turned into a pounding headache. The world (I’ve just peeked out from beneath the covers) looks grim.

Instead of trying to cheer myself up, I’m going to treat my melancholia homeopathically, in a “like cures like”

manner, with a dose of contemplation about just how wrong things could go in 2020. There’s something oddly comforting about imagining worst-case scenarios. Maybe it’s because if you have any imagination at all, you can usually imagine something much more horrible than what will really happen. Or maybe it’s because we’ve all had that “silver lining” proverb drilled into us (never mind that silver prices have been somewhat sluggish over the past few years). Anyway, here it is...

HOW BAD COULD IT BE?

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American Consequences

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LETTER FROM THE EDITOR

MY WORST-CASE SCENARIO FOR 2020

A left-wing Democrat beats Trump. “Progressives” and their pinko ilk sweep the House of Representatives. Democrats win a majority in the Senate.

encyclopedia... except listening to her is less like reading all 22 volumes of the World Book and more like having them dropped on your ear. So the Oval Office wouldn’t really be that much different – just a lot duller. And, since all White House pronouncements will be either incomprehensible psycho-ward Marxist babble or so intensely boring that reporters will fall into a catatonic trance, there will be no news from the White House. CNN, MSNBC, Fox News, the New York Times , NPR, and AM talk radio will have nothing to get hysterical about. The market for news media will shrink to about three people – Nancy Pelosi, Chuck Schumer, and Alexandria Ocasio-Cortez. And, if AOC doesn’t learn how to read and can’t figure out how to work the channel changer, it will be just Nancy and Chuck. The news media industry will collapse. So there’s one silver lining right there. (And silver prices have seen an uptick since mid- December.) With the collapse of the news media industry, we might even start getting some news again.

Already, this makes my aching brow and upset stomach seem like minor problems. But what would be the actual outcome of this worst-case scenario? We’d have a president who’s a ridiculous fool and is detested by half of America. Yes, yes, I know, lots of people say we have that already. But Trump, even to those who loathe him, is undeniably entertaining and fun to make fun of. There’s nothing funny about Bernie Sanders. He’s a sad, old, delusional crank shouting gibberish in the street. He belongs in a mental health facility, not a laugh line. Elizabeth Warren is even less entertaining. She is a schoolmarm, and not the beloved “Our Miss Brooks” kind. Warren is the teacher who gives pop quizzes after lunch on Fridays, waits until 3 p.m. to announce the topic of 30-page papers due at 8 a.m. Monday morning, and assigns the complete works of Proust to be read by her students over spring break. She is also the national know-it-all, universal answer-pants, and self-appointed authority on everything and its brother. She talks like an

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January 2020

keep hordes of Americans from rushing the border to get to somewhere offering better career opportunities, such as Guatemala. Of course, U.S. markets will crash. But after 11 years of bull, we’re prepared for some shit. And there will be plenty of opportunities to cash in quickly on buying blue-chip investments at poker ante prices due to the “Left-Turn Recession” of 2021 being the shortest on record. Because... A blink of an eye is about how long the Democrats’ control of government will last. Democrats can’t even control their own presidential nomination process. What’s the likelihood of them suddenly taking the wheel of their self-driving “Detestla” political machine as it ploughs through the crowded crosswalk of national governance? Once the Democrats have been elected, they’ll realize what the rest of us already know from watching their debates and campaigns – they all hate each other. They can’t agree on anything. The Democrats could stand outdoors during Hurricane Dorian and argue about whether it’s raining. Although, to be fair – since President Trump thought Hurricane Dorian struck Alabama “ Do you think anybody paid 92% of their income to the IRS in 1952 or 1953? Crafting tax laws is a notoriously loopy process. And the salient quality of loops is... loopholes.

Clark Kent, Lois Lane, and Jimmy Olsen will have their jobs back at the Daily Planet . (Superman is sick and tired of disguising himself as Rachel Maddow.) Meanwhile, in the House and Senate, Democrats will be raising taxes sky-high. This would scare the heck out of me – if I were a patsy, a dupe, a ripe suck, or born yesterday. In 1952 and 1953, the top federal income tax rate was 92%. Do you think anybody paid 92% of their income to the IRS in 1952 or 1953? Crafting tax laws is a notoriously loopy process. And the salient quality of loops is... loopholes. What the House and Senate will really be doing is making Christmas 2021 come on April 15 for tax accountants. Democrats, unable to fund their mad profusion of spending projects with tax dollars because they drew the Laffer Curve upside down, will need to print even more money than we’re printing already. (The U.S. Bureau of Engraving and Printing may have to resort to Xerox machines at FedEx Office Print & Ship Centers.) The value of the U.S. dollar will crash. But this, at least, will end our trade war with China. When a pair of chopsticks starts going for $39.95, China’s not going to be raking in a trade surplus from us. We’ll have to make our own iPhones, but the upside is that instead of being tapped by Xi Jinping they’ll be tapped by the NSA... This is more patriotic. Democratic devastation of the economy will solve the immigration crisis too. In fact, it’s Mexico that may have to build a wall – to

American Consequences

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LETTER FROM THE EDITOR

“ Whowouldn’t like to go back to college?... Keggers, tailgate parties, bong smoke clouding the co-ed dorms...

instead of the Bahamas – they’re not alone in this. But comparing Democratic quarrels with Republican spats is like comparing the marriage of Tom Cruise and Katie Holmes to the marriage of George and Barbara Bush. The Democrats are a national exercise in packing the dog with the cat. The Democratic Party isn’t a political party... It’s the name of a den of thieves whose single point of agreement is that they want to break into the national cash register and swipe the booty. When it’s time to divvy up the swag, all hell will break loose. Leafy eco-conscious policies will wither and turn brown after organized labor takes its chainsaw to the Green New Deal. Democrats will be in the doghouse with their low-income supporters when doubling the minimum wage sends tens of thousands of businesses into bankruptcy and America’s 1.7 minimum-wage workers are fired from 1.7 million minimum-wage jobs. Calls for Universal Income will run aground when Rashida Tlaib realizes that 45% of that income goes to people wearing MAGA hats. Free college tuition will come a cropper when everyone in the United States takes the Democrats up on it. Who wouldn’t like to go back to college?... Keggers, tailgate parties, bong smoke clouding the co-ed dorms – plus riding our motorcycles up the stairs in our Animal House fraternities and getting John Belushi’s 0.0 grade-point average. Medicare for All will lose its luster when every single doctor in America moves to Tijuana to open a pill mill and play golf. (Greens fees are $42 at Tijuana’s Club Campestre.)

And brace yourself for the fight over whether Hillary Clinton or Ilhan Omar should replace Ruth Bader Ginsberg on the Supreme Court. A sweeping victory by socialist Democrats in 2020 is the only thing on Earth that could make the kind of Republicans we have these days appear attractive. I mean, Mitch McConnell is going to look like Scarlett Johansson to voters. Expect a landslide GOP victory in the 2022 midterms with a veto- proof majority. Then, we’ll get a real impeachment. The House hearings and debate and the vote in the Senate will take a total of about 15 minutes. And the impeachment will include not only the Democratic President, but whoever got the wet smack second prize of being Vice President on the Democratic ticket. Next in succession – our 47th President – will be whomever the Republicans elect as Speaker of the House, and, frankly, I don’t care if it’s Francis the Talking Mule. The “just-how- wrong-things-can-go” will be to hell and gone. And we can return to life, liberty, and the pursuit of happiness. Which is why I’m getting up and mixing myself a Bloody Mary...

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January 2020

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FROM OUR INBOX

dependent upon, to say the least, slavery and drug trade for its existence. You are worse than or at least equivalent to Pelosi, Bush(s), and all the other satanic evils out there. – Joab K. Steven Longenecker comment: Joab, thanks for reading – we think. But our readers aren’t ignorant or fearful. In fact, we have a feeling we've got the smartest bunch of independent- minded folks of any magazine in the country. We’re happy to have you reading, but we think you’re going to be disappointed... There’s not a pentagram or summoning circle to be found in our office. P.J. O’Rourke comment: Also, Joab, it’s fine if you don’t buy it – because it’s free. So we don’t sell it! Re: Leave the Impeachment Drama in 2019 This is an EXCELLENT article! Thank you! You made my day. – Dave K. Steven Longenecker comment: Thank you Dave for giving us a read, as well as for your kind words. The decade does not end until midnight 31 December 2020. (“Zero: The Biography of a Dangerous Idea” by Charles Seife) – Walter W. Steven Longenecker comment: Walter, we haven’t read Zero but we’re putting it on our

Re: Our Newest Readers Weigh In Really enjoyed, “What if Santa Came for Grown-Ups.” I can identify, I smiled through the whole read. Happy Holidays, and thank you. – Wanda S. Santa-Tation was the funniest thing I have read in a while. The best part is it’s all true. Thanks for the laugh. – Frank B. P.J. O’Rourke comment: Wanda and Frank, your smiles and your laughter were the best things in my Christmas stocking! Of course, I’ve reached the age when most of what Santa puts in my stocking is Dr. Scholl’s corn and blister pads. But that makes me treasure your smiles and laughs all the more. I love the content of American Consequences and try to read as much as I can. – Rickye H. P.J. O’Rourke comment: And we’d like to return the favor, Rickye. Write and tell us more about what parts of American Consequences you find most enjoyable (or, for that matter, least enjoyable) to read. We read everything that comes in at feedback@ americanconsequences.com. [Your magazine is] interesting and thought provoking. But I don’t buy it... Getting ignorant, fearful people to invest for short- term gains in a corrupt system that is

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January 2020

of the other avaricious [people] in whose companies I might invest. Running a bank, huge corporation, or other enterprise is orders of magnitude easier than governing. – Jon L. P.J. O’Rourke comment: Jon, you make a very good point. We all want government to try to make the world a better place. And, as reasonable and realistic do to succeed. Also, there are many government programs (such as policies to stem to the soaring costs of medical care and higher education) that we won’t know whether they work until we try them. On the other hand, free enterprise contains certain natural restraints that government doesn’t have. When free enterprise tries something that doesn’t work – like the Edsel – it goes away. That is, market forces make it go away. But government isn’t subject to those same market forces. If the Edsel had been a government project instead of a Ford Motor Company project, people, we shouldn’t expect every government attempt to

list. In the meantime, we do suspect that you’re right. Though we also suspect that the best “New Decade” parties are past – having happened on December 31, 2019. Probably one of those times where it’s more fun to be wrong. Re: Give, Don’t Govern

CHECK OUT OUR ONLINE ARCHIVE OF PAST ISSUES.

Just because a program fails doesn’t mean government shouldn’t try to make the world a better place. Just because some wealth gets wasted in the process, doesn’t invalidate the need to dream big and try new and exciting programs. You are quick to point out that a great fund manager only needs to be “right” a little more than 50% of the time but fail to give government XLIWEQIFIRIǻXSJXLI doubt. No government gets everything right, just like no person gets everything right. I would not want to live in EGSYRXV]VYRF]/IǺ'I^SW Jamie Dimon, Lloyd Blankfein, Steven Schwarzman, or any

American Consequences

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FROM OUR INBOX

5ISTPIGERFIWIPǻWLERH8E\EXMSRJSVGIW people to participate to help others. Just like we need roads, bridges, military and emergence services, we also need to look after people who need it. Otherwise, we end up with more violence and crime and perhaps even revolution. Not in our best interest. Thirdly, we live in a democracy. If most people vote for candidates who want taxes to pay for government social programs, then that’s the price you pay for living here. You have the option of voting in candidates who don’t, and at the moment we have a president who doesn’t believe in helping others. I disagree with him, but we live in a democracy. – Rod H. P.J. O’Rourke comment: Rod, I might quibble with your characterization of the “two ideas” that American Consequences promotes. I’d like to think that we have more than two ideas. But you’re right about the tendency of democracy to relieve individuals of the responsibility for doing good works and to place that responsibility in the hands of government. Rather than get into a long argument with you about the rights and wrongs of this, I’d ask you to do one thing. Go back and reread the Constitution and the Bill of Rights and note how concerned the Founding Fathers were with one aspect of democracy – tyranny of the majority. Yes, yes, I know, Trump didn’t win the majority of the popular vote. But the Founders weren’t just worried about popular – vote tyranny. They worried about a majority

the government response very likely would have been to manufacture even more Edsels and make them (if this was possible) even uglier. For example, government poverty programs have been growing in number and expense since the Great Society era more than half a century ago. In fairness, the initial Great Society programs did cause a drop in the poverty rate. But that poverty rate quit dropping at the end of the 1960s and has leveled off, hovering between about 13% and 15% ever since. Meanwhile the scope and the cost of poverty programs continue to increase. But, you’re right, Jon. At American Consequences, we do concentrate on what the government refuses to learn from its policy failures. And we do pay a lot of attention to proposed government policies, such as price controls, that have a long history of failure. Maybe that’s because our theme is, as our title says, consequences . But maybe we should also work harder at suggesting constructive alternatives for government to try. Your e-mail promotes two ideas: that big government should be replaced with doing charity at home and that forcing people to pay tax is not generous. You are ignoring a few things: People don’t have the time or energy to do charity at home, that’s why many like the government doing it for them and the government has a lot of accountability, more than most charities.

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January 2020

Re: Why Millions Have Given Up Hope This Holiday Season 8LSWISGMEPIGYVMX]ERH2IHMGEVIFIRIǻXW were taken out of paychecks and paid for by the worker and their company, who also contributed to those payments. We were not given a choice, so stop calling them entitlements. If I had a choice I would not have contributed, instead I would have put it into a better plan than the paltry government’s bond or whatever it is plan. – Mary C. Please stop lumping Social Security with true entitlements. I have paid SS TAXES for 54 years and I am still paying them even though I am now 70 as I continue to work. I understand how the program is not structured in a sustainable manner, but I would have been happy if they just had invested my SS TAXES in something like Treasuries for the last 54 years and just gave me the funds to draw down like my 401(k). Congress has STOLEN my duly paid SS TAXES and now convinced guys like you to call my money an entitlement. Get real here and give us facts, not BS hype. I don’t disagree with your issue about the debt addiction of this country and most of the rest of the world for that matter. – John C. P.J. O’Rourke comment: Mary and John, you’re both right! As I’ve said before, the problem is that we’re right, too. Social Security shouldn’t be considered an “entitlement.” And it was deliberately set up as an “insurance program” so that it wouldn’t appear to be an entitlement. But that insurance program was a Ponzi scheme, which left Social Security, in fact, unfunded.

of states (East vs. West, as well as North vs. South) exercising a tyranny. And they worried about any one branch of the government – presidency, legislature, or judiciary – having a majority of power and tyrannizing the other two. Democracy is like eating – a wonderful thing that we sure wouldn’t want to give up but not necessarily beneficial when unlimited. Re: The Future’s So Bright, I Gotta Wear Shades As much as your perspectives provided are insightful and valuable, what may be missing is “the even bigger picture”... that being climate change. And I am not referencing global warming in this case, but quite the opposite, global cooling. With the sun in a cooling trend through that last three or four solar cycles, and now transitioning from #24 into #25, the forecast is for the lowest energy output from our host star in two centuries. Historical records suggest there will be more than just a little global cooling, which could radically alter peoples’ priorities and certainly impact stock market investments. – Ken L. P.J. O’Rourke comment: Oh my gosh, Ken – one more thing to worry about! (And I don’t suppose there’s any chance that man-made warming will nicely balance sun-made cooling – because things never work out that neatly, do they? Rising sea levels will put Key West under water and the water will be freezing cold.)

American Consequences

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FROM OUR INBOX

You wrote, asking when the debt dam would break, and then answered: Probably at the worst possible time... right as the economy enters a recession... as huge amounts of corporate debt become due... and as the U.S. consumer makes even bigger purchases funded by debt – whether that’s four years of college, a large QSVXKEKISVEPY\YV]9: My take is that when the debt dam breaks, the U.S. consumer will most likely cut way back as well, and probably massive numbers will declare bankruptcy, along with the U.S. government. It won’t be the choice of the consumers to cut back necessarily. In order to borrow at the consumer level, ]SYLEZIXSǻRHE[MPPMRKPIRHIVERHXLI PIRHIVWEVIPMOIP]XSTERMGEW[IPPGYXXMRKSǺ the ability to roll over debt just as everyone needs to do just that. – Gordon F. Steven Longenecker comment: You’re absolutely right, Gordon. And for most Americans, it will be a disaster. Essentially every major economic crisis is rooted in debt. The good news, of course, is that if you don’t have debt, it won’t be as much of a problem for you. It’s hard to completely shield yourself, of course, but a little common sense goes a long way.

All that we Social Security recipients are left with is a government promise that we’ll get what we’re entitled to. Consult Native Americans for a further discussion on government promises. Re: The Wheels of Society r«¼¼"¼¼HėZÊÊà 5VSǻXWSǺMRZIWXIHEVI3*:*7*&73*) money. How you can get so far away from human decency is the question... Do not IZIVJSVKIXXLEX]SY[MPPEP[E]WLEZIEǻKLX coming when you have the nerve to want XSOIITEPPXLIJVIIQSRI]TVSǻXWXLEXEVI earned not by you but literally earned by hardworking overworked ‘others’ (men and women in real life terms). – I.M.E. Steven Longenecker comment: There’s no such thing as “free money profits.” Folks who invest their capital take on risk and expect some sort of return on their money. If there is no possibility of return, why would anyone invest? You can’t have it both ways. If you’re not a saver and an investor taking advantage of this “time of plenty” in the economy any market, I have bad news for you when the next crisis comes.

Send us a message, question, or criticism at feedback@americanconsequences.com.

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January 2020

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January 2020

¿ CLICK HERE TO READ THE WEB VERSION

This being January, my natural inclination is to review PEWX]IEVƶWIGSRSQMGERHǻRERGMEPHIZIPSTQIRXWXS LIPTTSPMG]QEOIVWERHMRZIWXSVWERXMGMTEXI[LEXQMKLX be coming in 2020. Last year ended on a relatively TSWMXMZIRSXIIWTIGMEPP][LIRGSQTEVIHXS 8LIVIMWLSTISJEKPSFEPKVS[XLTMGOYTXVEHIXIRWMSRW LEZIPIWWIRIHERHGIRXVEPFEROWLEZIVIEǽVQIH that that they will maintain ultra-low interest rates and GSRXMRYIXSTVSZMHIEQTPIPMUYMHMX]+MRERGMEPZSPEXMPMX] MWWYFHYIHERHXLIVIEVIVIEWSREFPII\TIGXEXMSRWSJ solid investor returns across many asset classes.

By Mohamed A. El-Erian

THE GLOBAL ECONOMY’S LUCK

American Consequences 19 MAY RUN OU

As tempting as it is to dwell on current financial and macroeconomic conditions, doing so risks obfuscating a key element in the outlook for the future. There is a curious contrast between the relative clarity of expectations for the near term and the murkiness and uncertainty that comes when one extends the horizon further – say, to the next five years. Many countries are facing structural uncertainties that could have far-reaching, systemic implications for markets and the global economy. For example, over the next five years, the European Union will seek to establish a new working relationship with the United Kingdom, while also dealing with the harmful social and political effects of slow, insufficiently inclusive growth. The EU will have to navigate the perils of a prolonged period of negative interest rates, while also shoring up its economic and financial core. As long as the eurozone’s architecture is incomplete, consistent risks of instability will remain. Moreover, in the years ahead, the United States, having notably outperformed many other economies, will decide whether to continue disengaging from the rest of the world – a process that is at odds with its historical position at the center of the global economy. Or consider China’s development process. With the global economy acting more as a drag on growth than a boon to it, China may confront the risk that it has overplayed its hand. Heavy reliance on short-term stimulus measures is increasingly inconsistent with pursuing the longer-term

reforms that it needs, and its geopolitical ambitions and regional economic and financial commitments (including the Belt and Road Initiative) are becoming costlier. Most important, in the next five years, China and the U.S., the world’s two largest national economies, will have to navigate an increasingly narrow path as they try to secure their own interests while avoiding an outright confrontation. Such fluidity clouds the economic, financial, institutional, political, and/or social outlook for other countries. Today’s macroeconomic and geopolitical uncertainties will amplify those fueled by technological disruptions, climate change, and demographics. And they will raise questions about the functioning and resilience of the global economy and markets. This degree of uncertainty is particularly notable in the multidecade context of globalization. In recent years, the stability that comes with broad-based adherence to the rules-based international order has been considerably weakened, as has the power of central banks to repress financial volatility and buy time for the real economy. Left unmanaged, these medium-term structural trends would set the stage for greater political and social fragmentation, and raise the specter of secular de-globalization. If there is one thing that neither the global economy nor markets are wired for, it is a prolonged and deepening rupture in cross- border economic and financial relations. Were such a new paradigm to materialize, today’s trade, investment, and currency tensions would intensify and spill over to the realm of national security and geopolitics.

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In recent years, the stability that comes with broad- based adherence to the rules-based international order has been considerably weakened, as has the power of central FEROWXSVITVIWWǻRERGMEP volatility and buy time for the real economy. Bad outcomes are not inevitable (at least not yet). They could still be averted through the sustained implementation of policies to promote stronger, more inclusive growth; restore genuine financial stability; and usher in a fairer, more credible (while still free) system of international trade, investment, and policy coordination. But much will depend on the functioning of politics in the near term. Going into 2020, politicians have a favorable runway from which to launch the policies needed to extend the positive short-term outlook into the medium and long term. Worries about global recession have receded, financial conditions are ultra-accommodating, and U.S.-China trade tensions have de-escalated. But these auspicious circumstances will not last forever. Unfortunately, a policy push that could improve and clarify the medium-term outlook is unlikely. The US is entering a tense and divisive election year. Germany, Italy, and Spain are in the midst of difficult political transitions. The EU is dealing with Brexit and other regional divisions. And China’s government is trying to consolidate power in the face of slowing growth and continuing protests in Hong Kong. The main worry –

one that too few market participants have spotted – is that over the next five years, global economic and market conditions may need to deteriorate nearer to crisis levels before national, regional, and multilateral political systems muster an adequate response. Fortunately, we are now in a period when action could be taken to prevent the worst- case scenario from becoming a binding reality. Let us hope that I’m wrong about today’s political paralysis. As long as there is still time, there is a chance that policymakers will follow the advice offered by then-IMF Managing Director Christine Lagarde in October 2017: “Fix the roof while the sun is shining.” © Project Syndicate GLMIJMRZIWXQIRXSǽGIV[EWGLEMVQER of US President Barack Obama’s Global Development Council. He is president elect of Queens’ College (University of Cambridge), senior adviser at Gramercy, and part-time practice professor at the Wharton School at the University of Pennsylvania. He previously served as CEO of the Harvard Management Company and deputy director at the International Monetary Fund. He was named one of Foreign Policy ’s Top 100 Global Thinkers four years running. He is the author, most recently, of The Only Game in Town: Central Banks, Instability , and Avoiding the Next Collapse . Mohamed A. El-Erian , chief economic adviser at Allianz, the corporate parent of PIMCO where he served as CEO and co-

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HEALTHY OPTIONS: WHAT TO EAT

SKIP THE FAD DIET

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January 2020

By Dr. David Eifrig

I

t’s January, which means no one is eating the office cookies. Each new year, folks make resolutions to lose weight. They want to try the latest, greatest diet trend that promises to slim you down in just a few weeks. You can’t go anywhere without hearing about it. In fact, one of my researchers just had someone at the nail salon tell her all about the Whole30 diet. It’s a diet where you get rid of sugar, dairy, grains, and legumes for 30 days. Then you start reintroducing them to your diet. It’s supposed to be a quick fix to “reset” your metabolism. Here’s the thing... That kind of restrictive diet sets most of us up for failure. That’s one reason so many folks fail to keep their New Year’s resolutions each year. Each year, U.S. News and World Report ranks the best diets. It looks at factors such as ease of use, nutrition content, weight-loss efficacy, and benefits for folks with diabetes and heart disease. Our favorite diet tied for first place. The Mediterranean diet features lots of fish, olive oil, vegetables, and even some red wine. We’ve written many times about the benefits, including its ability to...

• Slow age-related brain decay • Reverse erectile dysfunction • Lower risk of cancer • Boost the immune system • Protect heart health

Another winner is the DASH diet, which physicians specifically designed for folks with high blood pressure (it stands for Dietary Approaches to Stop Hypertension). DASH is similar to the Mediterranean diet, but emphasizes cutting fatty foods, reducing salt, and improving your intake of calcium and potassium. This last part often gets overlooked in practice, as folks simply opt for low-fat options and cut salt out completely. Remember, low magnesium and potassium levels in Americans’ diets are probably a major component of high-blood-pressure problems. That’s because these minerals are just as important as sodium for regulating blood pressure. Three foods that pack in potassium and magnesium all at once are fish, avocados, and bananas. Cutting out salt completely is also dangerous. Some people cut down way too much on their salt intake, which leads to even worse health problems, including hyponatremia. Hyponatremia, a condition caused by abnormally-low levels of salt in the blood,

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HEALTHY OPTIONS: WHAT TO EAT

causes everything from muscle cramps to confusion and nausea. It can affect the nerves and inhibit walking. And it’s one of the leading causes for falls in the elderly. One thing we like about both diets is their emphasis on fruits and vegetables. With 10 servings being ideal, the more fruits and veggies you get every day, the lower your risk of premature death or cancer. Frankly, we hate diets. They’re restrictive and hard to follow. But if you want to try one this year, we suggest the Mediterranean diet. A simple day could include fruit and yogurt for breakfast, a nice salad with nuts and an olive oil dressing for lunch, and beans and fish for dinner. Check out this table to see what to load up on and what to avoid...

There’s plenty of flexibility with this diet. The key, of course, is to avoid inflammation- triggering foods. Inflammation is the root of so many medical problems, including heart disease and diabetes. These foods include artificial sugar, processed foods, and the white killers (white sugar, white bread, and white rice). Artificial sweeteners trigger inflammation and may contribute to diabetes. The only sugar replacement we’ve seen that we like is stevia, which is a natural, plant-based sweetener. But it may interfere with blood pressure, so we don’t recommend using it if you’re on blood- pressure medicine. We know following diets can be tricky. So even if you fall off your diet this year, making this one change will still keep you healthy: Cut out the inflammation-causers. You’ll have a better 2020 as a result.

WHAT TO LOAD UP ON AND WHAT TO AVOID

• Poultry • Cheese • Yogurt Sometimes

Rarely • Red Meat • Sweets • Fish • Olive oil • Fruits • Vegetables • Whole grains • Nuts • Beans Often

Never

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• White sugar • White bread ÎœĘĜƋåųĜÏå

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January 2020

HEALTHY OPTIONS: WHEN NOT TO EAT

By Joel Litman

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It’s both a chemical and a lifestyle

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HEALTHY OPTIONS: WHEN NOT TO EAT

E

HGH levels are highest in children and young adults and then proceed to drop severely from ages 30 to 40. In fact, many studies show that this drop in HGH levels over that span is larger and faster than the drop in HGH from ages 40 to 70. Getting old sucks. Hope was not all lost, however... With further extensive research, I found lots of positive notes on how HGH could be naturally brought back to more youthful levels. These various “bio-hacks” seemed quite doable, and frankly, not at all unhealthy in any way. I saw plenty of ads for synthetic HGH injections and pills. I haven’t tried those, and I probably won’t unless a doctor tells me I should for medical reasons. These artificial methods are not what I’m talking about here. I focused on personally trying and testing the natural techniques to increase HGH levels so I can get my body to feel younger. I have not tried any methods that seemed to be unhealthy in any way to me. When I began this period of research and “testing on myself ” a few years ago, one of our senior analysts mentioned intermittent fasting.

very January, the world is obsessed with “getting healthy.” New Year’s resolutions abound, gym memberships skyrocket, and Internet

searches for fad diets like Paleo and Keto increase threefold... But within a few weeks, most people have ditched their efforts and gone back to old habits. Today, I want to share a technique that has helped me feel immensely healthier... and younger. It’s one of the most powerful tools I’ve found in my wellness and anti-aging arsenal. But first, a bit of background about what has been the key to many of the insights I’ve found... Much of my research has pointed to the importance of one key hormone that the human body produces and how it impacts aging. I’ve had extreme elbow pain in both of my elbows – severe tennis elbow and golfer’s elbow. Looking for a non-invasive cure (or at least a symptom reducer), I found that some research suggested the joint issue may have been getting worse due to lower natural human growth hormone (“HGH”) secretion. A drop in HGH generally comes with aging.

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Personally, of all the things I’ve tried, the easiest, most direct way of naturally increasing HGH seems to be intermittent fasting. Studies have shown very interesting and even compelling results from restricting your caloric intake into a small window of time each day, every day. And to adjust to that fasting, your body responds with massive natural increases in HGH levels. For me, what I found was nothing short of a medical miracle. Over a few months of trying intermittent fasting, my elbow problems receded by 95% or more. I’m back in the gym as often as I want. I’ve recovered so much that I’m hitting personal records in elbow-important exercises that I haven’t hit since my early 30s. Essentially, by fasting 12 hours to 18 hours each day, one can increase natural HGH production levels back to those of one’s youth. I eased into it over a few weeks, so I didn’t find it that difficult to adopt as a lifestyle. Some studies have even shown natural increases in HGH levels of 500% or more. The overall impact on my life has been overwhelmingly positive. I feel more youthful, I’m stronger, I sleep more soundly, and there is no question that I’m experiencing faster Professor Joel Litman is the chief investment strategist at Altimetry. He helps investors get it right when Wall Street gets it wrong by using a team of 90 accountants and analysts who sift through more than 8,000 publicly traded companies around the world.

healing and recovery times. I’m not a doctor... So I can’t and wouldn’t recommend anything medically. However, I can shout at the top of my lungs about how intermittent fasting has personally changed my life. It has reversed my aging process in strength, sleep, healing, and recovery. My chronic elbow problem, which I thought I would be stuck with for life, is all but nonexistent (knock on wood). People tell me I look younger, and when I first meet new people now they don’t ever guess I’m on my 50th year of life. Given my crazy travel schedule and long hours studying the markets and individual companies and stocks, the heavier sleep has been a godsend. Again, I haven’t decreased the number of calories I consume... I’ve just changed when I consume them. I drink plenty of water while fasting – particularly carbonated water. I also drink black decaf coffee and lots of peppermint or chamomile tea. Peppermint tea has valuable polyphenols which also have several health benefits. Start out slow... try intermittent fasting for a couple of days and see how you feel. If you’re interested in reading more from Joel, he publishes a free daily letter called the Altimetry Daily Authority – where he talks about the hidden accounting of companies that Wall Street misses, as well as his health experiments like intermittent fasting. You can learn more by clicking here.

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By John F. Wasik

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January 2020

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oday’s cyber-robbers skip the tellers and prey on unwitting

Thieves acquired my personal bank information, printed fake paper checks, and tried to pass $8,000 worth of them. While I consider myself a fairly sophisticated person – I’ve been covering fraud as a journalist for decades – the irony of becoming a victim showed how persistent and multilayered thievery is today. I thought I was savvy on what not to do. I didn’t include any account references or numbers in my e-mails. I didn’t put them in texts. I upgraded my security settings on all my accounts, changed passwords and even signed up for a privacy browser (DuckDuckGo) that didn’t store my searches (highly recommended). I wasn’t responding to e-mails and clicking on links blindly. In short, I thought I was doing everything right.

ordinary account holders. Here, a veteran financial journalist explains how it happened to him. In less cybernetic times, bank robbers “knocked over” banks with tommy guns and drove off with the loot. Now, thieves are more likely to silently steal your personal information in indirect (often online) modes before they pilfer

actual dollars. I know this firsthand because it happened to me.

HELD UP WITHOUT A GUN

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HELD UPWITHOUTAGUN

I was stunned to learn how commonplace identity theft is today and how opaque the problem is. Normally, I wouldn’t have opened those envelopes, since they looked like junk-mail credit solicitations. This time, though, I hoped I would find some leads since they showed where the applications were filed. I forwarded this information to my local police department. Would finding the perpetrators be easy? Initially, I hoped so. We had a possible location and some names on the checks, although they were most likely fake, too. What if someone, however, was dense enough to put their own name on a fake check they was more chicanery beyond the bogus checks. About two weeks after the check theft occurred, I received notices in the mail from a credit union and credit card company in Maryland that my request for credit was denied. I hadn’t applied for credit in decades, so this was troubling. Were these the same individuals who cashed the fake checks? the forms I needed to complete to close the account and report the fraud. That took about an hour. Then, I still needed to go to the police and file a fraud report. For some reason, the bank wouldn’t do that for me. Although the bank restored the $8,000 from the cashed checks within a day or so, I was angry, and puzzled. Where did thieves get this account information? As I asked that question, I discovered there

Oh, I was also on high alert since my Internet security program twice alerted me that someone was trying to hack my e-mail (I changed the password and upgraded security levels). So I was warned, although the threat wasn’t specific. Still, I was targeted. As I dug deeper into this evolving problem, I was stunned to learn how commonplace identity theft is today and how opaque the problem is. Few institutions want you to know the extent of information- stealing operations. The good news is, my bank’s fraud algorithm caught the fake checks virtually immediately. But only because a check number had been used twice. When my banker called me and asked if I knew the names of the people to whom the checks had been written, my immediate response was “call the police.” I was en route to the South Side of Chicago at the time and drove back directly to my local bank branch. “Can you show me the checks?” I asked my banker. My name was right; the routing and account numbers were also correct. But something was off. There was filigree around the edges of the check. They had a design and logo I didn’t recognize. It looked like someone had cut and pasted a generic design and inserted the critical numbers. “These are not checks from your bank,” I told the banker calmly. “How did they get this information?” He shrugged his shoulders as he pulled up

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