American Consequences - September 2020

LLOYD Online Learning Is an Oxymoron

SEXTON The Death of the GOP

Blackout... Then World War III

REGAN

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

PORTER STANSBERRY

DR. RON PAUL

ENDOFAMERICA THEYWARNED US. NOW IT'S HERE. ARE YOU PREPARED?

SEPTEMBER 2 0 2 0

INSIDE THIS ISSUE

T his month in American Consequences , we scrutinize the many ways the end might come for America... and what you can do about it. If you read nothing else, don’t miss the unfiltered conversation between Dr. Ron Paul and Porter Stansberry regarding their past warnings for the nation, and whether it’s too late for most of America. Click here to share Dr. Paul and Porter’s conversation on Facebook. We appreciate every single one of you who shares our articles, since this is how new readers find our magazine. Then, click here for Dr. Paul’s Urgent Coronavirus Message for Every American ... It’s a controversial message, but one every American should hear. Editor in chief P.J. O’Rourke takes a close look at President Trump’s Second-Term Agenda. As he writes: When it comes to choosing between presidential campaign platforms, what should be a matter of principle can turn into a matter of taste ... How do you like your lies prepared and served? Oops, did I say “lies”?... Excuse me, I meant “promises.” And read Buck Sexton as he lays out a precise timeline for how the coming election could mean the death of the Republican Party. As he puts it, Democrats only need full control for two years to change the system forever... Of course, politics aren’t the only problem in America today...

Trish Regan shares a huge concern that essentially no one is talking about... even though it could be the first salvo of World War III. Dave Lashmet details why an October vaccine surprise may not be the easy “way out” of the COVID-19 mess that folks like to think. Alice Lloyd has written a fabulous piece on why online learning is an oxymoron. Jason Mattera shows how California’s progressive tax grabs are increasing in scope... and getting far, far more alarming. And our Chief Risk Officer X , of a major financial institution, shows four reasons why COVID-19 has far greater implications for the economy than a virus should. Seb Gorka reflects on the lessons learned, some the hard way, in the War on Terror since 9/11. And Nouriel Roubini asks if the U.S. dollar is about to lose its reserve currency status. Kim Iskyan shows why your retirement is in Uncle Sam’s crosshairs... and how you can protect your savings. And Bill Shaw predicts a gold surge to $3,000... and beyond and explains very simply the ways that you can personally buy gold. Alternatively, of course, you could simply embrace the chaos... So P.J. has written a nostalgic view on his own youth in the 1960s titled The Joy of Rioting . Please read and share our latest magazine, and tell us what you think at feedback@ americanconsequences.com. Regards, Steven Longenecker Publisher, American Consequences

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September 2020

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“No matter how you look at it, we are about enter into a strange time politically and economically.” - Dr. Ron Paul

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CONTENTS SEPTEMBER 2020 : ISSUE 37 LOST? CLICK HERE

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16 46

Editor in Chief: P.J. O’Rourke Publisher: Steven Longenecker Executive Editors: Trish Regan, Buck Sexton Managing Editor: Laura Greaver Creative Director: Erica Wood Contributing Editors: Sebastian Gorka PhD, Kim Iskyan, AMERICAN CONSEQUENCES Dave Lashmet, Alice Lloyd, Jason Mattera, Dr. Ron Paul, Nouriel Roubini, Bill Shaw, Porter Stansberry General Manager: Jamison Miller Advertising: Ricky D'Andrea, Jill Peterson Editorial feedback: feedback@americanconsequences.com Cover Illustration: Kevin Kallaugher Published by:

Inside This Issue BY STEVEN LONGENECKER

50 Blackout... Then World War III BY TRISH REGAN

2

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

60 School's In! Well, Sort Of... BY ALICE LLOYD

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12 From Our Inbox

66 Are Your Retirement Savings in the Government’s Crosshairs? BY KIM ISKYAN

16 The October Vaccine Surprise BY DAVE LASHMET

72 Gold $3,000... and Beyond BY BILL SHAW

22 California Tax Hikes BY JASON MATTERA

78 More Than Just a Virus

30 Have We Won the War?

BY CHIEF RISK OFFICER X

BY SEBASTIAN GORKA PHD

88 Is the Almighty Dollar Sinking? BY NOURIEL ROUBINI

34 End of America:

BY DR. RON PAUL AND PORTER STANSBERRY

92 The Final Word

BY BUCK SEXTON

46 The Joy of Rioting BY P.J. O'ROURKE

100 Featured Contributors

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From Editor in Chief P.J. O’Rourke

When it comes to choosing between presidential campaign platforms, what should be a matter of principle can turn into a matter of taste... How do you like your lies prepared and served? Oops, did I say “lies”?... Excuse me, I meant “promises.” Do you want an all- you-can-eat campaign platform buffet with its promises well-done to the point where even the romaine lettuce in the salad bar is burned to a crisp? In that case, I’m sure you found the Joe Biden platform delicious and filling. As I described in last month’s Letter From the Editor, Biden’s platform bill of fare is 564 pages long with every entrée so over-cooked that it seems as though Joe has accidentally left his mental oven on at 450 degrees since 1988. Or do you prefer a “tasting menu,” with little dibs of this and dabs of that, each dished up rare, not to say as raw as pork tartar and chicken sushi? If so, you’ll smack your lips over the four-page Donald Trump campaign platform with its 54 bite-sized promises. Never mind that some of what’s on offer contains nothing that could be considered an intellectual calorie.

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On August 23, the Trump campaign made an announcement...

TRUMP CAMPAIGN ANNOUNCES PRESIDENT TRUMP'S 2ND TERM AGENDA:

FIGHTING FOR YOU!

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September 2020

LETTER FROM THE EDITOR

prismatics and it begins to rain horse feathers while the pixie dust gums up the machinery of government that the gloom begins.]

_______ Building on the incredible achievements of President Donald J. Trump's first term in office, [ creditable achievements there may have been, but it's the miscues, muddled messaging, Tweet-blurts, and administrative

JOBS Create 10 Million New Jobs in 10 Months [That's 33,333 jobs per day, 1,389 jobs per hour. About the only way the government could create that many jobs that quickly would be to ban the Internet and legally require that every e-mail message, Google search, grandchild-picture Facebook posting, and item of advertising spam be personally delivered to you by a federal employee. We used to call this the "Post Office," and I was under the impression that the Trump administration was critical of that institution.] Create 1 Million New Small Businesses [Let's be frank about this... The only people who would have the grit and gumption (and desperation) to start a small business in the current economic mess would be 1 million new immigrant families.] Cut Taxes to Boost Take-Home Pay and Keep Jobs in America [As a Republican, I hate taxes. But, as a Republican, isn't there a deficit – which goes unmentioned in the Trump platform – that I'm also supposed to hate? Nor do I see how boosting take-home pay keeps jobs in America. It's the employers

chaos that have been in credible] the president's re-election campaign

today released a set of core priorities for a second term [so similar to the core priorities for the first term that they amount to a plea for a do-over] under the banner of "Fighting for You!" [With the amount of fighting that's going on in America at the moment, maybe the president should specify exactly which "You" it is that he's fighting for.] President Trump's boundless optimism [one way to put it] and certainty in America's greatness [despite it needing to be "made great" again] is reflected in his second-term goals and stands in stark contrast to the gloomy vision of America projected by Joe Biden and Democrats. [Actually, there's nothing "gloomy" about Joe's "vision of America." Biden is projecting a beautiful PowerPoint presentation of candy-flavored rainbow benefits, programs to give everybody a flying pony, and pixie- dust domestic and foreign policies. It's when the flying ponies collide with the marzipan

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that provide the pay who leave the U.S., not the workers who take the pay home.] Enact Fair Trade Deals That Protect American Jobs [I'm always hoping that it's not the trade deals we have already that supply those American jobs.] "Made in America" Tax Credits [The kind of thing that can end up subsidizing wine from North Dakota.] Expand Opportunity Zones [Meaning we may have to use the military to invade over-taxed and over-regulated places like California.] Continue Deregulatory Agenda for Energy Independence [A good promise that would be better if the Trump administration got serious about nuclear power plants. Reddy Kilowatt wants to get a glow on.] ERADICATE COVID-19 Develop a Vaccine by the End of 2020 [By holding scientists at gunpoint? Though if that will work, I'll get out my deer rifle.] Return to Normal in 2021 ["When you wish upon a star... "] Make All Critical Medicines and Supplies for Health CareWorkers in the United States [Nice thought, but let's make sure we have all critical medicines and supplies before we insist they be made here.] Refill Stockpiles and Prepare for Future Pandemics [Another nice thought. We'll ask the Magic 8-Ball which disease is coming next and what we'll need to stockpile for it.]

END OUR RELIANCE ON CHINA Bring Back 1 Million Manufacturing Jobs From China [Ship them by UPS or FedEx?] Tax Credits for Companies That Bring Back Jobs from China [Companies that are already getting "Made in America" tax credits. Double-dipping alert!] Allow 100% Expensing Deductions for Essential Industries like Pharmaceuticals and Robotics who Bring Back Their Manufacturing to the United States [Hmmm... I, in my day, have had an expense account. That $600 dinner for two at Lutèce seemed essential at the time.] No Federal Contracts for Companies Who Outsource to China [Can we still

order moo goo gai pan for takeout?] Hold China Fully Accountable for

Allowing the Virus to Spread Around the World [The bill has been sent to Xi Jinping. He says the check is in the mail.] HEALTH CARE Cut Prescription Drug Prices [A little something in the "How?" department might be appropriate here.] Put Patients and Doctors Back in Charge of Our Health Care System [And while we're at it, let's make all the health care bureaucrats sick and send politicians to treat them.] Lower Health Care Insurance Premiums [A proposition about as controversial as

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September 2020

LETTER FROM THE EDITOR

politics, how come he keeps asking me for more campaign donations? Also, how did he get into politics? I seem to recall that his own money was involved...] Drain the Globalist Swamp by Taking on International Organizations That Hurt American Citizens [Personally I'd start with FIFA – Fédération Internationale de Football Association. Watching soccer is painful for this particular American citizen.]

saying, "I love home and mother."] End Surprise Billing [Xi Jinping would like a refund.] Cover All Pre-Existing Conditions [Oops, mother needs to be put in a home, and since we lowered health care insurance premiums, we're having trouble finding a memory care unit to take her.] Protect Social Security and Medicare [Should we call up the National Guard for this as well as rioting and coronavirus?] Protect Our Veterans and Provide World-Class Health Care and Services [See "I love home and mother" above.] EDUCATION Provide School Choice to Every Child in America [My own child's choice would be to skip school.] Teach American Exceptionalism [Excepting, I presume, the exceptionally stupid things America has done.] DRAIN THE SWAMP Pass Congressional Term Limits [Good luck with getting Congress to vote in favor of firing itself.] End Bureaucratic Government Bullying of U.S. Citizens and Small Businesses [Lady Gaga has been a leading anti-bullying campaigner. Should we bring her in on this?] ExposeWashington's Money Trail and Delegate Powers Back to People and States [If Trump wants to get money out of

DEFEND OUR POLICE Fully Fund and Hire More Police and Law Enforcement Officers Increase Criminal Penalties for Assaults on Law Enforcement Officers Prosecute Drive-By Shootings as Acts of Domestic Terrorism Bring Violent Extremist Groups Like Antifa to Justice End Cashless Bail and Keep Dangerous Criminals Locked Up Until Trial [The real message in these five platform planks is that Trump's most effective campaign volunteers are rioters, looters, violent protestors, and loud, threatening demonstrators. All good liberals hate Trump,

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but all good liberals also live behind breakable glass windows. It would be awfully cynical to suggest that Trump supporters quit threatening him back and go provide the Antifa mob with food, drink, and throw-able objects (of the squishier, less dangerous kind such as plastic water bottles, because we don't want any policemen to get hurt). I don't want to be an awful cynic so I won't suggest it.] END ILLEGAL IMMIGRATION AND PROTECT AMERICAN WORKERS Block Illegal Immigrants From Becoming Eligible for Taxpayer-FundedWelfare, Health Care, and Free College Tuition Mandatory Deportation for Non-Citizen Gang Members

of inciting American xenophobia. Some Americans do hate foreigners... And yet America is a nation of foreigners. We're hip to the kind of tricks that foreigners get up to. "Know thyself," said the Delphic Oracle. Americans hate foreigners. Yet the "End Illegal Immigration" section of the Trump platform is remarkably similar to the lovey-dovey Obama administration's immigration policy. There are a few differences – blanket ineligibilities, "sanctuary cities" ban, and "able to support themselves" proviso. (Obama didn't seem to think anybody should support themselves, that was the government's job.) Otherwise, it's Obama immigration all over again, minus a Dreamer or two. Trump hasn't exactly gone soft on immigration, but he hasn't loaded up on immigration Viagra either.] Then there's... INNOVATE FOR THE FUTURE Launch Space Force, Establish Permanent Manned Presence on the Moon, and Send the First Manned Mission to Mars

Dismantle Human Trafficking Networks

End Sanctuary Cities to Restore our Neighborhoods and Protect Our Families Prohibit American Companies From Replacing United States Citizens With Lower-Cost ForeignWorkers Require New Immigrants to Be Able to Support Themselves Financially [Here are six platform planks showing restraint – weird restraint. No one has ever been able to restrain Trump, least of all Trump himself. And yet restraint we've got. Where'd that come from? (And where'd The Wall go?) Trump has been accused, not without reason,

Build theWorld's Greatest Infrastructure System

Win the Race to 5G and Establish a National High-SpeedWireless Internet Network Continue to Lead theWorld in Access to the Cleanest DrinkingWater and Cleanest Air

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September 2020

LETTER FROM THE EDITOR

Partner With Other Nations to Clean Up Our Planet's Oceans

DEFEND AMERICAN VALUES Continue Nominating Constitutionalist Supreme Court Justices and Lower Court Judges [But not working very hard to make sure there's a GOP Senate majority to confirm them.] Protect Unborn Life Through Every Means Available [Short of really going down into the subway tunnel of this emotionally fraught and morally complex issue and grabbing it 0s legislative third rail.] Defend the Freedoms of Religious Believers and Organizations [Although some of those religious believers are Islamist fanatics and their organization is ISIS.] Support the Exercise of Second Amendment Rights [Leaving it unsaid that getting this kind of exercise while running away from the police will not have a healthy outcome.]

AMERICA FIRST FOREIGN POLICY

Stop Endless Wars and Bring Our Troops Home [We might be able to do one or the other, but not both.] Get Allies to Pay Their Fair Share [NATO says the check is in the mail.] Maintain and Expand America's Unrivaled Military Strength [Which won't be so unrivaled if all our troops are home.]

Wipe Out Global Terrorists Who Threaten to Harm Americans [Also hard to do with all our troops at home.] Build a Great Cybersecurity Defense System and Missile Defense System [A noble goal to propose, although I doubt anyone in the voting booth (or the White House) has the slightest idea about the science and technology that would be involved in achieving this goal. So it's a noble goal to propose while talking through our hat.] And lastly, we have...

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FROM OUR INBOX

of my views. But I’m also glad – and flattered – to be called someone with “informed common sense.” Though that can be a hard thing to live up to. So much information is wrong... The senses can be deceiving... And sometimes (I consult my dictionary) common can mean “vulgar, low, coarse” instead of “shared by everyone.” As to why American Consequences hasn’t been on your radar, see my answer to Keith above. You may be getting too many blips on your radar screen from British royal family sex lives, Nancy Pelosi haircuts, and rumors of year-old Trump micro-strokes. I read American Consequences with great interest. It was really a pleasure to read this type of article rather than getting frustrated with politics. Keep up the good work. – Jas P. P.J. O’Rourke comment: We appreciate the compliment, Jas. But please don’t completely abandon getting frustrated with politics. Frustration with politics is a healthy reaction and a reminder that we, as individuals and as a nation, should keep politics to a minimum. (I’ve still got my dictionary open and note that the root of the word “frustrate” is frustrare , Latin for “to disappoint or deceive,” which is a pretty good definition of politics.) I’ve followed P.J. since National Lampoon days and always enjoy his columns! – Scott K. P.J. O’Rourke comment: I just knew there was someone out there who always enjoyed my columns. And it’s you, Scott! I applaud your

Re: Our Newest Readers Weigh In This is well written and needs to be read by a larger audience. National publication of some kind. – Keith A. P.J. O’Rourke comment: Thanks, Keith! We’re trying to be a national publication, and we’re having some success, I hope. But media today suffers from a problem that a broadcast engineer friend of mine describes as “noise-to- signal ratio.” There is so much sensationalism (noise) in the media that factual analysis (signal) gets lost in the screeching static. Keep fiddling with the dials until you find a station (us!) that comes in strong and clear. Through a random degrees of separation conversation with my 21-year-old daughter that started on Macaulay Culkin, I ended up talking about Mr. O’Rourke and his decades of common sense libertarianism with a conservative slant. Not an accurate take away on my part? Maybe. Let’s just go with informed common sense. At any rate, I ended up wondering where the hell P.J. has been. The question should be where the hell have I been. I can’t believe that American Consequences has not been on my radar. Keep up the good work. Thank you P.J. and staff. – Chris S. P.J. O’Rourke comment: Chris, you’re welcome. And I think “common sense libertarianism with a conservative slant” is a fair assessment

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September 2020

P.J. O’Rourke comment: James, I suspect you’re right about what Joe’s thinking. In which case Joe had better rethink it. Joe’s stand-up act is going to have to get a lot better before it can rival my friend Dennis Miller’s. While it may or may not be true about all the things you describe, at least Biden has a lifetime of government experience and can think and talk with people about something besides himself. – Jane D. P.J. O’Rourke comment: Jane, that’s a fair point. While Biden’s campaign platform is a ridiculous exercise in over-promising, there is no indication that Joe is not a decent and empathetic person. But whether “a lifetime of government experience” is a plus or a minus is something I’ll leave to the voters to decide. My opinion is that the fault Joe Biden has is a fault that really lies within ourselves: Wanting more from government results in more government than we want. The Dems know Joe will never make it through his first four years, Kamala will be president, the radical left (the squad) will enlist more of the same, it will be the end of the U.S. and it will turn into a banana republic with extreme poverty, it will be worse than the crash back in the 1920’s, disease will ravish the country and death will be seen all over with people rotting in the streets being eaten by rats and other rodents. It will not be a pretty sight. For people who think Joe as president will be a wonderful thing, they better think twice – he is like Bernie in Weekend at Bernie’s, he’s a stiff with fools pulling his strings! – Beverly S.

loyalty. But, looking over my old columns, I’m not absolutely sure I agree with you. Re: The Great American Meritocracy at Risk Awesome. I loved Trish Regan and miss her. Fox Business primetime has become a joke since her leaving. – Jack R. Trish Regan comment: Thank you for your loyalty, Jack. Our freedom of speech is an important value that we must all cherish. I know I certainly do! I enjoyed Trish Regan’s article on Venezuela and how it relates to what’s going on in the U.S. today. She was spot on, and I know what I’m talking about as I’m one of the few American expats still here in Venezuela... Everything you’re hearing today up there was said down here. As the saying goes, “The only new thing is the history you don’t know.” Keep up the good work! – Ted H. Trish Regan comment: Ted, thank you for the comment. You’re still there in Venezuela?! Wow. You are correct – nearly every American has left. Please stay safe and keep me posted! Re: Joe Biden’s 564 Pages of Empty Promises What a riot! However, I feel the joke is on us. Joe isn’t actually a politician, he fancies himself highbrow comedian, one we plebeians don’t have the intellect to understand. Joe thinks of himself as the liberal equivalent of Dennis Miller. – James F.

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FROM OUR INBOX

tell but our democracy will not be the same and America’s best days are over. – Marco K. P.J. O’Rourke comment: Marco, see the reply to Beverly above, for my take on Joe’s health and well-being. Meanwhile I’m not sure the Roman Empire is the best historical example, either of a republic or a decline... The Roman emperor was an absolute dictator (though subject to veto – on the point of a spear – by the Praetorian Guard). Thus the decline of the Roman Empire was the decline of a dictatorship, and by the time the Western Roman Empire collapsed in 476 A.D., nobody missed it much. Roman civilization , on the other hand, began in 753 B.C. and lasted until the fall of Constantinople in 1453 – 2,226 years. So I think we can endure four years of Joe. Re: Live Free or Die... The Privilege of Freedom and the Power of Speech Trish Regan’s article, “Live Free or Die,” is one of the very best I’ve read in quite a few years. She is absolutely right when she describes how our society has drifted from one of diversified acceptance of ideas that are not always compatible, to one in which everyone must agree or suffer dire consequences. I can remember the time when I actually voted for a Democrat, a Republican and an Independent, all on the same ticket. I simply voted for whoever I thought was best for the job, without regard for politics. Today, that just is not possible! More is the pity!

P.J. O’Rourke comment: But what’s your worst-case scenario, Beverly? Kidding aside, I think – and pray – your predictions are too pessimistic. My guess about what will happen... (Dumb Pundit Alert! I have been totally wrong about everything that’s happened in politics for at least the last five years!)... is that Biden will win and the Democrats will keep the House and take the Senate. Then, we will have two years of an attempt to make what you describe happen. Fortunately, The Squad’s arrogance is only exceeded by their incompetence. What they do accomplish will be awful, but they won’t accomplish much of it. By the 2022 mid-term elections, American voters will be saying, “These people stink.” And thereafter Biden will be facing a centrist/conservative Congress. Also, I think Joe will survive his first term in fine fettle. There’s something about being in power that seems to come with a spritz from the Fountain of Youth. It’s been 75 years since we’ve had a president kneel over in office, and FDR was a very sick man in his fourth term. Doubt that Joe will finish his first term as President. Then we will see howwell Harris leads the country. America is in a spiral decline just as the greatest republic that existed, Roman Empire. If you study history, we seem to be at that very point. Time will

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September 2020

Re: Covering the 1997 Hong Kong ‘Handover’ I’m amazed that P.J. O’Rourke was in Hong Kong in 1997 and still can’t get the basic facts straight. The British didn’t “give away” Hong Kong. It wasn’t theirs to give. They had only leased it, and the lease was up. – John B. P.J. O’Rourke comment: Actually, John, just the “New Territories” on the mainland were leased from China. The rest of Hong Kong was British territory, just as Puerto Rico is U.S. territory. The rights and wrongs of such colonialism can be argued endlessly. But the British giving Hong Kong – with its liberties, rule of law, and well-developed civil society – to China was equivalent to the U.S. giving Puerto Rico to Cuba. Great Britain was not in a position to militarily defend or even logistically provide for Hong Kong. So the handover was inevitable. But what Great Britain could have done was provide British citizenship to the people of Hong Kong. Britain would have gained over 6 million well-educated, entrepreneurial, hard-working, highly motivated (and in some cases very rich) immigrants. Today, Great Britain might be the economic powerhouse of the world – with fabulous take-out food.

We need to return to the days of yore, when people who did not agree politically could still associate, and maybe even love each other. – Donald G. Trish Regan comment: Donald, you and I are on the same page. It’s a shame that the world has become so polarized. I hope there’s an opportunity to get back to a civil world where we appreciate each other as people and remain willing to hear different points of view. Re: Why Uranium Is the Future Really enjoyed the article on uranium. I’ve been reading you for a few years now and this humor piece is certainly the one I’ve enjoyed most. Keep the funny stuff coming! – Jim G. Kim Iskyan comment: Jim, many thanks for the kind words. If I can write about investing and finance and uranium – topics in which there is little inherent humor – and make it funny, I feel like I’m doing something right. (I had a bit of inspiration from a guy named Bill Minkler, who for years wrote a back-of-the- magazine humor column for Nuclear News magazine. I know – humor in a nuclear power magazine? But it worked, and I still remember some of his writing.) I have two words that make my eyes glaze over: ‘nuclear’ and ‘aluminum’... – Shaun C. Kim Iskyan comment : I know what you mean, Shaun... I have to reach for the coffee when I hear the words “differential calculus” or “game of cricket.” And I don’t intend to invest in those anytime soon!

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American Consequences

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September 2020

By Dave Lashmet

THE OCTOBER VACCINE SURPRISE THINK A VACCINE WILL BE READY THIS AUTUMN? THINK AGAIN...

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THE OCTOBER VACCINE SURPRISE

Expect a COVID-19 vaccine “October surprise” this election season... So far, the COVID-19 pandemic has led to roughly 6 million U.S. infections, with a 2.5% case fatality rate. The contagion reaches across friends and family, spreading at an alarming pace. A vaccine is thought of as an end point – a “way out” of this mess we’ve made. That may or may not be true... But both politically and for the sake of the economy, few are interested in waiting to see how effective the vaccine will be... just as long as we have one. I’ve been a market analyst for 20 years, largely focused on medical advances, new drugs and treatments, and technology breakthroughs. And in my years of experience with the biotech space, I’ve seen what it takes for drugmakers and other companies to combat the worst threats to our health. The global coronavirus pandemic is kicking several of these battles into high gear now. And that means investors need to know what’s happening in this part of the market... and what a vaccine really means. You see, questions will remain this October... Will the vaccine work? Maybe. Will it be painful? Potentially, yes, very much so. Will it be permanently harmful? Probably not. So overall, any one of these vaccines is probably a better deal than getting COVID-19. That’s all we know so far... And that’s all we will know next month, too.

Even in the face of the COVID-19 pandemic, pivotal trials for a vaccine take six months. We will have a large sample of people’s reactions to a first and second vaccination – most take two doses for full protection. However, that is not a proxy for effectiveness. A vaccine that wins early approval and later proves to be ineffective will burn the goodwill of the people – especially if this worthless vaccine came with side effects. Nevertheless, you can expect an “emergency use authorization” by the U.S. Food and Drug Administration (“FDA”) by October 20, 2020. The reason behind this date is the “animal rule.” This rule is the reason why drug companies can develop a vaccine for a lethal contagion without risking people’s lives... at least at first. Some contagious infections are so lethal or difficult to treat that it would be unethical to test them on living volunteers. Instead, we use two stand-ins: non-human primates (generally monkeys or chimps) and one other kind of animal that gets the disease. In part, this is why the U.S. government builds massive biocontainment labs: to run animal experiments while protecting the scientists. The key experiment is called a challenge trial... You give the vaccine to the animals, then challenge them with the live virus. Ideally, you’d want the animals that got the vaccine to be fully protected and show no signs of sickness. Still, if the vaccinated animals get sick but have a less severe form

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September 2020

You see, questions will remain this October... Will the vaccine work? Maybe. Will it be painful? Potentially, yes, very much so. Will it be permanently harmful? Probably not. a vaccine. That’s because these antibody drugs are additional safety nets in case the COVID-19 vaccine is less effective in people than in animals. trials in late summer and work fast. Indeed, if more patients improve when given antibodies versus a matching control group, you can see an antibody work within days. So when the vaccine advisory committee of the FDA meets, knowing that there is an effective antibody drug will also help approve The truth is that the translation from animals to people is never perfect. A good rule of thumb in biotech is that every drug candidate works in mice, but only 1% of them win FDA approval. Still, knowing that there is an antibody drug – or a cocktail that includes a mix of antibody drugs – offers a promising safety net. The U.S. and global biotech manufacturers are highly effective, overall. Given time, they can make powerful, safe, and effective drugs... The problem with COVID-19 is that the epidemic moves so fast, we need to stop it quickly – so this is clipping off drug development time.

of the disease, that’s helpful. For example, a sickness but not a fatal case. Scientists also challenge another equal number of animals who don’t receive the vaccine. That proves the virus is live and lets researchers compare how both groups react. From there, it’s a subtraction: how well did the vaccinated animals do compared with unvaccinated controls. That’s the protocol. Researchers do try to look at side effects in the animals, too. But animals are hard to read. And they can’t report how they’re feeling. So that’s how a vaccine can work well in animals, but still have significant questions when it comes to human side effects. The U.S. Centers for Disease Control and Prevention (“CDC”) recently summarized the first 1.3 million U.S. cases of COVID-19. Of those cases, there were 72,000 deaths. For 40-year-olds, the CDC found a 1% risk of death from COVID-19. For 50-year-olds, the risk is 2%. For 60-year-olds, it’s 7%. For 70-year-olds, it’s 17%. And for the 80-plus bracket, there’s a 32% risk of death. It’s easy to see that the older you are, the more at risk you are. And so far, COVID-19 therapies have been slow to roll out. Still, we might see some of those get added on to an October vaccine surprise... In particular, watch for specialized antibody drugs that are made in bioreactors but can be added to the veins of severely ill patients. These antibody drugs specifically target the virus that is causing COVID-19. The drugs start clinical

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THE OCTOBER VACCINE SURPRISE In sum, this explains why we can get a vaccine for COVID-19 approved by the U.S. FDA

case fatality rate of 50%... It kills quickly, and it spreads broadly. Compared with that, severe side effects are acceptable... 18% of vaccine recipients reported joint pain and 9% reported new arthritis symptoms from the vaccine. None of the controls reported any extra arthritis symptoms. So while these are serious side effects, they’re also better than dying. For COVID-19, which is a lot less fatal in the aggregate – running at about a 2.5% case fatality rate – we can’t accept as high of a threshold for severe side effects. And yet we are seeing serious side effects in some early-stage COVID-19 vaccine trials...

for emergency use by October 20, 2020. But it leaves a major question unanswered: What are the side effects that someone would face when they get this vaccine? See, when doctors talk side effects for vaccines, they are weighing the side effects against the disease the vaccine is designed to prevent. For example, look at the newly approved Ebola vaccine... Made by pharma giant Merck, it won FDA approval in December 2019. Ebola can have a

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The Two Daves Square Off… Dave Lashmet Talks With Dr. David Eifrig About the Vaccine (video and transcript) Dave shows us how the SARS-CoV-2 virus attacks a cell and how researchers will use that “spike” to develop a vaccine. But don’t get in line for your dose just yet... Coronavirus Vaccine Tracker This vaccine tracker by the New York Times updates the latest on the COVID-19 vaccines in real time, and also details the development cycle of a vaccine from lab to clinic. U.S. government slow to act as anti- vaxxers spread lies on social media about coronavirus vaccine “We see more vaccine hesitancy with the COVID vaccine than with other vaccines. We know that. This concerns us...”

COVID vaccine: ‘8,000 jumbo jets needed’ to deliver doses around world Shipping a coronavirus vaccine around the world will be the airline industry’s biggest challenge ever, requiring the equivalent of 8,000 jumbo jet planes to get a single dose to 7.8 billion people... China Injects Hundreds of Thousands With Experimental COVID-19 Vaccines Among the hundreds of thousands who have been injected with experimental vaccine doses from CNBG, the Sinopharm subsidiary, are mainland China-based employees of Hong Kong-based Phoenix Satellite Television Holdings. Coronavirus: Whowould get the vaccine first? Unprecedented steps are being taken to ensure roll-out of the vaccine is global. But there are concerns that the race to get one will be won by the richest countries, at the expense of the most vulnerable.

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20 September 2020 WANT MORE?

In short, although we can approve a vaccine for its political importance, medically, we will know very little until the spring. As for efficacy, we won’t have this data by October. Like I said, we will use the animal rule instead. Unfortunately, people can be a lot older or a lot more obese than lab animals. Hopefully, any “October surprise” vaccine will take side effects into account... But either way, with one major exception, this is going to be an opt-in vaccine. Even doctors and nurses will not have to take it. They can always change hospitals or professions. However, soldiers don’t get that choice. So we expect the initial emergency use approval for a vaccine to largely apply to the young and healthy – focused on U.S. military personnel. After all, the Department of Defense needs FDA approval before vaccinating our troops. That’s to keep up with the Russian and Chinese militaries. Finally, let’s talk distribution... Military issues aside, the first folks eligible for a vaccine will be doctors, nurses, first For example, drug developer Moderna reported that three of 15 patients in its Phase I trial reported serious adverse events requiring an emergency room visit at the highest dose. And although the dose has been lowered for the Phase III trials, that’s still a major warning sign about the safety of Moderna’s vaccine.

responders like paramedics, and other medical aides in nursing homes and other care facilities. These vaccinations can start by the end of 2020... but likely only with about half a million doses by then. The bulk of our health care workers won’t be protected until Spring 2021. National distribution may start in the second quarter of 2021. But it might not finish until sometime in 2023. In other words, it’s unlikely that millions of Americans will be able to stop by their local Walgreens or CVS pharmacy and get a free COVID-19 vaccine this December. The good news is that by the time a vaccine is available to you – say, sometime next summer – we will have strong evidence of its safety and efficacy. The more sobering news is that until that time, you can expect local, state, and international mask mandates, since COVID-19 is an airborne, lethal contagion that especially threatens people over the age of 50. In short, although we can approve a vaccine for its political importance, medically, we will know very little until the spring. And nationally, it won’t protect us for another year, at least. Full distribution and herd immunity are at least two years away. Bottom line, vaccinating 200 million Americans is possible... But it’s not fast, nor easy.

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AHEAD

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September 2020

CALIFORNIA PROGRESSIVES GO BIGLY ON TAX HIKES

By Jason Mattera

If California were its own sovereign territory, there’s a good chance President Donald Trump would’ve already added it to his list of [bleep]hole countries.

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Californians, for their part, are voting with their feet – leaving the Golden State en masse , with one local report observing that more people have left the state over the last seven years than have migrated to it. A shrinking population means a diminishing tax base, and with California currently struggling to offset a $50 billion budget deficit amidst the coronavirus pandemic, perhaps this moment provides an opportunity for Democrat leaders in Sacramento to reevaluate their obsession with soaking “the rich,” and in its place pursue policies that are more welcoming to high earners? No? What a shocker...

From rolling energy blackouts induced by green-energy boondoggles to streets littered with human waste and needles because of lawless homeless encampments... to social justice no-bail policies that release prolific offenders back into communities to reoffend... to artificially inflated costs of living because of inept intervention into labor and housing markets... California has unintentionally provided the rest of America with a valuable lesson of what awaits other states when unhinged progressive politicians take over. And we can’t forget the taxes – the onerous, through-the-roof taxes that are designed to penalize residents who have the nerve of attaining financial success.

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much wealth . The words “excessive” and “extreme” as it pertains to wealth appear throughout the bill. “ For the benefit of accumulating excessive wealth in this state there shall be imposed an annual tax of 0.4% upon the worldwide net worth of every resident in this state in excess of the following ... For married taxpayers filing separately, fifteen million dollars ... For all other taxpayers, thirty million dollars .” (emphasis added) Here’s State Assemblyman Rob Bonta of Oakland explaining the nuts and bolts of his proposal. Take note of how cavalier he is about what would otherwise be straight- up theft if he didn’t carry the government’s imprimatur... If you’re a married couple filing jointly, if you have $30 million in joint assets, the amount over $30 million is what is taxed... So you get your first $30 million untaxed. Your next $10 million is taxed at about $40,000. Your next $10 million after that, another $40,000. Bonta downplays anxiety over adding another tax to an already overtaxed state by relying on liberalism’s predictable battle cry... Marxist class warfare: “It affects about 0.15% of the California population – not the top 10%, not the top 1%, the top 0.15%... about 30,000 people.” Of course, if you think that politicians who currently show no restraint with spending money they didn’t earn won’t eventually lower that threshold to entangle even more families, I have a totally on-budget, on-time high-

Progressives are planning to go after everything you own if you haven’t already waved goodbye to the Hollywood Hills. Normally, it’s risky to quote from legislation at length. The text is both painfully boring and intentionally opaque. It’s written by lawyers, for lawyers. But in this case, while the wording is still obnoxiously clunky, the intention of the text is abundantly clear. So we’ll reference large swaths of it to give a full picture of how progressives are planning to go after everything you own if you haven’t already waved goodbye to the Hollywood Hills. With that said, let’s dive right into Assembly Bill No. 2088. It starts with the fundamental conceit that lawmakers have been given the Solomonic wisdom to judge how much wealth is too HOW MUCH WEALTH IS TOO MUCH? Legislative Democrats have instead proposed the nation’s first-ever wealth tax, a scheme that would expand the state government’s reach to cover a person’s combined assets. After all, why bring spending in line with tax revenue – also known as responsible governance – when it is far easier to treat “the rich” like a bottomless ATM? Yet what makes this legislation truly alarming is that it would apply to former residents, as I’ll explain in a bit.

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September 2020

Folks smart enough to amass $30 million in assets are likely smart enough to identify loopholes that his enforcers are not. This list isn’t even the final word, however, as the bill makes clear: “Assets that must be reported separately shall include, but shall not be limited to ” (emphasis added). Say what you will about Bonta, but at least he understands that folks smart enough to amass $30 million in assets are likely smart enough to identify loopholes that his enforcers are not. Speaking of enforcers, Bonta’s legislation would empower the aggressive Franchise Tax Board (California’s IRS) to “adopt regulations to carry out these provisions, including regulations regarding the valuation of certain assets that are not publicly traded ” (emphasis added). The political party that trips over itself to condemn any restriction on abortion as an abridgement of privacy rights sure is comfortable mandating an intimate relationship between you and the IRS... The erasure of economic liberty aside, directing government pencil pushers to • Debts other than mortgages or other liabilities secured by real property • Real property • Mortgages and other liabilities secured by real property

speed rail project in California that would make for a great investment! There’s a reason why the wealth tax has had very little success in other countries... It’s a logistical nightmare. Bonta may be surprised to learn that “worldwide net worth” isn’t like determining how much money you have in your savings account... It’s a little more complicated than that. Or it could be that Bonta is aware of the nuances involved, and the sprawling bureaucracy that would be needed to enact his agenda is exactly the type of adrenaline rush that gets a power-hungry political junkie like himself out of bed in the morning. LOOPHOLES BEWARE Regardless, here’s how Bonta envisions California defining wealth for the purpose of taxing it: • Stock in any publicly and privately traded C-corporation • Stock in any S-corporation • Interests in any partnership • Interests in any private equity or hedge fund • Interests in any other noncorporate businesses • Bonds and interest-bearing savings accounts • Cash and deposits • Farm assets • Interest in mutual funds or index funds • Put and call options • Futures contracts • Art and collectibles • Financial assets held offshore • Pension funds • Other assets, excluding real property

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A wealth tax may be legally dubious, but by pressing for one, progressives don’t fully grasp how economies work. Economies are not static like a math equation... Rather, they are dynamic, representing billions of daily interactions that are impossible for control freaks. would be willing to pay at a particular point in time, and a tax auditor would not have a crystal ball to make such a determination. Moreover, Kline says, high-income households socked with the wealth tax would end up spending “an outrageous amount of time and resources trying to estimate the value of their assets every year – with the additional risk of audits and penalties if the state disagrees with their estimates.” To be fair, Bonta does leave room in his bill for taxpayers to appeal the state’s arbitrary assessment. Just don’t get your hopes up... “The burden shall be on the petitioning determine the value of personal possessions could be problematic, as David Kline of the California Taxpayers Association tells American Consequences ... The Franchise Tax Board would have an impossible task – attempting to accurately value assets whose values could not possibly be known unless they were offered for sale in an open market. The value of a work of art, for example, depends on what a buyer

party” to demonstrate that the methodology was “unfair.” Also be prepared for the Franchise Tax Board’s attempt to nullify a legal sale if it happened to decrease a person’s overall net worth. “Any transaction, a primary purpose of which is to reduce the valuation of a taxpayer’s worldwide net worth as of December 31, shall be disregarded.” Apparently, that’s considered “evasion.” ‘HOTEL CALIFORNIA’ Yet as I mentioned earlier, these clauses aren’t even the most disturbing parts of the bill. That award goes to the section that targets those who are no longer California residents. If passed, the wealth tax would hit affluent individuals who have lived in California over the last 10 years . “Avoidance,” asserts Bonta, “is not as simple as moving to another state. “We have a phased-in approach, whereby, if you move, in year one, 90% of the tax bill still applies to you. In year two, 80%, and so on, for ten years until it phases out.” “Their wealth was accumulated during their time in California, during the nexus that they had with the state of California, and that is what we are proposing in our bill.” I’m reminded of the lyrics from that famous Eagles song, “Hotel California” ... You can check out anytime you like, but you can never leave . This obvious overreach flummoxed Fox Business host Neil Cavuto, who seems to agree with my Eagles reference... “It sounds like they would be prisoners of California...

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September 2020

grasp how economies work. Economies are not static like a math equation... Rather, they are dynamic, representing billions of daily interactions that are impossible for control freaks like Bonta to regulate. When laws change, people alter their economic behavior and investment strategies to reflect their best interest under the new rules. It’s called human nature. Bonta understands this reality on some level, or else he wouldn’t plan on harassing nonresidents for money once they’ve left California. Still, he largely believes that “the rich” will stay put to take it in the shorts rather than hightail it out and roll the dice in court when Bonta’s enforcers come knocking. The great escape, however, appears to be in the works... Dennis Brager, a Tinseltown tax attorney for the rich and famous, remarked that he’s “hearing from clients who would like advice on how to break ties with California in order to avoid paying what will amount to confiscatory taxes on their income and wealth.” Echoing those concerns was Mauricio Umansky of the real estate company The Agency, telling one news outlet that “there is certainly a lot of conversation about getting out of California because of how expensive it is, but really more about the taxes – the fear of the new California taxes as well as the fear of the new wealth tax.” Even the Los Angeles Times

you’re not letting them leave.” Cavuto then asked the California Democrat the obvious question of how this tax would be legally binding. A person living outside of California is no longer subject to its jurisdiction, is he? “We believe we can do that,” responded Bonta. “Certainly, we’re open to dialogue and discussion as we move the bill forward. But we think it’s a sound approach and has a strong legal foundation.” Jim Burling, who is with the Pacific Legal Foundation, disagrees. He tells American Consequences that, while California “may be able to tax wealth within the state just like it can tax real property within a state, there is no basis for taxing nonresidents for wealth not located in the state,” adding that any attempt by lawmakers to tax the wealth of nonresidents could “violate the dormant Commerce Clause [of the U.S. Constitution] – a doctrine that holds a state cannot adopt laws that hinder the free flow of commerce across borders.” As of right now, Burling says, there’s no case law on the constitutionality of a state wealth tax “because no state has yet been so craven as California to have adopted one.” Because California’s constitution “nowhere expressly refers to the proposal’s taxation of ‘worldwide wealth,’ there is a good argument that there is no state constitutional authority [to implement] such a tax.” UNINTENDED CONSEQUENCES A wealth tax may be legally dubious, but by pressing for one, progressives don’t fully

– no friend of free markets – dinged the wealth tax

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