American Consequences

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2020 Election Threats: SCOTUS, Potential Election Fraud, & the Chinese Influence

Episode #3  |  September 30th, 2020
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In This Episode:

The legendary Neil Grossman (former European Central Banker, former hedge fund investor, physicist, mathematician and attorney with an interest in constitutional law) joins Trish to discuss Trump’s appointment of Amy Coney Barrett for the Supreme Court. They also discuss the potential outcome of the Fed’s actions–as Neil worries that the Fed is taking us down a disastrous path. In addition, Trish and political journalist Matthew Rozsa from Salon, debate the left’s latest comments about the 2020 election & Donald Trump. Plus, Is China’s anti-US TikTok provocations an act of war? Gordon G. Chang, professor and author explains. Stay up-to-date with everything Trish Regan by subscribing to the show on your preferred podcast app, or by following Trish on twitter @Trish_Regan. Visit AmericanConsequences.com/TrishRegan for more of the show and to read Trish’s magazine pieces.

Guests:

Matthew Rozsa

Political blogger
Matthew Rozsa is a staff writer at Salon since 2016. His writing has also appeared in other publications such as The Daily Dot, The Good Men Project. As a doctoral candidate studying history at Lehigh University, Rozsa applies the knowledge base and research skills acquired through his graduate work to the numerous issues discussed in his articles, which have appeared in national media outlets since 2012. In addition to covering politics, Rozsa also writes about American history, social justice causes, popular culture, and the concerns of the high-functioning autistic community.

Neil Grossman

Former European Central Banker, former hedge fund investor, physicist, mathematician and attorney with an interest in constitutional law
Neil Grossman (retired) spent the last two decades in the financial industry working as a proprietary trader, asset manager and market-maker. In particular, he has traded liquid products in major markets around the globe, with particular emphasis on arbitrage-related strategies.

Gordon G. Chang

Professor and author
Gordon G. Change is a professor and author of The Coming Collapse of China and Nuclear Showdown: North Korea Takes On the World. He has spoken at the Council on Foreign Relations, The Heritage Foundation, The Brookings Institution, the Cato Institute, RAND, the American Enterprise Institute, and other institutions around the world. He has given briefings at the National Intelligence Council, the CIA, the State Department, and the Pentagon. He has appeared before the House Committee on Foreign Affairs and the U.S.-China Economic and Security Review Commission.

Transcript:

Announcer:                 This is Trish Regan’s American Consequences, a view of things you won’t get anywhere else. Trish talks the Fed, the White House, and the world like no one. The biggest guests and best analysis starts right now. Here’s Trish Regan.

 

Trish Regan:               Hello, everyone, and welcome to American Consequences. I am Trish Regan, and oh my goodness, do we have a lot of news to talk about this week.

Let’s start of course with Trump’s appointment – President Trump’s appointment of Amy Coney Barrett. Pretty remarkable and historic in that she would become the first woman with school-aged children to sit on the Supreme Court bench if she is confirmed. Listen to her here.

 

Amy Coney Barrett:    While I am a judge, I’m better known back home as a room parent, carpool driver, and birthday party planner. When schools went remote last spring, I tried on another hat. Jesse and I became co-principals of the Barrett E-Learning Academy. And, yes, the list of enrolled students was a very long one. My children are my greatest joy, even though they deprive me of any reasonable amount of sleep.

 

Trish Regan:               [Laughs] I loved that, I really loved that. I thought she did a great job, and she paid tribute to Ruth Bader Ginsburg, which is terrific. We did hear, however, the president outline what might be an issue in terms of the confirmation process. Listen.

 

Donald Trump:           Her qualifications are unsurpassed, and her record is beyond reproach. This should be a straightforward and prompt confirmation. It should be very easy. Good luck. It’s going to be very quick.

 

Trish Regan:               Not controversial at all, no way, not with this group of politicians in Washington, D.C.

Joining me right now is someone whom I greatly admire, really a brilliant, brilliant man. A former mathematician – actually, I guess he’s still sort of a mathematician because it’s very much a hobby for him – physicist, hedge-fund adviser, lawyer with an especial interest in constitutional law, and vineyard owner Neil Grossman.

I joke that you are sort of the real Renaissance man, Neil. Good to have you here.

 

Neil Grossman:           Thanks, Trish. Thank you very much. And before we get going with what the judge said about lack of sleep, that makes it very important to understand that when you become a grandparent, you do get to sleep.

 

Trish Regan:               [Laughs] Good, good. I know you’ve got your hands full, but your daughter is probably a bit more busy. Anyway, good to have you here. I think that what’s incredible right now is that even this woman who really has a pretty pristine background… they’re going to go after her hard. I worry about the politics of this moment.

What are your concerns as someone with your background from everything? From your former central banking role over Norway – so your experience as a central banker – to your experience just as a grandparent, even? When you think about what they’re about to put her and this country through for the confirmation process, what’s really going on?

 

Neil Grossman:           First of all, this is a long-standing type of issue of what it means to follow the constitutional process of appointing or nominating somebody to sit on the Supreme Court and the process that goes from the nomination to the confirmation process in the Senate.

I remember back when I was a young lawyer just starting out, and there was a very, very brilliant scholar named Robert Bork who was nominated by, I believe Reagan, and he was ultimately turned down because of the politics of the moment, and the views.

I think it’s very important, and I think we have discussed this _____, to get ourselves back on track to what the president said when he said, “This is the person I’m nominating.” She is an outstanding scholar and eminently qualified to serve on the Supreme Court, irrespective of whether you fully like her politics or not.

The bottom line is, if we get away from the process of identifying great minds and just focus on a single issue or two issues we disagree with – and all we do is sit there and play ping-pong back and forth every time somebody comes into power – we’re never going to get great people sitting on the bench and representing us.

And I will point out something in that context. If we go back far enough, you and I talked about President Roosevelt and the court-stacking crisis. But people forget that President Roosevelt nominated – and it was confirmed – a judge named Felix Frankfurter… who was a brilliant legal scholar – and before he took the bench – was considered very liberal.

Ultimately Roosevelt came to say, “It was one of the greatest mistakes I have ever made,” because Frankfurter morphed into a more conservative justice. The great legal minds, when they sit on that court and they know where they are, they tend to grow into the position, and that’s really what you want.

 

Trish Regan:               Great minds. I get that, Neil. But the problem is, it’s such a horrible process. Think about poor Kavanaugh. My sources have told me that he really – at one point, he was just like, “Forget this. I have to think about my family.” And I get it. They’re accusing you of some pretty heinous, heinous stuff.

And the president said, “No, you’re going to go through it – with it, and I’ve got your back.” And he did. He eventually got through it. But you know what, that will forever mar his name, his family’s name. Wow.

 

Neil Grossman:           And despite a 30- or a 25-year tenure on the court, I think Clarence Thomas, Justice Thomas, still has some of the remnants of the process that we went through. This is a problem.

I try very hard to stay out of my opinion and how my opinion can form about an appointment. It’s very hard to get somebody who you’re going to always agree with. You want that person, that eminence, that presence, that mind sitting there.

Look, Justice Ginsburg had a brilliant mind. She may have been a liberal, but she still had a brilliant mind, and she had an amazing career on the bench whether we like all the things she said or not.

You can go back through history. The Supreme Court has evolved into the institution with the respect that it now has… precisely because we put great minds there who look at what’s presented to them on a case-by-case basis and try and create a consistent, holistic –

 

Trish Regan:               You’re talking about being a true intellect. One of the things I loved – and by the way, Amy Coney Barrett cited this because she was a Scalia clerk. She said one of the things that she admired so much was her – what she saw in terms of Scalia and Ruth Bader Ginsburg’s friendship. It was a great friendship. They went on vacations together, and they had a real friendship that was such a great friendship they wrote an opera about it.

In other words if you’re a real intellect, to me, you can appreciate different points of view. You’re going to back up your point of view, but you’re not going to be so emotionally hurt if someone disagrees with you.

 

Neil Grossman:           Of course you know my wife is a well-known CEO and is very prominent in the issues relating to diversity in the workplace in the C-suite. She says, and this is actually quite applicable here, “Diversity of thought is an essential ingredient to great outcomes.”

If all you do is have lack of balance, whether it’s one side or the other, you’re not going to develop that. Ginsburg and Scalia probably made each of them better than they would have been without that.

 

Trish Regan:               That’s so true. It’s so true. You know what, Neil? You’re a good friend of mine, as is your wonderful, wonderful, brilliant wife. We don’t always agree. I know that we’ve had some interesting dinner conversations. You and I don’t necessarily always agree.

One of the guests that’s coming on the program a little bit later is a brilliant writer from Salon, and he and I definitely don’t agree. [Laughs] It’s going to be an exciting conversation, I think, because he’s sort of a full-on socialist.

He’s a good friend, though, and I love him and appreciate him. I think one of the things he loves and appreciates about me is that I’m coming at it from a different point of view. That’s the way it should be, and that’s the way it used to be, Neil.

But now what I’m worried about – and I have a feeling you, sir, are, too – I’m worried about whether or not they are going to try and use this to pack the courts. Already, Senator Ed Markey was tweeting that if Amy Coney Barrett is confirmed, if they get the House – well, keep the House – if they get the Senate, if they get the Oval Office, they will in turn pack the courts to try and put more justices that will be of a liberal bent on there.

What happens if that indeed transpires?

 

Neil Grossman:           It’s a terrible outcome. By the way, if that happens, it’s going to happen again when the Republicans come back. You’ve got to stop this tit-for-tat process, whether they like it –

That’s why when you and I discussed this to begin with, even though you may have liked the outcome with Garland not being put forward and ultimately waiting until post-election.

 

Trish Regan:               No, but I agree with you on this.

 

Neil Grossman:           The bottom line is we need to get back to basic process and understanding that you’re not going to always get what you want in the person that the president has the authority and the privilege to nominate. If he’s going to go through the process of finding somebody who represents the nature of scholarship and integrity and of capability, that’s what you should be looking for.

Yes, you may find issues. Again, if somebody is going to come to the court with a predisposition saying, “This is the only way I’m going to vote and decide,” that may have some problem.

Every case is different. Every case has nuance. And I would be shocked if anyone of the quality that gets put forward to become a justice of the Supreme Court would ever say, no matter what the case is, “I’m going to decide A, B,” until the actual facts are put before them and they go through the process of understanding the issues. That’s what you want, and we’re never [crosstalk]

 

Trish Regan:               That’s what you want, and I just want to cite the brilliant piece that you wrote, which is on trishintel.com. You talked about this, because you said, “Look, you may like what happened with the last time around, but McConnell really was not doing his duty. He was being more political than he was constitutional in his approach.” And so I hear you, Neil. We have to be careful about precedent in this kind of environment.

So, long as I have you here, and given your background formerly as a central banker actually over in Europe out of Norway… given your background as a trader… given your background and interest in economics… what do you think of what the Fed is doing right now?

 

Neil Grossman:           I tend to be pretty opposed to the concept of the type of accommodation, predictability, and asset purchases that go on. Now this is a somewhat different environment, but my general view is ultra-low interest rates and these quantitative strategies actually work against what they’re trying to accomplish.

All you have to do is look at the outcomes in Japan, Europe, and even here, over the last number of years to understand that ultra-low interest rates actually ultimately embed lower growth trajectories and lower price trajectories.

I actually think there’s an academic justification for that. Standard economics focuses on the demand for money and real macro-variable, but as you move to the lower – the zero, or lower bound of interest rates and start applying these other types of programs, I think the supply side of money and nominal thinking becomes more and more important.

If you’re an investor, you’re extraordinarily reluctant to want to lend money to somebody at zero or even invest in a company where the expected returns may look OK on a real basis, but on a nominal basis are getting you very, very little for your risk.

 

Trish Regan:               I don’t know if this is the best way to go about getting it because I look at it from my point of view, and I say, “Wait a second, if interest rates are going to be forever low, why should I bother making that investment and borrowing money today when I can do it just as easily, just as cheaply, next year?”

 

Neil Grossman:           Well, that’s true, but zero-cost money may induce you to think about it. But the question isn’t just what the cost of the money is, the question is what the return relative to that cost is. You’re not going to want to borrow money to invest if your expected returns are not sufficient, and these low-interest-rate environments are telling you to expect lower returns.

People with money want cash flow. Older people want return on deposits and other predictable [crosstalk]. A 75-year-old person –

 

Trish Regan:               OK, so then they’re being forced into what, riskier investments? Are they being forced out on the risk curve because you’ve got to be invested in equities right now or else?

 

Neil Grossman:           Well, that is the theory. Of course the argument, I think they call it TINA, “There is no alternative.” That’s great. When you lose 80% of your investment because there is no alternative, it’s not the right acronym.

Listen, it has worked out because of the Fed’s ability, at least so far, to push asset prices up. But if you think about the logic about 10 or 12 years ago as the financial crisis started, basically we told people who had lost their life savings, their homes, their retirements, etc., because we had encouraged them to risk up, the solution was to double down.

In essence, it has worked because of the Fed’s pushing asset prices, but all this does is destabilize the functional economy. It’s sort of like a sword of Damocles. One day we’re going to wake up and find out that the actuality is that you’re not getting the type of productivity and growth and other factors, and you’re basically floating on air. The bubble pops. It just pops, and it’s a disaster.

 

Trish Regan:               It’s like a Ponzi scheme, right? [Laughs]

 

Neil Grossman:           It’s a Ponzi.

 

Trish Regan:               The Fed, they just keep printing money. At some point you’re going to have to pay it back.

 

Neil Grossman:           You have to pay it back, and ultimately I think there’s a problem. To me – I always say this – if the Fed and the ECB and the BOJ wanted to stimulate, the way to stimulate is actually to raise interest rates.

They should engineer interest rates to a nominal level where the front end of the yield curve is generating some return and the longer part of the yield curve is generating sufficient return to people who are investing in fixed income.

It’s making people think and analyze their decisions. They have to understand when you make a decision there is risk to the decision. Ultimately that’s what you want the process to be. Simply telling people to close their eyes, hold up their finger, and hope they’re going to be right is not really good investment philosophy even if it seems to work.

 

Trish Regan:               I hear you. Neil Grossman, the brilliant Neil Grossman. I believe you wrote an excellent column referring to the Fed effectively as “Dr. Evil.” I loved that one. Anyway, Neil Grossman, good to have you here, sir, as always. Thank you so much.

 

Neil Grossman:           Thanks, Trish. Thank you very much.

 

Trish Regan:               You’re listening to American Consequences. I am Trish Regan, and there are a lot of questions right now over just exactly what the next couple of weeks and couple of months are going to look like, November 3 being the big day. But already we’ve heard some warnings from the Left and from the Right that they may not accept the results of the election.

Here is Hillary Clinton talking to her former head of communications on Showtime’s The Circus.

 

Hillary Clinton:          Joe Biden should not concede under any circumstances because I think this is going to drag out, and eventually I do believe he will win if we don’t give an inch and if we are as focused and relentless as the other side is.

 

Trish Regan:               Yikes. OK, I am joined right now by a good friend, Matthew Rozsa, who is a journalist at salon.com. It’s so good to have you here, Matthew. I was just talking to Neil Grossman about you, and I said one of the things I appreciate about you is that we can have a pretty intellectual conversation and not take it too personally. We don’t always agree on things.

I do think that you and I both agree, though, that we have some concerns about what’s going to happen November 3. What’s your take?

 

Matthew Rozsa:          I definitely have some concerns, and I’m sure we’ll disagree here. But my main concern rests with Trump because of many of the things Trump has said. When he was asked about whether he would commit to a peaceful of transition of power, he said, “We’re going to have to see what happens.” He later added that, “There won’t be a transfer of power… Frankly, there will be a continuation,” after claiming that authorities are going to try to get rid of the ballots.

He has said that if this election is not known by Election Night – if the results aren’t known by then, then that will somehow cast out its legitimacy. He’s made false claims about the possibility of mail-in fraud.

I just keep thinking of a documentary I watched earlier this year from the History Channel about George Washington. In his farewell address, George Washington expressed concern that “cunning, ambitious, and unprincipled men destroying afterwards the very engines which have lifted them to unjust dominion would be enabled by hyperpartisanship.”

And it’s important to remember that the context of the farewell address was that many people believed that Washington wasn’t willing to relinquish power. He was going to deny that John Adams had been elected to replace him and simply declare himself the king.

I think between what Trump has said and the fact that he is the sitting president, which means he has the ability to declare himself a dictator while Joe Biden does not, those things cause me to have very grave concerns.

 

Trish Regan:               We’re going to back up here. First of all, I would say I see both sides at fault here. I’m not going to give Trump a pass on this because to me, if they ask you the question, “Hey, are you going to commit to a peaceful transfer of power?” the answer is absolutely yes.

But I would say they started this, gosh, back in August, Hillary Clinton was saying what she did. Let’s say, do we have the – I think we have the tape. Here is Joe Biden speaking with Trevor Noah, making a pretty wild accusation a month or so ago.

 

Joe Biden:                   My single greatest concern: This president is going to try to steal this election. This is the guy who said that all mail-in ballots are fraudulent, voting by mail while he sits behind the desk in the Oval Office and writes his mail-in ballot to vote in the primary.

 

Trish Regan:               And then you have Nancy Pelosi echoing another similar concern.

 

Nancy Pelosi:             [Trump] threatened to not even accept the result of the election with statements that he and his henchmen have made. So right now, our main goal – and I think Ruth Bader Ginsburg would want that to be – would be to protect the integrity of the election as we protect the American people from the coronavirus.

 

Trish Regan:               OK, so what I would say, Matt, is I don’t disagree that he shouldn’t say that he may not trust the results of the election because to me, this is basic, right? I think I learned in fifth grade that one of the things that distinguishes us from any banana republic or two-bit emerging-market country out there is the fact that we do have this sanctity of the vote and there is this trust and belief and faith in the system.

But what I’m horrified by now is not just Donald Trump, but Hillary Clinton, the former Democratic nominee for president. The current nominee for president saying that he’s concerned Trump is going to steal the election. By the way, these accusations were out there before Trump was questioned on it.

So my only point is when you talk about hyperpartisanship, don’t both sides need to take a deep breath here? Don’t we need to be doing everything we can to make sure everything is secure, but not only being secure, that the perception as well is that by the American people, they can have faith in the system?

 

Matthew Rozsa:          I agree with you. I will add that Joe Biden’s criticism of Donald Trump trying to delegitimize mail-in ballots is valid, and I also have concerns. Like I said before, a lot of people are concerned about the tearing down of these monuments honoring the Founding Fathers.

Well, in my opinion, George Washington’s greatest monument was the fact that he could have been a king, but accepted the fact that in the 1796 election he didn’t run, and the American people chose John Adams and he stepped down.

And so to me, the threat of a sitting president refusing to accept those results is a grave one.

 

Trish Regan:               It’s a bigger deal than Hillary Clinton saying what she said?

 

Matthew Rozsa:          Refresh my memory. What did Hillary Clinton say again?

 

Trish Regan:               Let’s play it again. Here she is with her former head of communications. I’m interested that they always use their communications people when they’re over at ABC or here on The Circus on Showtime. Anyway, here she is with her former head of communications talking about this election that we’ve got coming up. Let’s play the clip.

 

Hillary Clinton:          Joe Biden should not concede under any circumstances because I think this is going to drag out, and eventually I do believe he will win if we don’t give an inch and if we are as focused and relentless as the other side is.

 

Trish Regan:               What do you think, Matt?

 

Matthew Rozsa:          I will say this. If the ballots are counted – every ballot, not just the ones cast in person but cast by mail – and Donald Trump wins in the electoral college through that process, then Democrats should accept that result.

The concern of course is that there will be fraud, and if there are plausible allegations of fraud, then I agree that Biden and his campaign should fight them.

I also think I want to return to something you mentioned earlier about Antonin Scalia and Ruth Bader Ginsburg being very good friends. The crucial thing is that regardless of what happens after November, people need to remain civil. We have to unequivocally state violence is not acceptable. Acts that destroy people’s property are not acceptable. And this is something that applies to both sides.

 

Trish Regan:               I agree with you 1,000%. You know what? This is what troubles me so much, though, right now. Granted, I would say that the president has agitated in this way, and that the discourse has become extreme. But he’s also fighting back against a system and frankly, a media.

I don’t really include Salon, by the way, in this because I think Salon is very clear with its position, and I appreciate that. But publications that aren’t very clear on this and they’re trying to present as fact, but really they have their own biases, etc. So Trump is trying to fight back against that.

It’s just created this really contentious, really difficult atmosphere where one side at this point – I think probably both sides in some places. But certainly where I live, in my neck of the woods, I think one side feels like they really can’t say what they think, and there can’t be a civil discussion, Matt.

 

Matthew Rozsa:          I think it’s always important to take a step back from the abstract of these ideological debates, from the abstractions from these political issues, and remember that for most of us, there are people we know and love who disagree with us.

My father is a Trump supporter. My brother-in-law, who’s an officer in the NYPD, is a Trump supporter. I strongly disagree with them, and I hope that their wish for this election doesn’t come true. But I still love and respect them as human beings.

I think that’s a lesson that needs to be universalized because I enjoy having intellectual conversations with you precisely because we can still remain friends even though we disagree.

I disagree with you in the sense that both sides are equally to blame. Because Trump is the incumbent, I think there is more of a burden on him. And I would say the same thing in 2012 if Barack Obama had threatened to not step down should he have lost to Mitt Romney.

But at the same time, the key is remembering that the people on the other side – Trump supporters need to remember Biden supporters aren’t evil, and Biden supporters need to remember that Trump supporters aren’t all evil.

 

Trish Regan:               I think that’s a very fair and a very important point because there’s a quick demonization, if you would, of the other side that’s been going on, and that is really problematic and I think dangerous to us as a nation. I look at it, and to me, I feel like this has happened really fast because 15, 20 years ago you could still kind of have a civil conversation.

I told you, Matt, I grew up in New Hampshire, and we take ourselves very seriously every four years, but not too seriously that we’re not still friends, right? Every four years we get the chance to vote. Well, Iowa has been creeping in on that territory. But we’re first in the nation with the first-in-the-nation primary, every four years.

And you’d see signs up all over town for this candidate or another one. I think everybody respected one another. They respected the fact that you had an opinion. If you didn’t have a sign up and if you didn’t have an opinion, then that was more of a problem than if you had one.

I may have vehemently disagreed, and by the way, I grew up pretty liberal with some very liberal parents. I remember… five years old campaigning for Carter with them and then, as a little kid, having Walter Mondale. It was my very first report because I tape recorded the whole thing, and I went in and I played what we call in the business sound bites for my class the next day.

So I grew up in that environment, but my best friend was a Reagan supporter. You know what, we were still best friends. It was all OK. I’m looking around saying, “What the heck has happened to people?”

 

Matthew Rozsa:          And I think a lot of it has to do with, honestly, the increased polarization and acrimony in our political climate. I think a lot of it has to do probably with social media, if I had to place some blame there. I think social media cultivates this atmosphere where everyone can cluster together into these like-minded communities and ostracize individuals who aren’t thinking the way that they are “supposed to.”

I also think again a lot of the blame belongs with Trump. I think Trump –

 

Trish Regan:               I knew you were going to go there. I knew you were going to go there. I’m going to segue. Now you have to deliver the electoral votes by a certain time, and I guess if you don’t, then at that point it goes to the Supreme Court?

 

Matthew Rozsa:          My guess is, that would be the route that both parties would want to take.

 

Trish Regan:               I think that we may very well find ourselves in a situation where it comes down to the Supreme Court, and that may be another reason to bring it full circle… back to what Neil and I were discussing in the beginning with Amy Coney Barrett.

The idea that you’re going to have another conservative justice on the bench is not really sitting well with people because there are fears that that might result in a very contested election. It might result in Donald Trump’s favor.

 

Matthew Rozsa:          I share those fears fully, but I think back to the case of Brown v. Board of Education, which was ruled in 1954. The story goes that chief justice, who had just been appointed, told the other judges that whatever their decision was, it had to be unanimous because there had to be a firm resolution to the question of the legality of segregation.

I thought that was extremely wise because the fact that there was a 9-to-0 decision ruling segregation to be unconstitutional was the milestone event in ultimately eradicating that from this country.

John Roberts, I think, understands that the Supreme Court should not be viewed as partisan.

 

Trish Regan:               Definitely not.

 

Matthew Rozsa:          My hope is that he would share Earl Warren’s wisdom and say, “Whatever our decision is, it has to be 9-to-0. We have to make it very clear to the American people, ‘This is the candidate who won.’ ”

 

Trish Regan:               Well, we will see. We will see what happens. But I think you and I, from different perspectives, share some very similar concerns about how exactly the next couple of months will go.

Hey, it’s really good to talk to you, Matt. Thank you for coming on American Consequences today. I appreciate it.

 

Matthew Rozsa:          Thank you for inviting me. It’s been a pleasure.

 

Trish Regan:               OK, we’ve got a lot more in store. We’re going to talk about what exactly is happening with ByteDance and TikTok. Gordon Chang is next.

Well, ByteDance is in the news again. TikTok was supposed to get canceled as of Sunday. But guess what? A federal judge came through and said, “No, no can do.” And so TikTok gets to live another day, perhaps until it is finally sold to an American company.

Joining us with the implications of all of this, what it means currently, what it means for the future, is none other than the expert in all things China, Mr. Gordon Chang. Follow him on Twitter because he’s got some really, really insightful comments about all of this. I’m so looking forward to hearing what you have to say today, Gordon.

The federal judge says, “No, it gets to live another day.” What concerns do you have about the mining of data from so many young, vulnerable Americans that may be using this app?

 

Gordon Chang:           We have to all be very concerned about China using TikTok to surveil Americans, to download malicious software illicitly or surreptitiously. But there’s something even worse, and that is there are indications that China has used TikTok to try to foment violent protest in the United States.

Radio Free Asia issued a report that said that an intelligence unit of the People’s Liberation Army based themselves in the now-closed Houston consulate of China. From there, they used big data to identify Americans who were likely to participate in Black Lives Matter and antifa protests, and then it sent them videos on how to riot.

So this is not just a question of surveillance. This is a question of subversion. Indeed, this act of subversion is so bad that it actually constitutes an act of war.

 

Trish Regan:               Wow, an act of war. That’s a pretty aggressive accusation, Gordon. But you would see it, if the Chinese government is trying to feed this kind of discourse, these kinds of protests, then that’s crossing a line.

 

Gordon Chang:           It’s inciting people to subvert the U.S. government. Clearly this is a case where China has committed an act which is so grievous that we’ve got to be concerned. So we’ve gone well beyond just illicit surveillance of Americans.

 

Trish Regan:               I was troubled because I get back to shouldn’t the president of the United States and our intelligence community – say what you want about them, but the intelligence community, if they’re presenting intel to the president that suggests this is a real problem for America and potentially very compromising to America’s data, if the president says, “OK, we’re turning it off on Sunday night at midnight,” then shouldn’t the judge kind of trust what the intel community is telling the White House?

Why does the judge suddenly say, “OK, well, I know better than the CIA in terms of what actually is happening here”?

 

Gordon Chang:           I think the judge overreached in blocking President Trump’s order because I think President Trump knows exactly what’s going on. Even if this were just a case of illicit surveillance, I believe that that’s sufficient in order to block TikTok.

 

Trish Regan:               Sure. Somebody’s got to protect us, right?

 

Gordon Chang:           Absolutely, Trish. I think what’s going on here is we’ve got the International Emergency Economic Powers Act of 1977, which is what President Trump used in this case, and that should be sufficient. And if it’s not, then President Trump could use his powers under the Trading With the Enemy Act of 1917.

Now that would require designating China as an enemy. But we’ve already got to remember that China has designated us an enemy. In May of last year, People’s Daily, the most authoritative publication in China, carried a piece that declared a “people’s war” on the United States. If that’s not enough, I don’t know what is.

 

Trish Regan:               But that’s different, right? Because it’s a people’s war. I know it’s run by the CCP, but nonetheless if the CCP comes out and declares the United States an enemy, well, then I don’t quite know where we go from there.

I think that at that point there is definitely no trade agreement happening. But it’s different if a so-called – and I say this with quotations around it, journalist entity, because we know it’s not. It’s really just an arm of the CCP. But if they’re the ones saying that, it’s classified a little differently.

 

Gordon Chang:           Well, People’s Daily is official. Matter of fact, this is more official then if it came from the Chinese central government because in the Chinese system, the Communist Party dominates the central government, and People’s Daily is its official mouthpiece, as it calls itself. So whatever is in People’s Daily, especially in these circumstances, is official.

 

Trish Regan:               Well, why are we even doing the dance? Why are we even pretending that we should have any negotiations with China? I realize it’s a powerhouse. I realize it represents a lot in terms of wealth to a lot of corporations here. But come on, if they’re calling us an enemy, Gordon?

 

Gordon Chang:           Right, and it’s not just calling us an enemy. We’ve got to remember that Chinese leader Xi Jinping, starting in December, took steps that he knew or had to know would lead to the spread of the coronavirus beyond China’s borders. As of today we have, what, 205,000 or so Americans who have been killed by this disease.

So this is not just some theoretical matter. Propaganda is important in China. It’s not important here, but it is important in China. But even putting that aside, we have 205,000 killed Americans.

 

Trish Regan:               And you blame China for that, right?

 

Gordon Chang:           Absolutely. Xi Jinping knew the coronavirus was highly contagious, but he propagated the false narrative that it was not. At the same time he pressured countries not to impose travel restrictions or quarantines on arrivals from China while he was imposing travel restrictions and quarantines inside his own country. So he knew that they worked.

You put those two things together, Trish, and there’s only one conclusion, and that is this was a deliberate spread of the disease beyond China’s borders. We do not know the origin of the coronavirus. There is a lot of debate about that. But we do know what Xi Jinping did after that disease crippled China. He went out to level the playing field and crippling everybody else.

 

Trish Regan:               In other words, everybody else was going to feel his pain.

 

Gordon Chang:           Well, we’re certainly feeling the pain because the United States, we had a vibrant society, a healthy economy, and now you can see what’s happened. So this is a direct result of what Beijing did.

We need to impose costs, and we need to impose those costs, Trish, because this is not the last pathogen that will be generated from Chinese soil. We cannot allow Chinese leaders to think that they can do this again and kill Americans.

 

Trish Regan:               OK, so where does it go? Do we just say, “Listen, we just need to cut them off?” Maybe the answer is we don’t have a relationship with them. I don’t know. But how do we all coexist in this world given their ambitions and given that their ambitions are in direct contrast to what we want to see happen in the world in terms of our success?

Because I think if they get their way, Gordon, I think it’s pretty clear they will be the world’s No. 1 economy. They will be calling the shots. They will be the hegemonic power in the world, and we’re all going to have to learn Mandarin.

 

Gordon Chang:           China does not want to coexist with us, and we’ve got to recognize that, which means we’ve got to defend ourselves. We’ve got to understand that it’s not possible for the world to have both the People’s Republic of China and the United States of America at the same time.

Now I know Americans don’t want to think about this, but we didn’t want to think about al-Qaida, and remember what happened. We Americans are very good at ignoring what our enemies say about us, and so we learn at great peril and the loss of American life when we do not listen to what our enemies say. And China is indeed our enemy because they told us we are.

 

Trish Regan:               Listen, I’ll tell you a quick story and the listener a quick story. I remember I was a student at Columbia. I was an American history major but took a lot of classes just because it was of pure interest to me in international relations and learned all about al-Qaida.

I remember being pretty frightened at the time, so frightened that I was like, “OK, I’m not sure I want to jump on the subway,” or this or that. I learned about everything that could be, including the potential for them to come back at the World Trade Center again.

What’s wild to me is that this was out there, right? I learned all about it in classes on international relations and the challenges that we were having with al-Qaida. And so this was well known, well documented, and yet somehow we missed it.

The China threat, it’s also well known and well documented. Perhaps the difference, and I’ll ask you this, is that there’s an economic component, right? There’s something at stake for China. If they were to try and effectively take us out or take the West out, that would be I think economically still disastrous for them.

 

Gordon Chang:           It would be disastrous for them, and it certainly would hurt us. But we can’t think that we can run five decades of misguided China policy and think we can get out of this without a cost. We have seen part of the cost this year with the coronavirus, but there are so many other costs that China imposes on us.

So we’ve got to defend ourselves. We don’t have a choice. If we want to be sovereign, if we want to be free and independent, we are going to have to defend ourselves from China. This is not something that anyone wants to do, but we don’t have a choice because China’s driving this.

 

Trish Regan:               Well said, as always, sir. A big wake-up call there from Gordon Chang. You can follow him on Twitter, @GordonGChang. It’s always good to talk to you. Thank you so much, Gordon.

 

Gordon Chang:           Thank you so much, Trish. I really appreciate the opportunity.

 

Trish Regan:               What an interesting episode of American Consequences this has been. I’m Trish Regan, and we heard from the brilliant economist, and I could call him a hobbyist in terms of constitutional law – he’s just got a tremendous education and tremendous background in a lot of different things – Neil Grossman today talking about the importance of really segregating politics from the Supreme Court.

I think it’s really, really critical right now. Also, we have to keep in mind how important it is not to actually get in a situation where we’re packing the courts, right? Because then it becomes a very politicized body.

We heard from my friend, Matt Rozsa, from salon.com, and he clearly has a different view of things than myself and maybe many of you. Right now, it’s important to listen to all sides, and I think he and I do share an agreement on our concerns about whether or not we see a peaceful transition of power. I’ve never worried about this before, but increasingly it feels like we’re going down the path of a banana republic… Banana Republic, USA.

And then my friend Gordon Chang, who makes some very, very good points – you should follow him on Twitter, @GordonGChang – his concerns about, really, the TikTok activity by China being a kind of act of war. It is very clear that China is something, someone, an entity that we’re really going to have to confront in the coming years, and it’s time we take this threat seriously.

So good to have you here. I will see you next week right back here on American Consequences and in the meantime on my daily podcast, Trish Intel on trishintel.com, and of course on americanconsequences.com, where I write every week. Make sure you sign up for the e-mail, and we’ll be talking more.

 

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This broadcast is for entertainment purposes only and should not be considered personalized investment advice. Trading stocks and all other financial instruments involves risk. You should not make any investment decision based solely on what you hear.

Trish Regan’s American Consequences is produced by Stansberry Research and is copyrighted by the Stansberry Radio Network.

 

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