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The Responsibility Deficit: Why Big Government Will Cost Us Our Future

Episode #23  |  February 17th, 2021
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In This Episode:

Watch out, America – inflation is coming. As the Federal Reserve keeps up their spending extravaganza and government stimulus spending ramps ahead, we’re heading for a potentially destabilized economy, a further-squeezed middle class, and the dollar in danger. Neil Grossman, a former senior executive at the Central Bank of Norway, details the Fed’s accountability-problem and shares how ordinary Americans and lawmakers on the Hill can prepare for this fiscal crisis. Meanwhile, the former Chairman of the California Republican Party, Tom Del Beccaro, returns to give us an update on the ‘Recall Gavin Newsom’ efforts to help sort out the mess that is California. 


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.

Tom Del Beccaro

Former Chairman of the California Republican Party
Tom Del Beccaro -an acclaimed author, speaker as well as currently a columnist for Fox News, Fox Business & the Epoch Times. Tom is the former Chairman of the California Republican Party and former U.S. Senate Candidate from California. Tom is author of two historical perspectives, The Divided Era and The New Conservative Paradigm 1st Ed. & 2Ed, and is publisher of, where he publishes daily commentaries along with other columnists.

Episode Extras:

  • The Fed has to treat the inflation crisis like NASA treated Apollo 13 in 1970 — act immediately or have an undoubted calamity on their hands.
  • Around 2000, America had a four trillion-dollar deficit that took over two centuries to accumulate. In the last year, we’ve already exceeded that amount.
  • If you took all the outstanding bitcoin, you could buy about ¾ of the world’s gold reserve held by all central banks.
  • California Governor Gavin Newsom is officially up for recall as petition signatures to remove him have risen past 1.5 million.


Trish Regan:               Inflation is coming if it’s not already here. Hello, everyone, I’m Trish Regan. Welcome to this week’s edition of American Consequences With Trish Regan. You know, we’ve been hearing the Fed for so long now basically tell us it’ll all work out, it’ll all work out. That’s what they always say, right? Don’t forget, during the Obama-Biden years, what did we see? We saw the Fed work actively to try to support our economy and our markets. And by gosh, they did it, right? In terms of actually supporting our markets. In fact, if you ask me, the Fed had a very big hand in creating increasingly a class divide – something it’s trying to work against by creating inflationary pressures in the market. That’s what happened for eight years. And did we see anything in the way of real wage growth? No. And so the inflation came for the markets.


As for everyone else, good luck. What this does is it has the unintended effect of helping the rich and hurting the middle class while simultaneously kind of helping the poor in that there’s some support there, especially now, in the way of government programs. So if you’re poor enough, you’ll get a handout. If you’re rich enough, you’re invested in equity markets and so you benefit from those inflationary pressures. And everybody else that’s stuck in the middle is, frankly, stuck. And when I say stuck, they’re going to continue to be stuck. You know why? We’re looking at inflation coming down the pike – real, serious inflation. I suspect it’s unlike anything that we have seen only because – here’s why I say this – the amount of money now in our money supply has increased dramatically. Meanwhile, you’ve got a Federal Reserve that’s saying, “Ooh, don’t worry about inflation. We can manage this.” They’ve upped their inflation targets. Listen to Jerome Powell, the head of the Fed right now, speaking at the New York Economic Club recently.


                                    “Oh, inflation readings of March and April of last year, we’ll see measured 12-month inflation move up a few tenths. They’re called base effects, and that’s a transient thing that we think will pass. There’s also the possibility – indeed it’s in some forecasts – that as the economy fully reopens, there’ll be a burst of spending because people will be enthusiastic that the pandemic is over potentially and that that could also create some upward pressure on inflation. Now again, we would see that as something likely to be transient and not to be very large. In both cases, we don’t see those either lasting or particularly large. So the way we would react is we’re going to be patient. Expect us to wait and see and not react if we see small and what we would view as very likely to be transient effects on inflation.”


                                    In other words, nothing to see here, right? Don’t worry. It’ll all be fine. We’ve got this totally under control. And not only do we have it under control, but we want more and more spending. Listen to the former head of the Fed, now our Treasury secretary, talk about the need for stimulus.


                                    “We need a package that’s big enough to address this full range of needs. And I believe that the American Rescue Plan is up to the job. My predecessor has indicated that there’s a chance that this will cause inflation to rise, and that’s also a risk that we have to consider. I’ve spent many years studying inflation and worrying about inflation, and I can tell you we have the tools to deal with that risk if it materializes. But we face a huge economic challenge here and tremendous suffering in the country. We’ve got to address that. That’s the biggest risk.”


                                    Ah, that’s the biggest risk. I see, I see. But you know what the real risk here is? The real risk really is inflation. So you pump all that money in –  already the economy is starting to show signs of recovery – and what happens? It drives prices up. And we are seeing evidence of this everywhere including in – what do you think bitcoin is? Go back and listen to last week’s interview that I did with Anthony Scaramucci, and he has a lot of reasons why bitcoin is moving higher. But one of the reasons, let’s face it, is inflation and fears of a lower dollar. And so people are looking to alternative sources not just bitcoin commodities right now. As you’re seeing oil prices move higher, this is going to hurt the American economy. And most importantly, here’s what you’ve got to remember, and my next guest is going to talk about this, when you get a lower dollar – and that’s what happens when you have this much inflation, the dollar becomes worth less and less and less – when you have a lower dollar, that is a squeeze on the middle class. Because if somebody has been saving their whole life for retirement, well guess what? That $100,000 that they saved up… that $100,000 just isn’t what it used to be – not in five years. It’ll be very different.


So you have to think about protecting yourself in this environment. You have to think about the reality of the moment. And you have politicians that are so selfish and so self-interested and so concerned about the here and now and the willingness of them to just spend in the here and now – mortgaging effectively our future and our children’s futures and grandchildren’s futures – that’s the reality of what’s really going on. Joining me right now is one of my very dear friends, brilliant, brilliant guy, Neil Grossman. He’s basically done it all. He’s the wunderkind because he’s a physicist, he’s an economist, he’s a former central banker actually over in Norway, he’s a mathematician, and he’s a lawyer. So you’ve got pretty much everything covered, and I haven’t even mentioned that you’re a hedge-fund investor and that you worked many years in the investment office there at JPMorgan Chase. Neil Grossman, welcome to the program.


Neil Grossman:           Thanks, Trish. How are you?


Trish Regan:               I am good. I am good. I think I’m talking your language here because I’ve got a lot of concerns right now about the Fed. You’ve written on about how disgusted, frankly, you are with the Federal Reserve and their lack of concern for inflation and their willingness to kind of step in and try and play God in a way that actually is pretty detrimental to our economy. I want to give you a chance, sir, to just sound off on what you’re seeing right now given what we heard out of Powell and Yellen.


Neil Grossman:           Well to begin with, you said pretty much everything I need to say. I could probably go home now. The intro was great. Look, again, you know I agree with a lot of it. So let’s start with a couple of comments. Janet Yellen said they have the tools to do what it takes. Well maybe, maybe not. The first question though is if you have a tool, if you don’t use it, is it really a tool. And I suspect the other question – and they’re telling you they’re not going to use their tools because to use their tools is going to be problematic. The second thing is maybe you have a full toolkit – or if you’d used the toolkit six months ago or a year ago or four years ago, maybe you could’ve just tapped on the nail a little bit and gotten what you needed. Now, you probably need a sledgehammer if you acted now. And in about two or three years, you’re probably going to need to use a jackhammer or some other massive tool to put things down. So the first point, the longer you wait to react and to respond to something, the more you have to respond to it.


Trish Regan:               OK, that’s where I wanted to go because when you talk – hang on one second – when you talk about using their toolkit… they’re using their toolkit. They’re basically saying, we’re not going to stop inflation. We’re going to continue our money-printing extravaganza. So to me, those tools are already in use. So you’re talking about a different set of tools. You’re talking about the brakes, and they’re not willing to use the brakes, right?


Neil Grossman:           If we have to deal with it, we have the tools, right? And she just said we don’t think we have to deal with it. We don’t think it’s a problem. And again, I have a great analogy I like to use for situations like this. And there was an important moment – maybe you can’t say it this way anymore – in American history. We had a spaceship on the way to the moon in the late 1960s to early 1970s called Apollo 13. And there was a major disaster. It was an explosion. And basically the battery and fuel tanks lost much of what they had. And NASA responded with an enormous speed and adjusted the trajectory of the spacecraft almost immediately, which allowed the moon’s gravitational field to return the spacecraft to Earth. But if they had waited an hour or two, Apollo 13 would probably be passing Alpha Centauri by now. And it’s the same type of thing in monetary theory. Bottom line is the longer you wait to have to do something, the more consequential the actions are going to be to achieve your goal. And again, you mentioned it, this isn’t just prices. This isn’t just the dollar. Keep in mind, these guys – these folks in Washington have spent $5 trillion already – on the road to spending $5 trillion to $6 trillion when they finish the next package in less than a year. They’ve raised the deficit trajectory at a staggering pace.


So the amount of debt that we’re incurring is beyond imagination. Think about this. When Bill Clinton left office, which is not all that long ago, we had a $4 trillion deficit. That was the accumulated deficit for debt outstanding since the inception of this country. In the last nine months, we’ve issued or will have issued one and a half times the amount that it took 225 years to get to. Yes, there’s some inflationary consequences, but we are creating liabilities. And liabilities have consequences, and liabilities have costs. You know my view. We’re putting ourselves into a situation which is very unlikely we’re going to be able to get out of, and that’s sort of a sad statement.


Trish Regan:               All right. So when you say, “very unlikely to get out of,” specifically, what does that mean, Neil? What does that mean for our country? What does it mean for our kids? And what does it mean for all of us as we get older and try and face retirement?


Neil Grossman:           The first point – and most important one to you and me, and we talked about this – is kids. What we have done is we’ve created – we are really wonderful at ignoring problems and dealing with them ourselves and imposing those problems on the future. We are leaving our children and grandchildren a legacy of staggering liabilities relative to the size of this economy, which tells you the economy is going to be more and more sluggish as times goes on, not more and more dynamic. And the more and more sluggish the economy is, the more the consequences are for things like inflation, lower productivity, and ultimately – again, keep in mind that a year ago at the end of the fiscal 2019, the federal deficit was about $20 trillion to $21 trillion. I mixed up deficit and debt – the total outstanding debt. As of the end of the last fiscal year, which ended just in October, it was $27 trillion. By October of this year, my guess is at this point, we’re probably looking anywhere between $33 trillion and $35 trillion. The variation will be dependent on what fiscal packages are incurred. And those deficits,  yes, they are being explained away as low-cost funding. But at the end of the day, as interest rates go up, at this point, the average increase of 1% in outstanding debt means a $270 billion charge per annum.


If we go back to levels where we are even 12 to 15 years ago, let’s say 5% or 6%, spending an extra trillion dollars a year in debt service – and that ignores the fact that the deficits are growing – you’re crimping things you can do. Your ability to invest goes down. Or as you said, somebody out there is going to be funding this. The cost of the charges that come with funding it grow and grow. At the end of the day, you’re faced with a real bad consequence. All you have to do is look at countries, say, south of the U.S. border in Latin and South America to understand what happens when large deficits begin to impede the ability of the country to function.


Trish Regan:               OK, so a few years ago, I did a speech. And, basically, people were like, “Woah, Trish.” But it was a speech on how Rome fell in part because of its military commitments, etc., but primarily because of its debt, which was related to all of its military commitments all around the world. And it’s living off the dole, so to speak. That was a Roman expression. There were some things that contributed to the downfall of Rome, but when I look at the Roman Empire, and I look at the debt load, and the spending, and the excessive spending that that community took on, that civilization took on, I worry about the U.S. And I’ve joked in the past. You’ve probably heard me, Neil, say, “Hey, if we’re not careful, we’re going to wind up like France, and China is going to be the next USA.” Now I look at it, and I’m like, if we’re not careful, we’re going to end up like Venezuela. And you mentioned those banana republics down south, and that’s kind of how it’s feeling.


Neil Grossman:           Well, it certainly has that sensibility in the evolution of the political system. Washington is now in a tug of war with the Republicans, which theoretically are the party of conservative fiscal management. They’ve abandoned the playing field, and the Democratic party has moved further and further into progressivism bordering on absolute socialism. And there are no constraints if you’re going to argue you should be able to do whatever you want without consequences.


Trish Regan:               So why is that though? Talk to me about the politics of the moment because I think that there’s a reason, right? There’s no incentive for anybody to be responsible. And so I don’t know – I know it’s going to end badly. But how do we start to structure things and change things so that our lawmakers actually have an incentive to respond to this fiscal crisis in the here and now?


Neil Grossman:           Well, I think we have a fiscal deficit, but I think we have a responsibility deficit as well. Nobody wants to confront the problem. Nobody wants to accept that there are issues. And everybody – if you’re going to have a food line and everyone is taught to expect the food line, it’s very hard to tell people that there’s no more food to serve, right? I think you even said that in your intro. The bottom line is the Fed’s policies have done one thing really well, it’s made – and by the way, this is one point of inflation that’s off the charts, but they want to ignore it. Equity prices have exploded, and they’ve lost touch with any measurement of reality. But it’s explained away through just floods of cash. It’s, for the moment, a virtuous circle of the Fed and Washington print, and the people get, and the stock market goes up. But it’s not really reaching the broader economy as you pointed out. And what we have is people being trained to be jealous of others’ success. We have a system that’s now refocusing that lack or that divide and saying, “Well, let’s just print the money and give the handouts.” If you think about it, I’m not sure the exact numbers, but the fiscal gift to the people, and the CARES Act, and the subsequent things are somewhat sizable – somebody’s got to pay for it.


Trish Regan:               Well, I mean, they’re really sizable. When you think about the $1,400 checks that they’re talking about – and that would be for each American family member including the kids – that’s a lot of money. And our government workers have worked this entire time and collected a paycheck. Maybe they haven’t worked – they’ve been home. But they’ve continued to collect a government paycheck and now you get the stimulus, etc. So there’s no sort of accountability for “OK, do you really need this or do you not?”


Neil Grossman:           There’s a broad range in this, Trish, about what and how you do things. Again, this is just the fiscal confiscation and transfer. It’s almost like the exercise of the power of imminent domain. You see somebody that has a piece of real estate, and the government says we want it, and you can’t have it. We’ll take it from you and redistribute it. Look, there’s no doubt out there there are people hurting. But there’s very little thought about how to tailor this and focus this in ways that really are – that maximize. And I’ll say this again, most people probably don’t like hearing this, but I don’t understand why this has to be simply a handout. How about giving people assistance, but they’re primarily on the line to repay it? Even if that repayment is significantly down the road or perhaps maybe that repayment is tied in some way, shape, or form to how you actually succeed in life. So let’s say you give people a handout right now, and those people become very successful. Maybe those people should be paying to give that back 50 times over, as opposed to telling other people it’s just their responsibility to just sit there –


Trish Regan:               [Crosstalk] I don’t disagree with you. You’ve got to try and create some incentives that are properly aligned so that people know, business owners know if they’re going to take this money through the PPP program, then it’s not just a handout, but it’s money that somehow has got to be paid back. I think the challenge of this though is anytime you even lend money – you look at the student loan crisis, which we’re now about to forgive all these student loans I guess – but you think about how easily people borrowed money, and it created what? Inflation in the student loan market, just like you’ve seen in the health care market. You created college tuition prices that are so astronomical and so out of sync with the rest of the economy. And to me, that’s just government intervention, and it’s the same thing with health care, and by the way, the same thing in our markets right now, Neil. Government intervention with all this money is injecting inflation into equity prices. Your thoughts sort of quickly on that. And then briefly, I want to just ask you how you protect yourself. But just your thoughts on the inflation in the equity markets, health care, and tuition.


Neil Grossman:           Well, two things – I mean just the one more thing. It’s one important fact that’s defined by moral hazards. We basically created this massive moral hazard out there, right? We’re eliminating risks from people’s greed, and that’s not a good thing. Promising that you’re going to prevent people from making bad decisions only means they’re going to make bad decisions. Equity prices are inflated, you have assets like bitcoin – do you realize, Trish, bitcoin I think passed $50,000 today? If you actually took all of the outstanding bitcoin, you could probably buy three quarters of the gold reserves held by all of the central banks in the world. And I would say that’s a pretty good indication of inflation because a string of digits now represents some staggering percentage of a major asset in the world. You think about that. The bottom line is I don’t think we’ve seen how this feeds through fully yet. Asset prices mean ultimately there’s more buying capability out there. There is an enormous amount of risk when you look at these asset prices versus, as you say, generic inflation. You also have to look at what Washington and the Biden policies are. You’re sort of scratching your head if you’re like me saying, OK, let’s see. We’re going to tell every business they’re going to have to raise wages. OK, well raising wages is not necessarily – unless it’s tied to actual performance – it’s not a really good thing for stocks. We’re telling companies and individuals in the higher end that you’re going to be paying more taxes. That’s not necessarily a good thing for equities. So to me, the equity markets are almost like the top that’s been spinning. But when that spin stops, when the dance stops, this is not going to be, I think, a minor risk. In fact, I’ve written something we haven’t put out yet – you and I have talked about it – but I think 1,776 is my target for the equity markets at some point, unless you want inflation to adjust it a little bit. But I think there is a long way to go down when this thing unwinds.


Trish Regan:               [Crosstalk] 1,776 on the S&P 500, yeah. Rather fitting number.


Neil Grossman:           It seems like a nice number in an American historical context.


Trish Regan:               I know, given what’s going on right now. OK, so what do you do? How do you protect yourself? Do you short the market?


Neil Grossman:           Look, again, I think the first point, Trish – and this is very important – everybody is different. Everybody has different motivations, different risk tolerance, different expectations, and different things that affect their lives. So a single one thing fits everybody is a problem and that’s one of the bad things about the Fed by the way. You have three academics sitting in an ivory tower trying to tell everybody that there’s only one way to behave. They want everybody to do the herd mentality, the sheep mentality – whatever you want. That actually is a function that destabilizes things. You’re building a tin tower to the sky and the higher it gets, the more unstable it is. That’s I think one of the big problems. You want people to actually behave in their own personalized way, and if you take 300 million people behaving in different ways, it creates pretty significant stability. But as a general matter, if you’ve been riding this and you look at what you’re trying to achieve – if your long-term goals were 8% return on equities and you’ve happened to have made compounded 38% in the last four years because of what’s happened, I don’t see why you don’t want to take something off the table.


Trish Regan:               Great, you take it off the table, but where the heck do you go? I think this is the frustration that people have, right? Because there’s no real other place to go. And so they’re sitting there going how do I get yield in this environment?


Neil Grossman:           Why do you have to get yield in this environment?


Trish Regan:               Because of inflation. If you sit there and you keep the money under your mattress, what happens? That money is worth less five years from now.


Neil Grossman:           Well, but nobody is necessarily saying this is going to last for five years, No. 1. No. 2, again, even five years from now, if your long-term targets were 8%, and five years from now, you get a zero return, you’re still ahead of 8%. You’re still OK in theory. Now inflation does have some risks, and maybe nobody is saying take it all off the table. But the point of the matter is, this is a point in time where risk has grown. Look, interest rates – the long bonds are now over 2% yield. They’ve risen pretty significantly in the last four or five weeks. And with the amount of supply that’s going to be coming – look, most people don’t know we’re now issuing U.S. Treasury notes and bonds, which is the two- to 30-year sector of the U.S. Treasury funding spectrum – $325 billion of securities a month, and that number is going up. If you take out the fact that the Federal Reserve is absorbing $120 billion of that, which still leaves a negative flow, there is an awful lot of room for interest rates to rise a lot.


So if I were telling people, if you really have any interest, I would buy shorter dated security. So for single A corporate names for two or three years, you’ll probably get some return. But I think you should be in the mindset of slowing down, reducing your risks, and giving yourself flexibility. And again, depending on who you are, where you are, maybe you take 10% off, maybe you take 30%. And maybe for somebody who really is conservative and has done great, maybe you take 50% off and you just sit and get a feel for what’s going to happen. If you have to jump back in if you feel like you’re missing something, so be it.


Trish Regan:               I just struggle because if we’re coming to the premise and the realization that inflation is here for a while, then how do I take money out of the market knowing that the inflation is – I mean, yes, at some point, it pops. I get it. But I just don’t see that happening now. I look and see all the supportive measures from both the federal government and the Fed, and I’m just like OK, it’s inflationary for the near future. And so I agree with you, common sense is don’t be there. But the other reality is where am I going to be?


Neil Grossman:           Maybe the thing to do is you reorder your portfolio a bit and you buy things that are likely – and I say likely because I’m not sure the markets are responding any longer in the ways that one might expect – but you buy things and assets that are going to do better in an inflation. Listen, if you’re really worried about inflation, you should be buying food stuff and products or instruments that are tied to food, so that if the food prices rise, you have natural protection. I guess, in theory, real estate. But I suspect real estate has to be very specific. Because if you’re in states like New York or California, real estate is likely to get taxed more and more. You already see that in New York state for example. But real estate used to be something that would go up in inflationary times. There used to be gold, but you see gold has actually been floundering a bit. Maybe that’s an indication that there is less inflation. I don’t think so, but you’ve seen that replaced by bitcoin and those types of ilk. And again, to me that’s just something that’s sort of a head-scratcher a bit. You shorten your maturity as soon as you reduce your price sensitivity. If you’re worried about the dollar, you buy assets that are non-domestic in nature. And so maybe some of your portfolio should be shifted into more international assets. Again, I just think we’ve destabilized this economy, and we’ve grown to rely on a single institution that seems to think it can control everything, and that’s not usually the best concept.


Trish Regan:               Yep, well put. I most especially liked what you said about how we have a responsibility deficit. Isn’t that the truth? Neil Grossman, it’s so good to see you. We are going to have to publish that – 1,776 is your target on the S&P. We’ll put that onto so people can read it, and they can read all your columns there. But again, it’s so good to talk with you, sir, and I always love hearing your perspective on all of this. I’m afraid you’re right. I’m afraid that this is not going to end well. Anyway, thank you again, Neil. [Music Plays] Again, let me just emphasize one of the things that Neil mentioned which was that we have a responsibility deficit and people are being trained to be jealous of one another’s successes.


And this is not a path forward for the United States of America. You look around the country right now – I’ll use Florida and New York as an example. You compare and contrast those two states, and clearly, one has done something right. I say that Governor DeSantis should be giving Governor Andrew Cuomo some lessons in how to do things. He should be giving Gavin Newsom a few lessons as well in how to do things because when you see how much more successful a state like Florida has been – a state that didn’t close down its schools for months on end, a state that didn’t close down business for months on end – you compare and contrast that with places like New York or California, you really start to realize policy matters and you need a leadership. You need strong leadership that believe in the strength of the individual American. That’s not what we’re seeing in California. California is a full-on mess and what a shame. What a shame for an economy that has been sort of the life blood in so many ways of America.


The creative community that you have out there in Silicon Valley that has given birth to so much, and yet you have company after company saying, “We’re going to relocate to Texas.” Texas where things are open, and Texas where they’re not taxing us to death, right? Not to mention all the very wealthy individuals that are leaving California in droves. It is not a well-run state. And the people now are realizing that. Governor Gavin Newsom just trying to speak there in an outdoor press conference the other day. Listen to this.


                                    “But do not be naïve that we have to do so in a way that addresses this rampant fraud we’ve seen all across the United States. So we want to do that with verification, and we want to do it with the sophistication of understanding that we have since last October when we began the process of changing our protocols.”


                                    You must hear that recall Newsom in the back. And that’s just one lone guy. Let me tell you, there are a whole lot of guys and gals right now in the state of California that want to recall this governor. It’s not unprecedented. I remember being a reporter in San Francisco at the local station out there when they recalled Governor Davis. Remember that one? Well, could it happen again? I’ve got the guy who’s leading the movement right now to recall Gavin Newsom in California. None other than the attorney Tom Del Beccaro who used to run the Republican party out there in California. Tom, welcome back to the program. Good to have you here.


Tom Del Beccaro:      Great to be on, Trish. I lead which is helping recall Gavin 2020, and it’s a broad-based movement. We are passed 1.6 million signatures on our way to 1.9 million.


Trish Regan:               Wow, what is it you think that’s really fueling this other than you and a few others have been pretty outspoken in saying this is not right? But it’s not just you guys, right? This seems like in some ways to be pretty organic because the people themselves in California are getting so fed up.


Tom Del Beccaro:      They are, and this has been a culminating thing. Two years ago, even Big Tech complained to Newsom saying if you can’t deliver reliable electricity, we’re going to have to leave. Who knew that industry needed electricity? There was the wildfires, there’s the crime, there was the allowing of Black Lives Matter to trash parks last summer, there is the welfare fraud – $31 billion. There were all these things – lack of consistent water – that were building up. And then we got to COVID, and not only was there sustained lock downs, but now we’re last in the rollout of vaccines. And the contrasts are very clear. Disney World is open, Disneyland is closed. And even Disneyland is talking about moving its operations out of state. Job flight is rampant. You know this: Money goes and jobs go where they’re welcome, and they’re not welcome in California. And as a result, this has been building up. And then last November, it really took off when Gavin Newsom went to the French Laundry, one of the most expensive restaurants in the country, and lied about it. He said he was COVID compliant when he wasn’t. And we’re off to the races.


Trish Regan:               That’s what sort of gets me on all this because I just think about how I live my own life, and I’m very respectful of others, and I respect the reality that if you’re going to go shopping in a store and they have requirements and they want you to wear a mask, then you know what? You wear the mask, and you have to be thoughtful and respectful to the other people around you. Some people might be more vulnerable and might be more nervous. And I don’t have any problem with that. I really don’t because I feel like that’s me as an individual choosing to comply. I don’t have to go to that store, right? But I’m pretty live-free-or-die, conservative-libertarian in my approach and respectful I think – I hope – of others. But then I look at these politicians and they’re out there mandating things. Instead of saying this could be a voluntary requirement, they mandate it, but then they don’t do it themselves.


Tom Del Beccaro:      Yeah, and we’ll do shared sacrifice like you’re talking about. But when these leaders are so blatantly hypocritical, then you realize what’s truly going on. And it would be one thing, Trish, if this was all working. But now we see Florida actually has less infection rate than California, and they’ve been open the whole time. So it looks to the naked eye, and people get this, that his policies aren’t working. But they weren’t just a tax increase here or a regulation there. He has driven so many people out of business. And as you know from your career, small business owners have almost all of their assets tied up, sometimes all of them. And when they go under, they don’t just get to open up later on and write a check. They don’t have the money anymore. And that’s why there’s been so much job flight out of the state in the last year alone. It’s why Elon Musk left. Not because he was lacking for money, but he was fed up with it. And people are fed up with Gavin Newsom. I’ve got to tell you, I have a favorite restaurant in town. I’m sure you’ve been there from your days in the past.


Trish Regan:               Yeah, which one?


Tom Del Beccaro:      Postino in Lafayette – I’m kidding. Great little place. But there’s a Democrat bartender I’ve known there for over a decade – he knows what I do. And before the last shut down, he walks up to me and there was someone else sitting there he didn’t know and he goes, when are you going to kick this guy out? It’s not just up to me, but the point is these are people – Have you ever met somebody, Trish, who worked in a restaurant and didn’t need the money? No, they need to have money whether it’s an extra pair of shoes from tips that night for his kid or whatever it is. And so they’re fed up with it. We think we’ll hit 2 million signatures. Candidates are coming out of the woodwork now, sort of as I predicted, because in the beginning, Trish, it was thought that this will never happen. Then the media covered it as a longshot. Then as it got closer, they started smearing us. And then now that we’ve gone past 1.5 million – we need 1.495 valid signatures – now it’s “Well, he’ll never get thrown out.” You can see the progression. And his numbers have tanked. It’s not as bad as Cuomo is about to tank for his crimes. But he’s down in the polls, candidates are coming out, we’re actually having a policy debate in this state. Usually the Democrat is anointed, no one says a word, the media doesn’t cover the election. Now we have a choice.


Trish Regan:               Now you have a choice. We’ll see where this goes. California is such an interesting place where these things can take on pretty, pretty big lives of their own. I’ve seen it with Davis. But depending on where this goes, regardless of what happens, is there any chance – maybe I’m just being naïve here – but is there any chance that you might start to see a shift at all in California? The people that are going to be left, are they waking up at all to this realization? You mentioned the people that are bartenders or waiters, but you have a lot of people that are still living off the system that want that system to continue there in California. At what point does that shift or change?


Tom Del Beccaro:      Well, last November, Gavin Newsom put up three initiatives or backed them. One of them was a huge tax increase that got voted down. A year before, it was tax increase in LA that got voted down. He also wanted cashless bail. How’s that work? You know how it works in New York. It hasn’t done any better here. They had it temporarily, and then it was put on the ballot. Voters overwhelmingly rejected that. And of course, he tried to unionize Uber and Lyft, and they put an initiative on and that won overwhelmingly. You ask an important question: are things shifting? I think we’re having a spell of common sense in this state because you know it’s one thing to have a job and vote your social conscience. That happens a lot in California – according to their social conscience. But when nobody gets to work, and business are out, and you look at storefronts, the beautiful city you used to work in – San Francisco – has empty storefronts, needles on the street, and it’s being abandoned – people are waking up and saying OK, that’s not working. And if we can get some candidates – and I have an op-ed coming out what I want from the next California governor – if we can just get candidates to just use a little common sense, I think there can be the shift.


Trish Regan:               Wow, I think you’re on to something, and I think that common sense really, really matters right now. And it’s really important that these common sense fiscal conservative values be carried back to everyday people because otherwise, the trajectory of economies like California’s are very, very much in jeopardy. Tom Del Beccaro, where can we find you on Twitter?


Tom Del Beccaro:      @TomDelBeccaro on Twitter, @TomDel on Parler. And I just want to mention from your last piece – so true – I have a quote that says, “At the beginning of a civilization, a people will do anything to survive. And at the end, they apologize for doing it.” And at the beginning of the civilization, we do anything to survive – and that’s what we did as a civilization. And now towards the end, we apologize for doing it. That happens throughout all of history, and that just encapsulates the ridiculousness you described before.


Trish Regan:               Well, I’ve always said, Tom, it’s really easy to be a wealthy Democrat. It’s really easy to be a limousine liberal because at some point, when you have that much money, I guess you start feeling guilty about things, and you want to give it back. And it doesn’t matter as much to you as opposed to somebody who’s still on that ladder trying to get their assets together. Anyway, Tom Del Beccaro, thank you so much. I so appreciate it, and we’ll keep talking.


Tom Del Beccaro:      All right, take care.


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Trish Regan:               You know I think that was kind of an important point that Tom was making there about how as a society, as a civilization, you work really hard in the beginning, and then at some point, you’re like whoops, sorry, for all that. We have to kind of balance this because we need to be as humane as possible, but we also need to keep that grit that is so unique to all of us as Americans. So I leave you with this as we try to plan out the future and we try and gauge where things are going. I think the reality is we have a government that wants to be very, very involved. I don’t know if this flies in the long run. I don’t know if they’re going to be successful and that they’re going to be elected again. I wouldn’t be surprised if you see a shift in two years and for sure in four years. But nonetheless, this is what the situation is right now. So as an individual, what do you need to do? You need to think about how you protect yourself. You need to recognize the reality that inflation is here. And you need to recognize the reality that at some point, things could go south pretty, pretty quickly. I suspect that that moment is not quite in the works just yet, but as Neil Grossman cautioned us, be very careful because when it does creep up on us, it will creep up fast. And it’s a bubble that could very quickly and badly burst. But as Tom Del Beccaro says, having some responsibility for the individual here is critical, and you can’t continue to have lawmakers in office that are employing really lousy policies. Whether it’s Gavin Newsom or by the way, Governor Cuomo there in New York who we’ve now learned sent 9,000 more people – 40% more people than anyone had thought he had sent – into nursing homes with COVID causing thousands of people to die.


And then what did he do? He lied about it. He and his team lied about it because they were too afraid that the federal government was going to get them in trouble. At some point, enough, right? The self-serving aspect of these politicians has to stop. I joke that we need some extremists in the middle, some people with some common sense because – I’m going to use the American Consequences line – all of this behavior has consequences. Thank you so much for tuning in everyone. I’m going to be back next week with you all again. American Consequences With Trish Regan – make sure you go to where you can read my writings. I have a terrific piece this month in our magazine on bitcoin which I really, really encourage you to read. And of course, you can find me everyday at with my opinion commentary there. We’ll talk again next week. [Music Plays]


                                    Thank you for listening to this episode of American Consequences. Want more Trish? Read her weekly articles Thursdays in our magazine at and subscribe for free to get all of our daily articles and the monthly magazine. We’d love to hear from you, too. Send Trish a note, [email protected] 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 decisions based solely on what you hear. Trish Regan’s American Consequences is produced by Stansberry Research and American Consequences and is copyrighted by the Stansberry Radio Network.


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