Saturday, February 27, 2010

Grading Free Market Capitalism and "The Invisible Hand"

Free market capitalism is based on the idea that "the invisible hand" of the market will create the best possible outcome for the most people.

But as I noted a couple of weeks ago, the man who came up with idea of the invisible hand did not believe in unrestrained free market capitalism:





As Paul Krugman writes:


Moreover, as I pointed out in September:

One of the leaders of the new science of financial modeling - Rama Cont - points out that Adam Smith was wrong about the "Invisible Hand".

Specifically, investors in financial markets rationally pursuing individual profit can produce outcomes that are bad for almost everyone.

As an article in City Journal notes:

Simple forecasts can also be mistaken if they fail to account for the actions of market participants themselves: investor strategies can influence prices, which in turn influence future strategies in a feedback loop that can cause considerable instability. Cont recalls the severe stock-market crash of October 1987, which seemed to strike out of the blue, since nothing significant was happening in the real economy. Subsequent research, though, blamed the crash in part on a new investment strategy, “portfolio insurance,” which a large number of fund managers had simultaneously adopted. Based on the famous Black-Scholes options-pricing model, this strategy recommended that fund managers reduce their risks by automatically selling shares whenever their values fell. But the approach didn’t take into account what would happen if many investors followed it simultaneously: a massive sell-off that could send the market plummeting. The 1987 crash was thus not provoked by events in the real economy but by a supposedly smart risk-management strategy—and the current downturn, of course, also derives at least partly from a global craze for a seemingly foolproof financial innovation...

Investors in financial markets rationally pursuing individual profit, then, can produce outcomes that are globally negative. Doesn’t that contradict classical economic theory? “Both theory and empirical facts do tend to show that, on the financial markets, the Invisible Hand does not always lead to welfare-improving general outcomes,” Cont replies.

Does this mean that free market capitalism is dead?

No. And I'm not sure that there is any better alternative.

But capitalism has to grow up and become less naive, relying less on a blind faith in "the invisible hand" and more on an understanding of human nature, including insights from the field of behavioral economics.

It must include sophisticated checks and balances to make sure that the system is not gamed, instead of childish ideas about the "inherent stability" of the market.

And it must make sure that the poker game doesn't suddenly end when one of the players gets all of the chips.

Of course, with high-frequency trading dominating the market (and see this), frontrunning, permanent bailouts (and see this), government-sponsored credit rating scams and enterprises, the creation and maintenance by the government of banks so big that their very size warps the entire system, socialism for the big boys, and all of the other shenanigans going on, we don't currently have free market capitalism.

Friday, February 26, 2010



As the Washington Times wrote yesterday:




Yes, massive debt overhangs do matter.


Higher interest rates do not equal a debt crisis.


America the Beautiful is Turning into America the Barbarian

Even after General Petraeus joined all of the experts saying that torture doesn't work, decreases national security, and is bad for our country, the Democrats are scrambling to be as pro-torture as the Republicans.

As Raw Story reports today:

Democratic leadership in the House was in disarray last night after having to withdraw the 2010 Intelligence Authorization Act, moments before it was to have been voted upon, as the result of a controversial anti-torture provision.

The amendment was added in the House Rules Committee late on Wednesday and had not previously been vetted in committee. It would have criminalized the most extreme forms of "enhanced interrogation" and provided stiff sentences for intelligence officers or medical professions who engaged in them.

Republican opposition caused the Democrats to attempt to remove the provision from the bill on Thursday by a unanimous consent agreement. When the Republicans refused to go along, the Democratic leadership was forced to pull the bill entirely.

In the wake of the debacle, there was confusion as to how the provision had gotten into the bill, and Democratic leaders appeared to be attempting to distance themselves from it.

The American Prospect had reported earlier that the amendment was proposed by House Intelligence Committee Chair Sylvestre Reyes (D-TX). After the withdrawal of the bill, however, Politico cited Democratic sources as saying that "House Rules Chairwoman Louise Slaughter attached the provision to the bill Wednesday over the objections of other House leaders." One source told RollCall (reg. req.), "No one wanted it in there," and Rep. Jane Harmon (D-CA) insisted, "It's a mystery how that language got in there."


The amendment would have banned the most extreme forms of "enhanced interrogation" -- including waterboarding, stress positions, sleep deprivation, prolonged isolation, and forced sexual acts -- and imposed sentences of up to fifteen years, or even life if a detainee died as a result of such treatment.

Instead of revealing the truth that torture doesn't work, Democrats and Republicans are both pandering to the lowest common denominator. See this, this and this.

America the Beautiful is turning into America the Barbarian before our very eyes.

Helicopter Ben and Pallet Tim

Fed chair Ben Bernanke is nicknamed "Helicopter Ben" because of his 2002 speech recommending that money be dropped from a helicopter in order to prevent deflation (and then actually doing it).

Similarly, I think we should nickname Secretary of Treasury Tim Geithner "Pallet Tim".

As I wrote last July:

A soon-to-be released report by special inspector general Neil Barofsky finds:


[The banks have also distributed] bailout money to pay executives fat bonuses which they used to buy gold toilets and prostitutes, and to lobby Congress to stop any meaningful reform.

The report by the special inspector general also calls on the Treasury Department to require regular, more detailed information from banks about their use of federal aid provided under the Troubled Asset Relief Program.

According to the Post, the Treasury has refused to collect such information, and:

In a written response, the Treasury again rejected that call. Officials have taken the view that the exact use of the federal aid cannot be tracked because money given to a bank is like water poured into an ocean.
But just like dye is frequently added to streams by scientists in order to trace the flow of water, Treasury could easily track the flow of bailout funds. Indeed, the government has very sophisticated software which tracks funds, which it uses in terrorism investigations. But that is all moot. The truth of the matter is that Treasury never even asked the banks to keep track of where the bailout money was going. If they ask, the banks would be required to keep track themselves.
In addition, as I have argued for years, the amount of the TARP bailouts could be much higher than $700 billion. See this and this. The amount could be in the trillions.

And Geithner's Treasury is administering trillions more through its other "emergency" programs.

Of course, Geithner's New York Fed also pushed to keep pay AIG's CDS counterparties at full value, and then to keep the deal secret.

But Pallet Tim had experience distributing large sums of money without any oversight even before he became Treasury Secretary.

In July 2009, Congressman Henry Waxman stated:


The Los Angeles Times reported at the time:

Prior audits by Stuart W. Bowen Jr., the special inspector general for Iraq reconstruction, found that more than $8.8 billion in such funds could not be properly accounted for.
Bloomberg wrote:
A report from Waxman's House Oversight and Government Reform Committee ... described contractors being told to bring big bags to collect shrink- wrapped bundles of money and one episode where a Bremer staff member was allegedly told to spend $6.75 million in a week.

"We have no way of knowing if the cash that was shipped into the green zone ended up in enemy hands,'' Waxman, a California Democrat, said at today's hearing.
I'm not too worried about the money having fallen into enemy hands. I think it is much more likely that it fell into the hands of gleeful defense contractors, like these happy fellows:

In addition, ABC noted that there might have been a partisan bias:


Rodes challenged, "I want to know why half the U.S. staff had never been outside of the country before and had to get a passport for the first time?"

(I'm not trying to make this a partisan issue: under the current Democratic administration, I would guess that Democratic folks are favorably getting their palms greased).

$2.4 billion of these $100 dollar bills were loaded onto pallets, put on C-130s and shipped to Iraq in June 2004:


And guess who was the head of the New York Fed at the time this was going on?

Yup ... Pallet Tim.

Note: I am not implying that the Fed's shipment to Iraq were illegal (they were apparently part of a UN-sponsored Iraqi oil revenue arrangement). And I am not implying that Geithner is responsible for the theft of billions of dollars by defense contractors or others - he was never asked to oversee distribution of the funds once they arrived in Iraq, and he wasn't head of the New York Fed when the shipments started.

I am simply saying that Geithner has long been a yes-man to the powers-that-be, who ships pallets of money wherever he is told without question or any follow-up or tracking whatsoever.

Thursday, February 25, 2010

Professor Auerbach Provides More Evidence of Fed's Coverup Regarding Watergate and Iraq

Professor Robert Auerbach was kind enough to send me an email to let me know that Ron Paul read the following letter written by Auerbach into the Congressional record today:

I would like to enter into the record the following letter from Professor Robert D. Auerbach, a professor at the LBJ School of Public Affairs at the University of Texas. This letter provides additional information regarding remarks I made at yesterday's Financial Services Committee ... hearing, remarks which Federal Reserve Chairman Bernanke categorized as “bizarre.”



First, consider the Fed’s coverup of the source of the $6300 in hundred dollar bills found on the Watergate burglars when they were arrested at approximately 2:30 A.M. on June 17, 1972 after they had broken into the Watergate offices of the Democratic Party. Five days after the break-in, June 22, 2003, at a board of directors’ meeting of officials at the Philadelphia Fed Bank, it was recorded in the minutes [shown on page 23 of my book] that false or misleading information had been provided to a reporter from the Washington Post about the $6,300. Bob Woodward told me he thought he was the Washington Post reporter who had made the phone inquiry. The reporter "had called to verify a rumor that these bills were stolen from this Bank" according to the Philadelphia Fed minutes. The Philadelphia Fed Bank had informed the Board on June 20 that the notes were "shipped from the Reserve Bank to Girard Trust Company in Philadelphia on April 3, 1972." The Washington Post was incorrectly informed of "thefts but told they involved old bills that were ready for destruction."


The second subject brought up by Congressman Ron Paul is the exposure of faulty examinations of the Federal Reserve of a foreign bank in Atlanta, Georgia through which $5.5 billion was sent to Saddam Hussein that a Federal Judge found to be part of United States active support for Iraq in the 1980s.

On November 9, 1993, several federal marshals brought a prisoner, Christopher Drogoul, into my office at the Rayburn House Office Building of the U.S. House of Representatives. The marshals removed the manacles. Drogoul took off his jump suit and changed into a shirt, tie, and business suit. He immediately looked like the manager of the Atlanta agency with domestic headquarters in New York City of Banca Nazionale. Drogoul had come to testify about a “scheme prosecutors said he masterminded that funneled $5.5 billion in loans to Iraq’s Hussein through BNL’s Atlanta operation. Some of the loans allegedly were used to build up Iraq’s military and nuclear arsenals in the years preceding the first Gulf War.” 1

Drogoul’s “’off book’ BNL-Atlanta funding to Iraq began in 1986 as financing for products under Department of Agriculture programs.”2 The loans allegedly had been authorized by the U.S. Department of Agriculture. Since Drogoul told the committee he was merely a tool in an ambitious scheme by the United States, Italy, Britain and Germany to secretly arm Iraq in their 1980-88 war, the testimony was politically contentious and unproven. He was sentenced in November 1993 to 37 months in prison and he had already served 20 months awaiting his sentencing hearing.

U.S. District Judge Ernest Tidwell found that the United States had actively supported Iraq in the 1980s by providing it with government-guaranteed loans even though it wasn’t creditworthy. The judge said such policies “clearly facilitated criminal conduct.”3

Gonzalez was drawn to Drogoul’s answer about the Fed examiner who had visited his Atlanta operation. Gonzalez said that:

“At the November 9, 1993 Banking Committee hearing I asked Christopher Drogoul, the convicted official of the Banca Nazionale Del Lavoro agency branch in Atlanta, Georgia, how the Federal Reserve Bank examiners could miss billions of dollars of illegal loans, most of which ended up in the hands of Hussein.

Mr. Drogoul stated:

The task of the Fed [bank examiner] was simply to confirm that the State of Georgia audit revealed no major problems. And thus, their audit of BNL usually consisted of a one or two-day review of the state of Georgia’s preliminary results, followed by a cup of espresso in the manager’s office.”

Gonzalez was appalled at the of lack of effective examination of a little storefront bank and also appalled by the gifts exchanged by officers of the New York Federal Reserve and the regulated banks in New York City where the main U.S. office of BNL was located. A description of what followed is in my book.

The Fed voted in 1995 to destroy the source transcripts of its policy making committee that had been sent to National Archives and Records Administration. Chairman Alan Greenspan had the committee vote on this destruction, telling the members: “I am not going to record these votes because we do not have to. There is no legal requirement.” (p. 104 in my book.) Greenspan thus removed any fingerprints on this act of record destruction. Donald Kohn, who is now Vice Chairman of the Board of Governors at the Federal Reserve, answered some questions I had sent to Chairman Greenspan about this destruction. Kohn replied in a letter on November 1, 2001 to me at the University of Texas that they had destroyed the source records for 1994, 1995 and 1996, they did not believe it to be illegal and there was no plan to end this practice. That is one reason why the Federal Reserve audit supported by Congressman Ron Paul is needed. The Fed must stop destroying its records.

Robert Auerbach is Professor of Public Affairs at the Lyndon Baines Johnson School of Public Affairs, The University of Texas at Austin. He was an economist with the House of Representatives Financial Services Committee during the tenure of four Federal Reserve Chairmen: Arthur Burns, William Miller, Paul Volcker, and Alan Greenspan. Auerbach also served as an economist in the U.S. Treasury's Office of Domestic Monetary Affairs during the first year of the Ronald Reagan administration and as a financial economist with the U.S. Federal Reserve System. Auerbach has been a professor of economics at the American University in Washington, D.C. (1976-83), and a professor of economics and finance at the University of California-Riverside (1983-93). He has written numerous articles, and two textbooks in banking and financial markets. He received two Masters degrees in economics, one from the University of Chicago and one from Roosevelt University, where he studied under Abba Lerner, and a Ph.D. in economics from the University of Chicago, where he studied under Milton Friedman.

1 Marcy Gordon, “Banker Imprisoned in BNL Case Tells Story to House Committee,” The Associated Press, November 9, 1993.

2 U.S. Newswire: “Former Executive of Atlanta Agency of Italian-Owned Bank Pleads Guilty to Conspiracy”, from U.S. Department of Justice, Public Affairs, June 2, 1992.

3 Peter Mantius, “Drogoul given 37 months Judge in BNL case also blasts actions of U.S. prosecutors,” The Atlanta Journal and Constitution, December 10, 1993, Section A, p. 12.

More Evidence that the Fed Sent Money to Iraq


Here is some more information.

In July 2009, Congressman Henry Waxman stated:


The Fed starting shipping the money a month after Saddam went into hiding (but long before he was captured), so the money likely did not go to Saddam. (Update: I have since discovered additional information about these shipments.) However, it shows how well the Fed can move money around the world.













In fact, I don't know anything about money laundering, drug trafficking or terrorist networks. But I might be able to guess who could keep track of that kind of information: the Fed.

Wednesday, February 24, 2010

Economist With Financial Services Committee For Eleven Years, Assisting With Oversight of the Fed, Lends Support to Ron Paul's Questions



However, in 2008, the University of Texas published a book by Robert D. Auerbach - an economist with the U.S. House of Representatives Financial Services Committee for eleven years, assisting with oversight of the Federal Reserve, and subsequently Professor of Public Affairs at the Lyndon B. Johnson School of Public Affairs at the University of Texas at Austin - which seems to support Paul's questions.

In Deception and Abuse at the Fed, Auerbach claims:


You can read details of Auerbach's allegations about Iraq here, and about Watergate here.

Moreover, a 1982 article from the Miluawakee Sentinel alleges:


I don't yet have an opinion as to what this means, whether Auerbach has his facts right, or whether his allegations - if true - really amount to proving that the Fed had a major role in arming Saddam or stonewalling Congressional investigators about Watergate.

Mainstream Media Refuses to Disclose that "Independent" Pundits Are Actually Lobbyists

As reporter Sebastian Jones points out (see this and this), former Congressman Richard Gephardt runs a lobbying firm representing giant insurance and pharmaceutical companies.

Retired General Barry McCaffrey sits on the board of a giant defense contractor, DynCorp, and lobbies for war.

And many other "pundits" interviewed by the mainstream news are really high-level lobbyists for giant companies, pushing their agendas.

And yet they are treated as "independent experts" by the media.

Indeed - 2 years after Jones asked the large networks why they don't have a disclaimer on the screen beneath the pundits' names saying who they really work for - nothing has been done.

The corporate media are acting like virtual "escort services" for the powerful, selling access - for a price - to viewers and to powerful government officials, instead of actually investigating and reporting on what those in power are actually doing.

And see this.

Tuesday, February 23, 2010

Foundation for the Study of Cycles: Gold to $2,000 By Late 2011, While Dollar and Stocks will Sink

I'm agnostic about different cycle systems, but - for what it's worth - the Foundation for the Study of Cycles is predicting:

  • Gold will head north of $2000 ounce by the 3rd or 4th quarter of 2011
  • This will happen in middle of a sinking stock market and economy
  • Other PMs will do well, but not as well as gold
  • A major new dollar decline will start in the 3rd quarter of 2010, and end in early 2012 (the dollar's value against gold will plummet)
  • A convergence of cycles will make 2012 a total train wreck. For example, the 500 geopolitical cycle will shift, with power and wealth heading from West to East. Other cycles will bottom during the period from late 2011 to late 2012, so things will get really ugly. The 4th quarter in 2012 will be a horrible time for America

Greenspan: Worst Financial Crisis EVER, INCLUDING the Great Depression


Bloomberg notes:


As I pointed out last May:


Unfortunately, virtually everything the American government has done since the crisis started has been counterproductive. See this, this, this, this, this, this, this, this, this, this and this.

The same is true of most other governments.


Monday, February 22, 2010

How to Reach A Larger Audience

Stop preaching to the choir!

Start reaching a larger audience!

The people you talk with and the websites which publish what you write might think you're great, but the vast majority of people out there aren't hearing it.

You're Reaching a Very Small Audience

Communications experts like George Lakoff (who I recently interviewed) and Frank Luntz say that most people don't make political decisions based on fact and logic. Instead, they make decisions based on their ideas of morality and pre-existing "frames" of reference.

So if you are just reciting facts, you are not going to persuade anyone except the minority of people who reason and make decisions based on logic. (You may say "but all of the websites I read and people I talk to make decisions based on logic". Okay, but that only means that you don't read the overwhelming majority of websites or talk to the overwhelming majority of people who make decisions based on other factors. See this and this).

Associating an issue or person with an emotion is called “anchoring”.

Some words convey strong positive or negative emotions, and act as powerful anchor words. For example, in 1995, Newt Gingrich pushed the following positive words for use by politicians:

share... change... opportunity... legacy... challenge... control... truth... moral... courage... reform... prosperity... crusade... movement... children... family... debate... compete... active(ly)... we/us/our... candid(ly)... humane... pristine... provide...

liberty... commitment... principle(d)... unique... duty... precious... premise... care(ing)... tough... listen... learn... help... lead... vision... success... empower(ment)... citizen... activist... mobilize... conflict... light... dream... freedom...

peace... rights... pioneer... proud/pride... building... preserve... pro-(issue): flag, children, environment... reform... workfare... eliminate good-time in prison... strength... choice/choose... fair... protect... confident... incentive... hard work... initiative... common sense... passionate
"National security" is also, obviously, a very powerful anchor. Just using these some of these words to describe one's position helps to persuade people towards that position.

Gingrich urged the following negative words be describe one’s opponent:
decay... failure (fail)... collapse(ing)... deeper... crisis... urgent(cy)... destructive... destroy... sick... pathetic... lie... liberal... they/them... unionized bureaucracy... "compassion" is not enough... betray... consequences... limit(s)... shallow... traitors... sensationalists...

endanger... coercion... hypocrisy... radical... threaten... devour... waste... corruption... incompetent... permissive attitudes... destructive... impose... self-serving... greed... ideological... insecure... anti-(issue): flag, family, child, jobs... pessimistic... excuses... intolerant...

stagnation... welfare... corrupt... selfish... insensitive... status quo... mandate(s)... taxes... spend(ing)... shame... disgrace... punish (poor...)... bizarre... cynicism... cheat... steal... abuse of power... machine... bosses... obsolete... criminal rights... red tape... patronage
(Gingrich's buzzwords came from Luntz)

Lakoff and Luntz periodically release updated lists of anchors and frames concerning specific issues. For example, Lakoff writes today that Democrats promoting health care reform should use the words "freedom" and "life". And Luntz recently wrote that those fighting financial reform should focus on phrases such as "lobbyist loopholes", "agent of change", "government accountability", "bloated government bureaucracy". (Lakoff is on the left, and Luntz on the right. But everyone should look beyond their partisan biases to their scientific communications insights. They are, after all, two of the leading experts in field of communication).

Let's take the example of economic policy. You can write about the bailouts, credit default swaps and oligarchy until the cows come home. But you won't reach anyone who doesn't already know about those issues.

Instead, start out by framing the issue in terms the majority can understand. For example:

Obama's economic advisors - just like Bush's - are wolves in sheep's clothing. They rewarded the greed which caused the big banks to fail and brought on the collapse last year and the decay of the whole economy. We need real reform and real change, not the hypocrisy of rewarding the banksters with more bailouts. The crisis will not end until we give some some tough love to the banks to really rein in their radical corruption.
(I'm not an expert at framing, so you might be able to do better.)

Note: What should we do when we come face-to-face with a negative but powerful frame promoted by the other side? The best solution is usually to reframe it. Find a better, more powerful frame which encapsulates the truth.

The Religion Frame

The overwhelming majority - 75% - of all Americans consider themselves to be Christian. It is irrelevant for this discussion on reaching a larger audience whether or not those 75% are all living up to their values, whether every word of the Bible is true, whether Christianity is a detrimental force undermining democracy and reason, or whether all organized religion is a con.

What is important is that most Americans are Christian, and so you can't reach a wider audience unless you speak in language meaningful to Christians.

Let's take an example. The facts are that governments from around the world have admitted that they carry out false flag terror for political ends. But rounding up the confessions and facts won't persuade anyone except the small minority of people who think rationally and make decisions based on facts.

To reach a wider audience, I have to invoke Christian values, morality and the frames which are meaningful for people of faith.

For example:

  • "Punish the sinners"
  • Expose the "wolves in sheep's clothing"
  • "Root out evil"
  • "Protect national security"

You could say something like:

Traitors in Washington have - for a long time - committed sins against our country which are threatening our national security. Instead of using the world's greatest military to fight bad guys, there are sinners who have hijacked our defense apparatus for their own evil purposes.

If you think that this is beneath you, you are mistaken. Specifically, the first step is to climb up from the fog of unreason to logic. Congratulations, you've done that.

But the second step is to translate that logic into language that the majority can understand. If you don't do that, you have failed as a communicator.

For example, good science writers don't use a bunch of technical jargon. They translate that jargon into plain English that everyone can understand, and use everyday images that people will get. The same is true for any communication.

(And if you are an atheist and speaking in religious language seems dishonest, think of this as speaking a little Spanish when you travel to Mexico or a little French when you go to Paris: you're trying to converse a little in the "local language". Even if your accent is horrible, you'll get credit for trying.)

3 Brains Are Better than One

If you want to reach a larger audience, you also have to stop talking to only one out of three brains.

Yup, every person actually has 3 brains. Top-notch communicators appeal to all 3 brains.

The 3 brains are:

  • (1) The human brain (neocortex), where we handle logic, abstract thought, words, symbols and time. This is the one you've been preaching to and reaching only a small audience.
  • (2) The reptilian brain, which focuses solely on survival, fight-or-flight, and getting away from pain. This is, largely, what fearmongering politicians try to stir up.
  • (3) The mammalian brain, which handles emotions: love, indignation, compassion, envy, hope, etc. This is what, largely, what Obama's "hope" politics has focused on.

Most people incorrectly assume that if enough facts and logic are presented, people will believe the truth. In fact, psychologists, marketing experts and trial lawyers have found that facts are less persuasive for most people than emotions in reaching decisions.


The reptilian and monkey portions of our brain reach decisions based upon survival and emotion before the neocortex can make rational decisions. So facts alone won’t convince most people. Instead, stories, images and emotions are what sway most people.

For example, one political psychologist writes:

If you appeal primarily to people's reason without first getting them to feel the significance of the issue you're talking about, they're not going to be interested. From an evolutionary standpoint, our emotions play two major roles. One, our emotions appear to capture our attention, so if you don't make emotionally compelling arguments, if you don't use stories or examples to grab listeners, they won't hear important things you have to say. The other role of emotion, which is probably most crucial, is that emotions motivate us -- positive feelings pull us towards things that are generally good for us, and negative emotions move us away from things that are generally bad for us.

People are driven primarily by one of two emotions:

  • (1) Moving away from pain. People whose primary drive is to move away from pain usually believe that the world is primarily a scary and dangerous place, and that people are basically bad. Conservative political advisors typically try to manipulate this emotion.
  • (2) Moving towards pleasure. People whose primary drive is to move toward pleasure usually believe that the world is fundamentally a fair and good place, and that people are basically good. Liberal political advisors typically try to manipulate this emotion.

If someone falls into the first category, discussing how truth will help them avoid pain will be effective. For people in the second category, stressing the pleasure that truth will bring will be useful.

Of course, if you are communicating with more than one person at a time, you should mix both messages.

These illustrations brilliantly illustrate how those in power can manipulate these two emotions.

Motivating people through a moving away from pain/fear strategy works very effectively in the short run. This is because the reptilian brain reacts first and overrides the higher thinking functions. But, over time, it stops working, and the moving away from pain strategy eventually becomes ineffective. In the long run, hope and a positive vision works better than fear. The fact that we went from Bush to Obama make sense in this light.

Seeing, Hearing, Touching

Most modern people process information primarily through their visual sense. Some process information through hearing. Other process information kinesthetically (through touch and feeling).

People not living in modern societies process information primarily kinesthetically, as that is how we are biologically wired. As stated above, we are wired to make decisions largely based on feeling and emotion.

As a neuroscientist points out:

Smells and tactile stimuli are routed immediately through the amygdala the emotional seat of the brain most responsible for the fear response. To give you a simplified explanation, this means that smells and touch can evoke much more vivid memories and emotional responses than sights or sounds.

Sights and sounds are shunted first to the thalamus. The thalamus deconstructs your vision into basic chunks of information: shape, size and color. Audio signals are similarly reduced to information about volume and dissonance. Only after this has happened does the signal get passed to the amygdala and the frontal cortex. As a consequence of this slightly more circuitous route, visual and auditory cues often trigger emotions that feel less intense than those of smell and feel.

Reading books and browsing the internet are exercises in very visual mediums that are only rarely accompanied by sound, touch or smell. If you’re trying to communicate through either of these mediums, you are immediately handicapped out of three senses.

So what does this mean on a practical level?

Unless you communicate using a person's primary mode of learning (called "submodality"), you won't be speaking in his language, and so probably won't be able to persuade him.

Moreover, studies show that communications which rapidly switch back and forth between visual, auditory and kinesthetic cues best help the listener focus on the message.

Therefore, the world's top communicators will frequently and rapidly switch between "seeing", "hearing" and kinesthetic words.

Some examples of visual words and phrases are:

"I see what you mean."
"Look at what's happening."
"Can you picture that?"
"What's the big picture?"
Some examples of hearing words and phrases are:
"I hear you."
"If you listen carefully, you'll notice . . ."
"Can you hear their cries for justice?"
"That's the sound of democracy."
Some examples of kinesthetic words and phrases are:
"What would that feel like?"
"Pulled the rug out from under us."
"Tearing a hole in the Constitution"
"Getting tripped up on . . ."
"They're stabbing us in the back . . ."
An example switching submodalities could be as simple as: “I want to talk with you about the stories that we tell ourselves, the way we view the world and the way we feel as Americans.”

Obviously, multimedia is necessary for a website. Pictures which convey other senses are also effective. For example, photos of people smelling things will trigger the olfactory part of your readers' brain.

“You” Statements

The unconscious mind hears any statement using the word “you” as being directly at that particular listener.

Using a "you" statement when you are in a confrontational situation with someone will usually polarize the listener and destroy any possibility of influencing him.

A trick for getting around this is to use an “indirect you”; that is, speak in the third person. Here are some examples:
“[third person] was saying ...”

“He said ‘you wouldn’t believe’ . . .”

“She said ‘you can’t imagine how difficult . . .”

“He said ‘you would have to be, you know, disconnected from life to ignore . . .”

“She said ‘you’d have to be almost criminally disconnected from humanity to . . .”

“He said ‘you wouldn’t believe’ . . .”

“And I said to him, ‘you know, I agree.”

“Many people tell me that what they would like to say to [listener or listener’s group] is ‘you guys are . . . .’”

If you shift the rhythm of your speaking or writing, or the pace of your video or movie, the listener or viewer will have pay attention to follow you. This draws him in, and forces him to pay attention (and thus be receptive to your message). If you listen to a world-class speaker, they will pause more than you might assume, and speak quieter in parts.

Pacing your presentation is important.

Future Pacing

It can be powerful to tell a story in the future, as if its happening now. Then work your way back to the present, to connect the future and the present.

Masterful speeches can work back and forth and back forth among different time frames, interweaving present, future and even past events to make one's point and give the listener a feeling of continuity in one's vision.

Switch Levels

Similar to switching between timeframes, one can switch between levels of complexity: from the individual, to the group, to the societal, to all of humankind.

Tell how something will benefit the individual and also society. Don't just get stuck on one level or another.

Avoid Negatives

The unconscious mind usually doesn't hear negatives. It hears “not” as “is” (how do you react to "I am not a crook"?). And it doesn’t hear “un” or “dis”, or even "I will stop" or "I will end" sometimes.

As summarized in an article in the Washington Post:

This phenomenon may help explain why large numbers of Americans incorrectly think that Saddam Hussein was directly involved in planning the Sept 11, 2001, terrorist attacks, and that most of the Sept. 11 hijackers were Iraqi. While these beliefs likely arose because Bush administration officials have repeatedly tried to connect Iraq with Sept. 11, the experiments suggest that intelligence reports and other efforts to debunk this account may in fact help keep it alive.

The Post concludes that the studies show that "rather than deny a false claim, it is better to make a completely new assertion that makes no reference to the original myth".

So try to avoid negatives and stick to positive statements.


There is alot of information conveyed above. You will probably need to re-read this essay to get all of the fine points.

But if you're short on time, Thom Hartmann summarizes some of the most important elements of successful and persuasive communication based on modern discoveries into how people actually make decisions:
“Tell a story to capture their attention. Build into the story visual and auditory metaphors and elements, each designed to evoke emotional responses. Embed into the most emotional parts of the stories the information you want remembered. And pace the story so that listeners and viewers move to your beat
Note: If you have any ethical reservations about using these techniques, please note that I am only advocating using them to promote the truth. I am completely opposed to using psychology or marketing techniques to spread disinformation.

Why We are Susceptible to Manipulation










Wolf In Sheep's Clothing









Grow Up

The good news is that we can evolve.





The Arizona Republic reports:



McCain isn't the only one to say that Paulson was doing a bait-and-switch.

The TARP Inspector General found that Paulson misrepresented the too big to fail banks' health in the run-up to passage of TARP.

Congressmen Brad Sherman and Paul Kanjorski and Senator James Inhofe all say that the government warned of martial law if TARP wasn't passed (Inhofe says Paulson was the one doing the talking).

And Paulson himself has said:

So Paulson knew "by the time the bill was signed" that it wouldn't be used for its advertised purpose - disposing of toxic assets - and would instead be used to give money directly to the big banks. But he didn't tell Congress before they voted to approve the TARP legislation.

Bullet-Proof Case (Not Ivins ... The FBI Cover-Up)

In a new post, vaccine expert Dr. Meryl Nass shreds the FBI's case against Bruce Ivins:


Indeed, both Lawrence Livermore National Labs and Sandia National Labs have already discredited the FBI's claims.

Back to Nass's article:
Here are today's reports from the Justice Department, AP, Washington Post and NY Times. The WaPo article ends,

The FBI's handling of the investigation has been criticized by Ivins's colleagues and by independent analysts who have pointed out multiple gaps, including a lack of hair, fiber other physical evidence directly linking Ivins to the anthrax letters. [Note by Washington's Blog: Indeed, handwriting analysis failed to link Ivins to the anthrax letters.] But despite long delays and false leads, Justice officials Friday expressed satisfaction with the outcome.



That is only the first of many holes in FBI's case. Here is a sampling of some more.

  1. The report assumes Ivins manufactured, purified and dried the spore prep in the anthrax hot room at US Army Medical Research Institute of Infectious Diseases (USAMRIID). His colleagues say the equipment available was insufficient to do so on the scale required.
  6. ***.
  7. The FBI's Summary states that "only a limited number of individuals ever had access to this specific spore preparation" and that the flask was under Ivins' sole and exclusive control. Yet the body of the report acknowledges hundreds of people who had access to the spores, and questions remain about the location of the spore prep during the period in question. FBI wordsmiths around this, claiming that no one at USAMRIID "legitimately" used spores from RMR1029 without the "authorization and knowledge" of Bruce Ivins. Of course, stealing spores to terrorize and kill is not a legitimate activity.
  8. FBI says that only a small number of labs had Ames anthrax, including only 3 foreign labs. Yet a quick Pub Med search of papers published between 1999 and 2004 revealed Ames anthrax was studied in at least Italy, France, the UK, Israel and South Korea as well as the US. By failing to identify all labs with access to Ames, the FBI managed to exclude potential domestic and foreign perpetrators.
  9. FBI claims that "drying anthrax is expressly forbidden by various treaties," therefore it would have to be performed clandestinely. Actually, the US government sponsored several programs that dried anthrax spores [Note by Washington's Blog: government labs in Utah and Ohio worked with dried anthrax]. Drying spores is not explicitly prohibited by the Biological Weapons Convention, though many would like it to be.
  12. FBI claims Ivins was able to make a spore prep of equivalent purity as the letter spores. However, Ivins had clumping in his spores, while the spores in the Daschle/Leahy letters had no clumps. Whether Ivins could make a pure dried prep is unknown, but there is no evidence he had ever done so.

On the other hand, there are reasons why a conspiracy makes better sense. If the FBI really had the goods, they would not be overreaching to pin the crime on a lone nut.

JFK, RFK, George Wallace, Martin Luther King, all felled by lone nuts. Even Ronald Reagan's would-be assassin was a lone nut. Now Bruce Ivins. The American public is supposed to believe that all these crimes required no assistance and no funds.

Does the FBI stand for the Federal Bureau of Invention?
Indeed, a minute's reflection will show how silly the FBI's claims are.

As I wrote in 2008:


Similarly, a manufacturer of specialized anthrax equipment said:

I also noted in 2008:

According to the FBI, Ivins made the killer anthrax in his lab at Fort Detrick all by himself in something like 12 hours ...

Is that plausible?



Rather than proving Ivins' guilt as a lone nut killer, the FBI has only succeeded in proving the great lengths that the government will go to cover up a crime.

Sunday, February 21, 2010


General Petraeus - the military commander overseeing the wars in Iraq and Afghanistan - told Meet the Press Friday that torture is counterproductive:

General Petraeus is, of course, correct.

Army Field Manual 34-52 Chapter 1 states:


Indeed, all of the top interrogation experts say that torture doesn't work in providing information which will keep us safe.


And I agree wholeheartedly with General Petraeus that we should live our values. The father of our nation - George Washington - forbid the use of torture.


Finally, the type of torture used by the U.S. in the last 10 years is of a special type of torture created by Communists for the explicit purpose of extracting false confessions (see this, this, this, this and this). That's about as un-American as you can get.

Saturday, February 20, 2010



As the San Francisco Chronicle wrote in 2003:




























American eugenicists had craved twins to advance their research into heredity.



Verschuer had a longtime assistant. His name was Josef Mengele.



As Michel Crichton wrote in 2004:













Appendix 1, State of Fear (Avon 2004).
