Wednesday, July 31, 2019

“Damned Tears”

“Damned Tears”
By Andy Alt

I am just going to let this speak for itself. It is a beautiful, heart-breaking piece written by Andy Alt, about his father, who died by his own hand when Andy was just eight years old...- CP

“For every joke he tells, there is a sadness. Each sadness buried by one joke. Once he thought the joke transformed the sadness, but the joke merely blanketed the sadness to comfort it.

It’s said that tears clean one’s eyes. If the the dam broke from all of the tears from his sadness — crying an ocean over the loss of his father, the loss of his child-hood, the loss of what-could-have-been-but-never-will-be, what he never knew, what he’ll never know, feelings he’s never felt, feelings he’ll never feel, a father he can never know, nor the father who can ever know his son, a father who can never be proud of his son, a son who can never be proud of his father, a voice he’ll never hear, a father who will never hear the voice of his son, the son who can never have his father, the father who can never have his son, the life that never was, a life that never included a father, the life of a father that isn’t — if the tears for all these were shed, he could throw away his glasses and have perfect vision. And the tears would wash over his soul and clean the taint of blood and terror. All emotions, love, hope, happiness, sadness, fear, and many others, would be uncovered and laid out — existing, coexisting peacefully upon the cool sheets of time and the future.

A trickle of these tears were shed this night, for the death of a father over two decades past, and the death of a son over two decades past, each only happening yesterday. As the tears fall he could for a moment sense and feel what the father felt at the time of his death, and then the son shed even more tears for the pain which the father felt at the moment the father’s finger was upon the trigger. The son could almost feel the father’s presence, and the son reached out his hand, but there was no hand to take it. He told the father that he missed and loved him, and that he knew the father missed and loved him as well.

And I realized that I do indeed have a father, but he is dead. Some of the sadness now uncovered, the tears dry, the ink falls from my pen, and I see that I’ve written about the loss of two men.”

"The Pure And Simple Truth..."

"The pure and simple truth is rarely pure and never simple."
- Oscar Wilde

“The Stock Market Started To Fall In July…”

“The Stock Market Started To Fall In July…”
by Michael Snyder

"Will we look back on the month of July as a critical turning point for the stock market? During the first half of 2019, stock prices soared to record high after record high even though we just kept getting one number after another that indicated that a new economic slowdown was starting. Because of the disappointing performance of the U.S. economy, it was believed that we would see a rate cut from the Federal Reserve on Wednesday, and that is precisely what happened. But instead of rejoicing, investors started to panic a bit, and the Dow Jones Industrial Average ended the day down 333 points. We will get into why that happened in just a little bit. But without a doubt it seems quite odd that the Fed’s very first rate cut since December 2008 actually caused stocks to go down. On a historical basis, interest rates are already very low right now, and so this greatly limits what the Fed will be able to do once the next recession officially begins. Of course most investors are not concerned with such considerations. What they really want is for interest rates to be pushed all the way to the floor as quickly as possible, and so they were quite disappointed with what they heard from Fed Chairman Jay Powell on Wednesday.

But considering the fact that we haven’t seen a rate cut in more than a decade, the truth is that investors should have been thrilled by what happened.  When interest rates go down, that tends to promote more economic activity… As expected, the Fed lowered its federal funds rate by a quarter-percentage point to a range of 2% to 2.25%. The move is likely to ripple through the economy and financial system, nudging down rates for credit cards, home equity lines and auto loans and theoretically sparking more economic activity. While the rate cut should aid borrowers, it will frustrate savers who were just starting to benefit from higher bank account yields. And more economic activity usually results in higher corporate profits, and higher corporate profits usually result in higher stock prices.

So why isn’t Wall Street rejoicing? Well, it is because Fed Chairman Jay Powell told the press that this rate cut was just “a mid-cycle adjustment to policy” and that he didn’t anticipate that this was “the beginning of a lengthy cutting cycle”.

Many on Wall Street had been anticipating that the Federal Reserve would keep on cutting rates after this rate cut, but as I detailed the other day, the only way that would make sense is if we were plunging into a recession. And while the Fed is definitely willing to admit that there are some trouble signs, they are not willing to completely throw in the towel on the “booming economy” narrative just yet.  The following comes from CNBC: "In approving the cut, the FOMC cited “implications of global developments for the economic outlook as well as muted inflation pressures.” The committee called the current state of growth “moderate” and the labor market “strong,” but decided to loosen policy anyway."

Needless to say, President Trump was not thrilled by what happened on Wednesday. He was hoping that this would be the beginning of a series of rate cuts, because the lower interest rates go the better chance he has of being re-elected. In a two part tweet on Wednesday, Trump once again ripped into Jay Powell and the Federal Reserve: "What the Market wanted to hear from Jay Powell and the Federal Reserve was that this was the beginning of a lengthy and aggressive rate-cutting cycle which would keep pace with China, The European Union and other countries around the world."

"As usual, Powell let us down, but at least he is ending quantitative tightening, which shouldn’t have started in the first place – no inflation. We are winning anyway, but I am certainly not getting much help from the Federal Reserve!"

And it will be very interesting to see if investors on Wall Street continue to vent their frustrations for the rest of the week. At other times when Wall Street has been disappointed by the Fed, we have seen violent moves toward the downside, and it is entirely possible that such a scenario could play out once again.

In fact, one Morgan Stanley analyst had already been warning that the coming reversal “is likely to be sharper and deeper than one might expect”: "Echoing Guggenheim’s fears that US equities are in for a dramatic collapse, Morgan Stanley’s Mike Wilson warns that “…if equity markets fail one more time at our key resistance point, we believe the reversal is likely to be sharper and deeper than one might expect, even if the earnings recession is more benign than we expect.“

And Egon von Greyerz is even more pessimistic about what is right around the corner: "The messages from the ECB and the Fed couldn’t be clearer. They are seeing major problems in the financial system and in the world economy and they will do whatever it takes to save the system. But they will fail. The autumn of 2019 will see a major shift in sentiment as markets turn from a secular bull to a secular bear. We are likely to see major crashes in many global stock markets. Virtually no one is prepared for this so there will be both panic and despair."

Of course the truth is that we have never been more perfectly primed for a stock market crash than we are right now, and things are lining up ideally for the sort of nightmare scenario that I have been warning about. It is just a matter of time before all of our economic and financial bubbles burst, and when they do the pain is going to be off the charts. I think that the CEO of Overstock.com recently made this point very well:

"Patrick Byrne, the CEO of online retailer Overstock.com, sounded an ominous note for the several years ahead as well. “I think it will be bad,” he said. “To be honest, I think that ’08 was the hors d’oeuvres course,” he said according to Fortune. Byrne, a longtime cryptocurrency enthusiast, compared what he anticipates will happen to the economy to what might happen to a bridge overloaded with too many vehicles. “It’s a little bit like asking me there’s a bridge that was designed to hold 20 cars passing over it at a time and there’s now 100 going over it,” Byrne said. “When’s it going to break? When’s it going to collapse? That’s really your answer.”

“I’m kind of shocked it’s gone on this long,” Byrne continued. “I think that we have deep, deep, structural, architectonic level problems in our economy that will surface.” As Byrne aptly pointed out, the big surprise is that it has taken this long for everything to collapse.

We had far, far more time than we deserved to try to get things turned around, but we never actually fixed any of our long-term economic and financial problems. Now the next crisis is at our door, and I believe that the remainder of this year will turn out to be quite 'interesting' indeed."

"Now What?"

"Now What?"
by Brian Maher

"At 2 p.m. the announcement came issuing… The Federal Reserve has lowered interest rates for the first instance in 11 years — since those grim, unlit days of 2008. A 25-basis point rate cut it is. In its own telling: "In light of the implications of global developments for the economic outlook as well as muted inflation pressures, the Committee decided to lower the target range for the federal funds rate to 2–2.25%." The Federal Reserve also declared an immediate and unconditional halt to quantitative tightening today — two months ahead of schedule.

Has Jerome Powell thrown down his sidearm, hoisted the white flag of surrender… and come out with his hands in the air? Or does today’s rate cut merely represent a fighting retreat, a tactical withdrawal? In his post-announcement statement, Mr. Powell got his back up high and stiff… and hunkered in. Do not consider today’s rate cut a retreat, he insists: "Let me be clear: What I said was it’s not the beginning of a long series of rate cuts. When you think about rate-cutting cycles, they go on for a long time and the committee’s not seeing that. You would do that if you saw real economic weakness and you thought that the federal funds rate needed to be cut a lot. That’s not what we’re seeing."

Powell instead labelled today’s cut a “midcycle adjustment to policy.” Just so. But the market says otherwise. Federal funds futures presently give a 60% chance of another cut in September. But a 100% chance by November.

Our money is on Mr. Market. We further expect additional rate cuts to follow. Let us come out flatfooted and declare it... The rate hike cycle is over. “Normalization” is no more. We do not know when we will see normal again… if ever.

By our lights, the global economy is in for hard sledding. Reams of economic indicators suggest today’s conditions are worse than in September 2007 — at the doorstep of crisis. These include global manufacturing data, economic surprise indexes (how economic data meet expectations) and financial conditions.

These United States are not excepted… despite the superficially gaudy numbers. Go at them one by one, line by line. In each instance you will find a woeful comparison against 2007:
The crackerjacks at Morgan Stanley ransacked the data. And it got them sweating. They concluded a 25-basis-point cut lacks the required oomph They pleaded for a 50-basis point cut instead. That is because markets wagered most heavily upon a 25-basis point rate cut today. The blindsiding blow would have dizzied Wall Street… and riled the animal spirits.

How did the stock market absorb today’s 25-point cut? Perhaps Jerome Powell should have taken aboard Morgan Stanley’s advice. Come the 2 p.m. announcement, the market took a sip of Powell’s near beer… and spit it back in his face.

All major indexes plunged into red numbers. The Dow Jones lost 334 points on the day, nearly all after 2 p.m. It had shed 478 points at the peak of the rout. The S&P lost 33 points on the day; the Nasdaq, 98.

MarketWatch in summary: "U.S. stocks fell Wednesday afternoon with investors disappointed that the Federal Reserve only cut interest rates by a quarter percentage point as expected in order to cushion the economy from a global slowdown and escalating trade policy tensions."

But even if the Federal Reserve cut 50 basis points, we expect heavy weather soon enough. As we have maintained, recession is likely within three months of the first rate cut that ends a cycle. Today we have the rate cut… at last Thus the hourglass begins dripping sand. By early November it may run out. More tomorrow…

Below, Jim Rickards shows you why the Federal Reserve is trapped in an endless cycle of market manipulation. What does today’s rate cut signify? Read on."
"One Manipulation Leads to Another"
By Jim Rickards

"By now you have heard the Fed lowered interest rates today by 25 basis points. This was fully expected. The deeper story is that the Fed’s attempt to “normalize” monetary policy has failed. It never came close to raising rates to between 4% and 5%, the level history shows is required to fight recession. The Fed also announced an end to quantitative tightening (QT) today, two months ahead of schedule. Its balance sheet is still much higher than it was in 2008.

The question now is, what comes next? Powell disappointed markets today when he indicated the rate cut was a “midcycle adjustment to policy.” The Fed did not commit to more rate cuts. They may cut in September or not. This was disappointing to markets and is one reason stocks retreated despite the easing. The Fed was trying to raise rates to prepare for the next recession. But, they came close to causing a recession last December. In effect, the Fed failed in its primary mission and is now in retreat.

This creates uncertainty about whether the Fed will retreat more or resume its preferred rate hike path. One thing we know about markets is that they can't stand uncertainty and will remain volatile until this tension is resolved.

How did we get here? We all know the outlines of how the Fed and other central banks responded to the financial crisis in 2008. First the Fed cut interest rates to zero and held them there for seven years. This extravaganza of zero rates, quantitative easing (QE) and money printing worked to ease the panic and prop up the financial system.

But it did nothing to restore growth to its long-term trend or to improve personal income at a pace that usually occurs in an economic expansion. Now, after a 10-year expansion, policymakers are considering the implications of a new recession. There’s only one problem, as I said: Central banks have not removed the supports they put in place during the last recession.

Interest rates got up to 2.50% (back down to 2.25% today), but that’s far lower than the 4–5% rates that will be needed so the Fed can cut enough to cure the next recession. The Fed has reduced its balance sheet from $4.5 trillion to around $3.8 trillion, but that’s still well above the $800 billion level that existed before QE1.

In short, the Fed (and other central banks) only partly normalized and are far from being able to cure a new recession or panic if one were to arise tomorrow. It will take years for the Fed to get interest rates and its balance sheet back to “normal.” And now that it’s going in the other direction, even longer.

But the current expansion is already the longest on record. It can’t be expected to last much longer. When it does strike, the next recession may be impossible to get out of. The central banks just don’t have the “dry powder” to fight it with. And that comes back to a deeper problem...

The problem with any kind of market manipulation (what central bankers call “policy”) is that there’s no way to end it without unintended and usually negative consequences. Once you start down the path of manipulation, it requires more and more manipulation to keep the game going. Finally it no longer becomes possible to turn back without crashing the system.

Of course, manipulation by government agencies and central banks always starts out with good intentions. They are trying to “save” the banks or “save” the market from extreme outcomes or crashes. But this desire to save something ignores the fact that bank failures and market crashes are sometimes necessary and healthy to clear out prior excesses and dysfunctions. A crash can clean out the rot, put losses where they belong and allow the system to start over with a clean balance sheet and a strong lesson in prudence.

Instead, the central bankers ride to the rescue of corrupt or mismanaged banks. This saves the wrong people (incompetent and corrupt bank managers and investors) and hurts the everyday investor or worker who watches his portfolio implode while the incompetent bank managers get to keep their jobs and big bonuses. All it does is set the stage for a bigger crisis down the road.

The bigger problem is there’s no way out, as I said. One manipulation leads to another. The zero interest rate policy (ZIRP) didn’t work, so the Fed went to quantitative easing (QE). After QE1, QE2 and QE3 (2008–2013) came the “taper” (2014) and then the “liftoff” in rates (2015), followed by “pause” and “patience” when it came to more rate hikes (2016–19). Now the Fed’s back to cutting rates. We can’t say when it will end.

The Fed also announced today that it’s ending QT prematurely. The point is that the Fed has not normalized rates and they have not normalized their balance sheet. It’s just one manipulation after another with weak results and no way out. The latest form of manipulation is what’s called a “standing repo facility,” which is just another flavor of QE. Under this facility, banks would swap their cash reserves at the Fed for Treasury securities on the promise that they could swap back into cash immediately if needed. Essentially, this manipulation would allow banks to hold fewer reserves than presently required, knowing the Fed would have their backs if they ran into trouble.

This is just another accounting gimmick to pretend to clean up the Fed’s balance sheet. It won’t be the last manipulation. We’re a long way from that. In all likelihood, we’re only getting started. But there’s little reason to believe conditions will improve. The fear is that the U.S. could become like Japan... In my 2014 book, "The Death of Money," I wrote, “The United States is Japan on a larger scale.” That was five years ago.

Japan started its “lost decade” in the 1990s. Now their lost decade has dragged into three lost decades. The U.S. began its first lost decade in 2009 and is now entering its second lost decade with no end in sight. What I referred to in 2014 is that central bank policy in both countries has been completely ineffective at restoring long-term trend growth or solving the steady accumulation of unsustainable debt.

In Japan this problem began in the 1990s, and in the U.S. the problem began in 2009, but it’s the same problem with no clear solution. The irony is that in the early 2000s, former Fed Chair Ben Bernanke routinely criticized the Japanese for their inability to escape from recession, deflation and slow growth. When the U.S. recession began during the global financial crisis of 2008, Bernanke promised that he would not make the same mistakes the Japanese made in the 1990s. Instead, he made every mistake the Japanese made, and the U.S. is stuck in the same place and will remain there until the Fed wakes up to its problems.

Bernanke thought that low interest rates and massive money printing would lead to lending and spending that would restore trend growth to 3.2% or higher. But he ignored the role of velocity (speed of money turnover) and the unwillingness of banks to lend or individuals to borrow. When that happens, the Fed is pushing on a string — printing money with no result except asset bubbles. That’s where we are today. Today’s rate cut will do nothing to reverse it."

Musical Interlude: Paul Mauriat, “Love is Blue”

Paul Mauriat, “Love is Blue”

"A Look to the Heavens"

"This NASA/ESA Hubble Space Telescope image shows the edge-on profile of the slender spiral galaxy NGC 5775, which is surrounded by a halo of gas that astronomers suspect is kicked up by star explosions like a galaxy-size fountain. A photo from the Hubble Space Telescope has revealed what scientists have called a veritable galactic "fountain of youth," one that would turn the fictional pirate captain Jack Sparrow of the Pirates of the Caribbean films green with envy. Journeying to the mythic Fountain of Youth is Sparrow's goal in in the adventure film franchise, "Pirates of the Caribbean: On Stranger Tides." But the space fountain spotted by Hubble is no myth.
Click image for larger size.
The new Hubble image shows the galaxy NGC 5775, which is located about 85 million light-years from Earth in a group of galaxies called the Virgo Cluster. NGC 5775 is a spiral galaxy that is tilted away from Earth in such a way that only its edge is visible. This edge-on position of the galaxy has allowed astronomers to spot a vast halo of hot gas around NGC 5775, but how the material actually got there is unclear, researchers said. "Some astronomers think that hot gas from the disc is driven into the halo by supernova explosions, which is then returned to the disc as it cools- like a massive galactic fountain," according to a Hubble telescope image description. Because of the phenomenon, Hubble researchers dubbed it a "galactic fountain of youth" when they released the image this month.

There is also another oddity about the galaxy NGC 5775 that has attracted attention from astronomers: a bridge of hydrogen gas linking the galaxy with a galactic neighbor called NGC 5774. The two spiral galaxies are on a collision course and are in the early stages of merging, according to Hubble scientists. However, neither object has yet sprouted a tidal tail of gas and stars- created by intense gravitational disruptions- that typically precedes galaxy mergers. The Hubble Space Telescope is a joint project by NASA and the European Space Agency."
- http://www.sott.net/

The Poet: Mary Oliver, "Song of the Builders"

"Song of the Builders"

"On a summer morning
I sat down
on a hillside
to think about God -
 a worthy pastime.
Near me, I saw
a single cricket;
it was moving the grains of the hillside
 this way and that way.
How great was its energy,
how humble its effort.
Let us hope
it will always be like this,
each of us going on
in our inexplicable ways
building the universe.”

~ Mary Oliver, “Why I Wake Early”

“Paradox Governs Our Lives”

“Paradox Governs Our Lives”
by Gordon S. Livingston M.D.

“In thirty-six years of listening to patients talk about their dreams and discontents, it has become apparent to me that most of us have a lot of difficulty figuring out what it means to be happy and how to achieve and sustain this desirable state. One would think that, living in the most affluent society the world has ever seen at a time in which our material welfare is virtually guaranteed, where our natural enemies have been subdued, and most of the infectious diseases that threatened human life contained, we might have the leisure to figure out ways of living and relating to each other that would produce sustained feelings of fulfillment and contentment. That this is not the case is what keeps people like me in business.

What, exactly, is our problem? What is it about the human condition that stands between us and the lives we desire?

As someone who works with his head and heart, I always admired those who work with their hands. I spent a lot of time on a farm when I was young and became adept at, among other things, converting dead trees into firewood. Some years ago, when I bought a house in the suburbs, I installed a woodstove and started scavenging for fuel. One day I passed a house with a dead oak tree in the front yard and stopped to ask the homeowner if I could take it down in exchange for the wood. He seemed happy for me to do so.

I dropped it into the street and over the course of a day transformed it into a large stack of firewood. As I hauled the last of it away, the homeowner expressed his gratitude and told me that a tree company had wanted to charge him $500 for this service. I decided to go into business. I discovered that to become a "licensed tree expert" one had to take a written and practical exam. I showed up in my state capital on the appointed day and found myself in a room with a lot of young guys wearing flannel shirts and three-day beards. The written test was easy enough but then we had to accompany an examiner on a stroll through the streets of town. He would point out a tree and we had to write down its species name on an answer sheet. It was the middle of winter, so while those who knew their trees better than I did wrote their answers down, I was on my hands and knees trying to scare up some recognizable leaves.

In any event, I got the license, put an ad in the paper, and, over the next couple of years, cut down a lot of trees. It seemed to me a more productive way to exercise than running on a treadmill at the local sports club. Then I paid a real tree expert to teach me to climb, which added to the charm of the experience, though it did create some homeowner consternation when, as frequently happened, my on-call beeper went off and I had to climb down the tree to use their phone to talk to the hospital emergency room. 

Anyway, climbing and cutting trees usually drew a crowd of interested onlookers. One day when I was going up a dead hickory, I grabbed a branch that broke off in my hand and I fell about thirty feet onto a lawn, narrowly missing a flagstone walk and a couple of spectators. As I lay there stunned and embarrassed, a man rushed up and began palpating my thyroid gland while reassuring me, "Don't worry, I'm a doctor." So I said, "What kind of doctor are you?" "I'm a dermatologist," he answered. In the distance I could hear the siren of the approaching ambulance. Shortly after my broken back healed, I folded the tree business.

I tell this story because, like so much of life, it contains plenty of both good and bad news: My dreams of earning bread from the sweat of my brow were realized, but my health suffered. To swing gracefully from your climbing rope requires that you first get up the tree. People admire those who take physical risks, but it's also entertaining when they plunge to the ground. I have plenty of firewood, but my bad back makes it difficult to carry it into the house. And so on.

I have come to believe in what might be called the determinative role of paradox. Sometimes when something happens to us it is many years before we know whether it was fortunate or disastrous. Many of our favorite folk sayings are expressions of this truth: "Too much of a good thing is bad." "He who wants everything, risks everything." "God punishes us by answering our prayers." We succeed in our work at the expense of our families. The love of our youth is the bane of our middle-age. Experience makes us wiser but time defeats us. The more things change, the more they remain the same.

It is the discovery that "obeying the rules" does not always, or perhaps even usually, lead to fulfillment that is the biggest disillusionment of all. It turns out that many of the rules we follow were constructed to protect the interests and privileges of someone other than us. This is why so many people feel themselves in the grip of influences they cannot control: faceless bureaucracies, large corporations, economic forces- all the engines of a society that guarantees the pursuit of happiness but sets many obstacles on the path to its achievement.

In an effort to describe what constitutes acceptable behavior, it falls to the institutions of mental health to play their roles in defining "normality." Psychiatry has done its part by constructing the Diagnostic and Statistical Manual of Mental Disorders, soon to be in its fifth edition. Within this weighty compendium is a description of various forms of behavior deemed abnormal by this society. Here we have the major mental illnesses- schizophrenia, bipolar disorder, major depression- alongside all the forms of anxiety and discouragement that cause people to seek help. Included as well are those maladaptive and troublesome patterns of behavior that comprise the "personality disorders": antisocial, compulsive, dependent, avoidant- all the people who annoy, exploit, and alienate their fellow citizens.

We appear to have a genetic loading for a variety of attributes. Identical twins raised apart have a high likelihood of suffering similar mental disorders. There is also evidence of a high concordance for personality characteristics, notably antisocial personality disorder. In the struggle between nature and nurture, both, not surprisingly, turn out to be important in determining the kinds of people we are.
     
Amid all this diagnosing and describing of human behavior, we are still confronted with the essential questions of how to live, how to discern what it is that we are responsible for, and what we must accommodate. One analogy is to heart disease. Clearly there are things that predispose us to suffer coronary events over which we have no control, our gender and genetic backgrounds, for example. If you are a man whose family history is one of early death from heart attacks in its male members, it is a good idea to refrain from smoking, watch your diet, and exercise regularly. But you still stand a good chance of suffering a myocardial infarction. So does it make sense to say ‘the hell with it' and eat, drink, and smoke as you please for as long as you can? That, of course, is a personal decision.

One author has defined happiness as a ratio between accomplishment and expectations. If the numerator of that fraction is sufficiently large, if we have done enough with our lives, however we define that, we have a good chance at being happy. If, however, the denominator, expectations, are sufficiently great, they can overcome whatever we have accomplished and we are left feeling unfulfilled. What is important to notice is that, insofar as the subjective experience of happiness is concerned, both components of the ratio are self-defined. What, to each of us, represents a satisfying level of accomplishment? And how does this match up with the expectations we have of ourselves? This concept usefully explains why people we might consider less fortunate materially than we are might be living happier lives and is the source of the truism that "money can't buy happiness." (Though it must be said that Malcolm Forbes maintained that anyone who believed this was shopping in the wrong places.)

The best strategy for living, then, seems to be to control what we can without indulging the illusion that we can control everything. Perhaps another way of expressing this is through yet another paradox: we gain maximum control when we relinquish the fantasy of total control. Again we are attempting to walk a line between the extremes of helplessness and omnipotence.

If this sounds like a plea for moderation, perhaps it is. I prefer to think of it this way: if we are to be happy in a world where bad things happen routinely and unexpectedly, we need to keep our expectations realistic and develop a resilience to tragedy that will protect us from despair. We need to attune ourselves to the good news/bad news paradox and develop a capacity for accepting what we must. We also need to learn the art of letting go: of the past, of unresolved grievances, of our younger selves. Nobody gets out of here alive. Whether this reality is a reason for despair or an incentive to mobilize the courage required to get up each morning is a matter of attitude. This is where we have a choice.”

"You May Choose..."

"Surely, You Did Something..."

"It's 3:23 A.M.
And I'm awake because my great great grandchildren won't let me sleep.
They ask me in dreams,
'What did you do while the planet was plundered?
What did you do when the earth was unraveling?
Surely you did something when the seasons started flailing?
As the mammals, reptiles and birds were all dying?
Did you fill the streets with protest?
When democracy was stolen, what did you do once you knew?
Surely, you did something...'"


- Drew Dellinger

The Daily "Near You?"

Mandelieu, Provence-Alpes-Cote d'Azur, France
Thanks for stopping by!

"Cognitive Dissonance And the Human Mind"

 
"Cognitive Dissonance And the Human Mind"
by Dan Eden

"When “Robbie” the robot was told to shoot a weapon at a man in the movie "Forbidden Planet," his electronic brain sparked and short-circuited. His creator had programmed him to never harm a human and so the conflicting ideas paralyzed him. Human beings often are presented with opposing thoughts also, but our brains have developed a way of resolving these conflicts through a process call cognitive dissonance. We are taught, like “Robbie,” that killing is prohibited— but what about war? And many anti-abortionists support the death penalty… conflicting behavior is all around us. So how exactly does that work?

Simply put, congitive dissonance theory states that when you have two opposing ideas (or ideologies) at the same time, you will act upon the one that causes the less distortion to your ego. According to Wikipedia: "Cognitive dissonance is an uncomfortable feeling caused by holding two contradictory ideas simultaneously. The “ideas” or “cognitions” in question may include attitudes and beliefs, and also the awareness of one’s behavior. The theory of cognitive dissonance proposes that people have a motivational drive to reduce dissonance by changing their attitudes, beliefs, and behaviors, or by justifying or rationalizing their attitudes, beliefs, and behaviors. Cognitive dissonance theory is one of the most influential and extensively studied theories in social psychology.

Dissonance normally occurs when a person perceives a logical inconsistency among his or her cognitions. This happens when one idea implies the opposite of another. For example, a belief in animal rights could be interpreted as inconsistent with eating meat or wearing fur. Noticing the contradiction would lead to dissonance, which could be experienced as anxiety, guilt, shame, anger, embarrassment, stress, and other negative emotional states. When people’s ideas are consistent with each other, they are in a state of harmony or consonance. If cognitions are unrelated, they are categorized as irrelevant to each other and do not lead to dissonance.

Let me give you some examples. There are lots of schemes and con-artists trying to get your money these days. Almost every day I receive dozens of e-mails from people like Abada Muzoola from Nigeria, who just happened to get my e-mail address and wants me to help him transfer 70-million dollars to my bank in return for a 10 percent commission. Wow, I could use 7-million dollars! All he needs is my bank account number and pin-code. He is even willing to transfer the total amount to my account because he trusts me so much. I continue to receive variations of this scheme every day. Why? Because they work. Somewhere in the world is a victim who will have cognitive dissonance.

On a more sophisticated scale, Bernie Madoff bilked hundreds of wealthy people out of an estimated 50-billion dollars by manipulating the same mental process (and would have continued doing so had he not bragged to his sons, who turned him in). So how is it that people are able to convince others to give them access to their funds or to willingly give them their cash? First, one more example: You’re walking down a busy street deep in your own private thoughts. All of a sudden a smiling woman jumps out of somewhere, stands in front of you, and puts a flower in your hand. “Hello dear… isn’t it a wonderful day today? I want you to have this flower!,” she says. Now you have a beautiful flower in your hand. It’s a nice gift and she seems friendly. She begins to walk with you, telling you that you have nice, kind eyes. She says she noticed right away that you were special and so wanted to meet you. You forget your previous thoughts about work, bills or your own life. Suddenly you feel good… appreciated… uplifted. Then, in the same friendly voice and bright smile, she says, “I know you are a good person and you can help me by giving me a something for the beautiful flower — right?”

What happens inside your head at that moment is cognitive dissonance. The dissonance or dis-harmony comes from two conflicting ideas or decision paths. One path tells you that you should just say “No thanks!” and keep on walking; maybe return the flower and feel insulted even if it means she will become disappointed with you. The other path tells you that she has made you feel good and has earned your friendship and a couple of bucks. She has been friendly and you don’t want to ruin the brief relationship you have formed. Heck, you should probably even give her back the flower so she can use it on the next victim. Which decision will cause the least damage to your ego?

In cognitive dissonance theory the outcome of these opposing thought paths will be the one that requires the least emotional stress. Most victims will pay up rather than feel they are being cruel or disrespectful to someone who has made them feel so good. In the case of the Nigerian philanthropist, Abada Muzoola, it is often less stressful to believe that you are the lucky “chosen” beneficiary than to believe you are one of the thousands of e-mails he has sent this offer to. Later, after their bank account has been cleaned out, most people realize that they should have known better and are puzzled by their own vulnerability. Many feel so embarassed that they don’t report the crime to the authorities.

Psychologists refer to this vulnerability as the “willful suspension of disbelief,” where one can easily see the potential manipulations and evil motives of the perpetrator, but, because they have already made some prior commitment to go along with this, it is easier to continue than to back out. The investors of Mr. Madoff knew that a 10% to 12% annual return on an investment, especially in the current bear market, was impossible. Something dishonest or illegal had to be going on. But because they had been made to work so hard to let him take their money— often begging him to please allow them to invest millions of dollars— they had made the psychological investment that “locks in” the cognitive dissonance. After that, it was more stressful to admit that this was a ponzy scheme than to just avoid worrying about it.

In Festinger and Carlsmith’s classic 1959 experiment, students were asked to perform boring and tedious tasks (e.g. turning pegs a quarter turn, over and over again). The tasks were designed to generate a strong, negative attitude. After an hour of working on the tasks, participants were asked to persuade another subject (who was actually a confederate) that the dull, boring tasks the subject had just completed were actually interesting and engaging. Some participants were paid $20 for the favor, another group was paid $1, and a control group was not asked to perform the favor. When asked to rate the boring tasks at the conclusion of the study, those in the $1 group rated them more positively than those in the $20 and control groups. This was explained by Festinger and Carlsmith as evidence for cognitive dissonance. The researchers theorized that people experienced dissonance between the conflicting cognitions, “I told someone that the task was interesting”, and “I actually found it boring.” When paid only $1, students were forced to internalize the attitude they were induced to express, because they had no other justification. Those in the $20 condition, however, had an obvious external justification for their behavior, and thus experienced less dissonance.

Are you beginning to understand how this works now? Cognitive dissonance has been used to control larger groups and populations also. In World War II there was a famous campaign where citizens were asked to donate all their old pots and pans, supposedly to be melted down to make tanks, munitions and war planes. The collection was highly effective and the psychological “investment” initiated solidarity and nationalism for the war effort. Of course, all those pots and pans ended up buried in landfills.

Here’s a modern day example: When the US invaded Afghanistan, ex-President Bush came on the television asking families to donate whatever they could to help the school children in Afghanistan who needed paper and pencils. Thousands of school kids collected coins in classrooms across the nation and sent the donations to the White House. The funds ended up being put in to some vague account that never did what it was donated to do. But the “investment” was enough to gain support for a far-away war in an obscure land for vague reasons. Sometimes, as with the tragic collapse of the World Trade towers on 9-11, the “investment” is made for us. In this way an entire nation can be made to feel that they have already sacrificed something and that they should choose the path of war over peace forgetting about the Iraqi civilian casualties— or even that Iraq was not responsible. I once belonged to an Episcopal church in New Mexico that collected oil for M-16s to send to the troops in Iraq! They also invested the church funds with Raytheon and Haliburton.

Cognitive Dissonance in Advertising and Marketing: In advertising there is a theory that a consumer may use a particular product because he or she believes the advertising for that product, which claims that the product is the most effective of its kind in the job that it does. Then the consumer may see a competitor’s advertisement that seems to prove conclusively that this competitive product is better. This creates dissonance. The consumer must now relieve the uncomfortable feeling that the dissonance brings about and will often do so by switching products. The theory acts as a double-edged sword, though, because while advertisers want to create dissonance for nonusers of their product, they do not want to create it for those who do use their product. This is why advertisers use their logos on things like NASCAR and sports arenas. They want you to become loyal to their brand. This will create distrust when you see the same product— even an apparently better product— with a different and unfamiliar brand.

Cognitive dissonance most often occurs after the purchase of an expensive item such as an automobile. A consumer who is experiencing cognitive dissonance after his or her purchase may attempt to return the product or may seek positive information about it to justify the choice. If the buyer is unable to justify the purchase, he or she will also be less likely to purchase that brand again. Advertisers of high-priced durable goods say that half of their advertising is done to reassure consumers that in purchasing their product the right choice was made.

Some good uses of cognitive dissonance: Congitive therapists use this technique to change bad behavior and decisions. The technique is called a “yes set.” Getting a patient to agree to treatment for addiction or to initiate some beneficial behavior is difficult. There is often a fundamental “batting of heads” between the patient and people trying to help. The breakthrough is achieved when the therapist purposely initiates a series of statements to which the patient can agree. After repeatedly agreeing with the therapist on a multitude of minor decisions, the patient begins to feel good and the therapist allows the patient to “invest” in this positive relationship. Then, with skill, the therapist introduces the crucial decision. “So don’t you think it’s really time for you go to rehab?” Faced with the option of agreeing or offending the therapist, the patient often continues the “yes” response. The example above is highly effective because the patient not only agrees to change the bad behavior but is immediately rewarded by the continuation of their positive self-esteem and good feeling.

Cognitive dissonance requires some skill to work
: The concept doesn’t always work. Especially if it’s poorly executed. I was once shopping for a car and, after selecting a possible make and model, found myself sitting in the little room with the salesman, haggling about the price. At one point he asked me for my driver’s license or credit card and told me it was a “gesture” so that I would trust him. At the time, I just said “No way,” and split. For many customers, this simple act would be enough to form a psychological “investment” with the dealer, who could then use this to manipulate and close the sale. It might be more difficult for the customer to demand his license or credit card and storm out of the office than to sit there and be intimidated until they signed the sales contract.


Eliminating Cognitive Dissonance: There are several key ways in which people attempt to overcome, or do away with, cognitive dissonance. One is by ignoring or eliminating the dissonant cognitions. By pretending that ice cream is not bad for me, I can have my cake and eat it too, so to speak. Ignoring the dissonant cognition allows us to do things we might otherwise view as wrong or inappropriate. Another way to overcome cognitive dissonance is to alter the importance (or lack thereof) of certain cognitions. By either deciding that ice cream is extremely good (I can’t do without it) or that losing weight isn’t that important (I look good anyway), the problem of dissonance can be lessened. If one of the dissonant cognitions outweighs the other in importance, the mind has less difficulty dealing with the dissonance — and the result means that I can eat my ice cream and not feel bad about it.

Yet another way that people react to cognitive dissonance is by adding or creating new cognitions. By creating or emphasizing new cognitions, I can overwhelm the fact that I know ice cream is bad for my weight loss. For instance, I can emphasize new cognitions such as “I exercise three times a week” or “I need calcium and dairy products” or “I had a small dinner,” etc. These new cognitions allow for the lessening of dissonance, as I now have multiple cognitions that say ice cream is okay, and only one, which says I shouldn’t eat it.

Finally, perhaps the most important way people deal with cognitive dissonance is to prevent it in the first place. If someone is presented with information that is dissonant from what they already know, the easiest way to deal with this new information is to ignore it, refuse to accept it, or simply avoid that type of information in general. Thus, a new study that says ice cream is more fattening than originally thought would be easily dealt with by ignoring it. Further, future problems can be prevented by simply avoiding that type of information— simply refusing to read studies on ice cream, health magazines, etc.

Cognitive dissonance is all around us. We live in a world full of contradictions. Children are killed in Gaza in the name of peace. Feminists wear makeup, short skirts and high heels. Conservationists like Al Gore fly around in private, fuel guzzling jets. Anti-gay Christian Senators tap their feet in public bathroom stalls… these opposing ideologies are all resolved somehow, somewhere, deep in our human psyche with cognitive dissonance."

"The Intended Audience...:

"Innovative New Process Converts Vegetables Into Meat By Feeding Them To Cows"

"Innovative New Process Converts Vegetables 
Into Meat By Feeding Them To Cows"
by The Babylon Bee

U.S. - "Look out, Beyond Meat - a new competitor has emerged in the market of turning vegetables into a food that tastes just like meat. But while companies like Beyond Meat use laboratories to turn vegetables into something tasty, this new process uses a much more natural method: feeding the vegetables to a cow.

The startup, which goes by the much simpler brand name of “Meat,” came upon this process after using hundreds of millions of venture capital dollars to research how to turn vegetable products into something delicious that could be used as a burger. “Vegetables are ugly and horrible, and no one likes them,” said Meat researcher Winston Sullivan. “We tried everything to make them edible, but nothing worked - except maybe covering them in ranch dressing. But then we saw this creature, a cow, was eating the vegetables - because it was so dumb and didn’t know any better or something - and somehow afterward it became filled with tasty meat. It was amazing.”

Sullivan says they have no idea how the cow turns vegetables into something edible (they suspect witchcraft) but have now obtained many of these creatures so they can feed them inedible vegetables and harvest tasty, tasty meat. The results are already a hit, as restaurants like Five Guys have used the patties made from naturally processed vegetables to huge success.

Meat is now trying to see if the process can be repeated with other animals. They’re currently testing their process on a chicken, though they say that, so far, the results aren’t as good as from the cow unless the product is breaded and fried."

"How It Really Is"

No money in your wallet if they can help it:
"The Capital One credit cards with the highest interest rates are the Capital One Secured Mastercard (26.99% (V)) and the Capital One Platinum Card (26.96% (V)). They’re also the easiest to get. Capital One Platinum accepts applicants with limited or no credit, while Capital One Secured accepts people with bad, limited or no credit."

Such nice people...

"The Treasury Department Is In Desperate Need Of A Sucker"

"The Treasury Department Is In Desperate Need Of A Sucker"
by Simon Black

"Ten years ago, at the peak of the global financial crisis, the Board of Trustees which oversees Social Security in the United States issued a stark warning: They projected that Social Security’s enormous trust funds would completely run out of money in 2039. Naturally nobody paid attention. Back in 2009 the economy in shambles, so focusing on a future economic crisis that was more than three decades away was a low priority. And for the past decade, the US government has continued to ignore its Social Security problem. But it’s become much worse.

Ten years later, the Board of Trustees now projects that Social Security’s primary trust fund will run out money in 2034. That’s five years earlier than they projected back in 2009. And it’s only 15 years away. Now, 15 years might seem like a long time. But take a minute to grasp the magnitude of this problem: According to the US government’s own estimates, Social Security and Medicare combined are underfunded by $100 TRILLION. $100 trillion is literally more than FIVE TIMES the size of the entire US economy. And this giant fiscal chasm is actually growing.

The big problem for Social Security is that tax revenue is no longer enough. Every worker who is legally employed in the United States currently pays roughly 15% of his/her wages each month to help fund Social Security and pay benefits to retirees. But there are now so many people receiving Social Security benefits that all the payroll tax revenue is no longer enough.

Social Security also derives a portion of the income it needs to pay benefits from the investment returns on its $3 trillion worth of assets. Problem is– Social Security is forbidden by law to invest in anything EXCEPT United States government bonds.

Most countries who have large Sovereign Wealth Funds or Pension Funds have the latitude to invest that capital in a variety of asset classes. I personally know several national pension fund and sovereign wealth fund executives in Europe and Asia, and they typically buy a wide variety of assets– real estate, private equity, stocks, bonds, etc., with a target annualized return of between 6% to 8%. (Norway’s sovereign wealth fund earned an average 7.6% between 2010 and 2017. And California’s state employee pension fund, CALPERS, earned 6.7% last year.)

But Social Security doesn’t have this investment freedom. Instead, Social Security is required BY LAW to invest in US government bonds, which yield less than 3%. In fact Social Security’s investment return last year was 2.9%. You’re probably starting to see the problem...

At the moment, Social Security is the #1 owner of US government debt, having spent years stockpiling $3 trillion of dollars worth of US Treasury bonds. Month after month, as payroll tax revenues exceeded the total retirement benefits paid out, Social Security invested its surplus into government bonds. But now that flow of money is about to reverse.

We know that Social Security’s payroll tax revenue is no longer sufficient to pay out benefits. There are simply too many retirees. We also know that the 2.9% invest return is pitiful and not going to help at all. This means that Social Security is about to start burning through the trust funds in order to meet its monthly benefit obligations.

The Board of Trustees has already acknowledged this fact. And they project the trust funds will be fully depleted in 15 years. But it could likely come much sooner than that.

Before they can use the trust funds to cover their financial shortfall, Social Security will first have to convert its government bonds into cash. Doing that will require that they either let the bonds mature (and demand the government to repay them in full). Or it will require them to dump tens of billions… hundreds of billions of dollars worth of bonds on the open market. Either way, Uncle Sam loses its biggest lender. Instead of borrowing money from Social Security, the Treasury Department is going to have to pay Social Security back.

We’re talking $3 TRILLION. That’s not exactly pocket change. And it’s coming at a time when the US government is already losing more than $1 trillion per year. The Congressional Budget Office already forecasts that the federal government will have to borrow $12.7 trillion in additional debt through the end of 2029.

Now, on top of that already-prodigious figure, the Treasury Department will have to find some sucker willing to lend an additional $3 trillion to repay Social Security… not to mention tens of trillions of dollars more down the road. That’s extremely unlikely.

What’s far more likely is that the US government simply freezes the repayments to Social Security. Maybe they pay back a trillion or two. But not the full amount. The rest of it would be frozen, which means that the trust funds would be effectively depleted MUCH earlier than expected.

Prudential, one of the largest financial institutions in the world, estimates that 86% of current retirees, 88% of baby boomers who are about to retire, and 71% of Gen-Xers, rely or expect to rely on Social Security when they retire. But the Social Security trustees themselves tell us that the funds will run out of money in 15 years. And as I’ve just shown, it could happen a lot sooner than that. So it’s clear that a LOT of people will have their lives turned upside down.

Look, maybe I’m totally wrong. Maybe the Treasury Department does find a sucker to bail out Social Security. Maybe that sucker is us. Bank deposits, managed IRAs, etc. are all fair game for Uncle Sam. They could seize anything they want. But even if I’m totally wrong, it certainly doesn’t hurt to have a Plan B… to take back control of your own retirement."

"The Economy Is Starting To Implode"

"The Economy Is Starting To Implode"
- IRD Investment Research

"Regardless of the Fed Funds rate policy decision by the FOMC today, the economy is spinning down the drain. Lower rates won’t help stimulate much economic activity. Maybe it will arouse a little more financial engineering activity on Wall Street and it might give a temporary boost to mortgage refinancings. But the economic “recovery” of the last 8 years has been an illusion based on massive money printing and credit creation. And credit creation is de facto money printing until the point at which the debt needs to be repaid. Unfortunately, the system is at the point at debt saturation. That’s why the economy is contracting despite the Fed’s best efforts to create what it incorrectly references as “inflation.”

The Chicago PMI released today collapsed to 44.4, the second lowest reading since 2009 and the sharpest monthly decline since the great financial crisis. The index of business conditions in the Chicago area has dropped 5 out of 7 months in 2019. New orders, employment, production and order backlogs all contracted.

The Chicago Fed National Activity index for June remained in contraction at the -0.02 level, up slightly from the reading in May of -0.03. The 3-month average is -0.26. This was the 7th straight monthly decline for the index – the longest streak since 2009. This index is a weighting of 85 indicators of national economic activity. It thus measures a very wide range of economic activities.

The Richmond Fed manufacturing survey index fell off a cliff per last week’s report. The index plunged from 2 in June to -12. The June level was revised down from 3. Wall Street was looking for an index reading of 5. It was the biggest drop in two years and the lowest reading on the index since January 2013. Keep in mind the Fed was still printing money furiously in 2013. The headline index number is a composite of new orders, shipments and employment measures. The biggest contributor to the drop was the new orders component, as order backlogs fell to -26, the lowest reading since April 2009. The survey’s “business conditions” component dropped from 7 to -18, the largest one-month drop in the history of the survey.

Existing home sales for June declined 1.7% from May and 2.2% from June 2018 on a SAAR (seasonally adjusted annualized rate) basis. This is despite the fact that June is one of the best months of the year historically for home sales. Single family home sales dropped 1.5% and condo sales fell 3.3%.

On a not seasonally adjusted basis, existing home sales were down 2.8% from May and down 7.5% from June 2018. The unadjusted monthly number is perhaps the most relevant metric because it removes both seasonality and the “statistical adjustments” imposed on the data by the National Association of Realtors’ number crunchers.

The was the 16th month in a row of year-over-year declines. You can see the trend developing. June 2018 was down 5% from June 2017 (not seasonally adjusted monthly metric) and June 2019 was down 7.5% from June 2018. The drop in home sales is made more remarkable by the fact that mortgage rates are only 40 basis points above the all-time low for a 30-yr fixed rate conforming mortgage. However, this slight increase in interest expense would have been offset by the drop in PMI insurance charged by the Government for sub-20% down payment mortgages.

The point here is that pool of potential home buyers who can afford the monthly cost of home ownership is evaporating despite desperate attempts by the Fed and the Government to make the cost of financing a home as cheap as possible. 

New home sales for June were reported to be up 6.9% – 646k SAAR from 604k SAAR – from May. However, it was well below the print for which Wall St was looking (660k SAAR). There’s a couple problems with the report, however, aside from the fact that John Williams (Shadowstats.com) referenced the number as “worthless headline detail [from] this most-volatile and unstable government housing-statistic.” May’s original number of 626k was revised lower to 604k. Furthermore, the number reported is completely dislocated from mortgage application data which suggests that new home sales were lower in June than May.

The new home sale metric is based on contract signings (vs closings for existing home sales). Keep in mind that 90% of all new home buyers use a mortgage for their purchase. Mortgage applications released Wednesday showed a 2% drop in purchase applications from the previous week. Recall, the previous week purchase apps were down 4%. Purchase apps have now been down 6 out of the last 9 weeks.

Because 90% of new home buyers use a mortgage, the new home sales report should closely correlate with the Mortgage Bankers Association’s mortgage purchase application data. Clearly the MBA data shows mortgage purchase applications declining during most of June. I’ll let you draw your own conclusion. However, I suspect that when July’s number is reported in 4 weeks, there will a sharp downward revision for June’s number. In fact, the Government’s new home sales numbers were also revised lower for April and May. The median price of a new home is down about 10% from its peak in November 2017.

The shipments component of Cass Freight index was down 3.8% in June. It was the seventh straight monthly decline. The authors of the Cass report can usually put a positive spin or find a silver lining in negative data. The report for June was the gloomiest I’ve ever read from the Cass people. Freight shipping is part of the “central nervous system” of the economy. If freight shipments are dropping, so is overall economic activity. Of note, the price index is still rising. The data shows an economic system with contracting economic activity and infested with price inflation.

The propagandists on Capitol Hill, Wall Street and the financial media will use the trade war with China as the excuse for the ailing economy. Trump is doing his damnedest to use China and the Fed as the scapegoat for the untenable systemic problems he inherited but made worse by the policies he implemented since taking office. Trump has been the most enthusiastic cheerleader of the biggest stock market bubble in history. This, after he fingered his predecessor for fomenting “a big fat ugly bubble” when the Dow was at 17,000. If that was a big fat ugly bubble in 2016, what is now?"

Economic Market Snapshot PM 7/31/19"


Gregory Mannarino,
"FAILSAFE? Fed. Cuts Rates: This Is How it Play Out Short Term"
MarketWatch Market Summary, Live Updates
CNN Market Data:

CNN Fear And Greed Index:

Tuesday, July 30, 2019

"The Ritual Of Our Existence..."

"This world belongs to the strong, my friend! The ritual of our existence is based on the strong getting stronger by devouring the weak. We must face up to this. No more than right that it should be this way. We must learn to accept it as a law of the natural world. The rabbits accept their role in the ritual and recognize the wolf is the strong. In defense, the rabbit becomes sly and frightened and elusive and he digs holes and hides when the wolf is about. And he endures, he goes on. He knows his place. He most certainly doesn't challenge the wolf to combat. Now, would that be wise? Would it?"
- Ken Kesey

“The Only Thing Necessary for Evil to Triumph Is…”

 “The Only Thing Necessary for Evil to Triumph Is…”
by Paul Rosenberg

“I’m betting that most of my readers can complete this phrase. The problem is, it isn’t quite true. Edmund Burke, its supposed source, was a good man, but that doesn’t make the saying true. Here’s the complete passage, in the form most of us know: "The only thing necessary for evil to triumph is for good men to do nothing."

Yes, there is a time when good men and women must stand up for what’s right, even when it involves risk, but that moment comes only after evil has already been well established and is powerfully on the move. Fighting evil may be an essential thing, but it isn’t the first problem— it matters only after thousands or millions of mistakes have already been made. And if those first mistakes had not been made, great fights against evil wouldn’t be necessary.

Where Evil Comes From: Let’s begin with a crucial point: Evil is inherently weak. Here’s why that’s true: Evil does not produce. It must take advantage of healthy and effective life (AKA good men and women) if it’s to succeed. Evil, by its nature, is wasteful and destructive: It breaks and kills and disrupts, but it does not produce and invent. Evil requires the production of the good in order to do its deeds.

• How much territory could Caesar have conquered on his own?
• How many people could Joe Stalin have killed with no one to take his orders?
• How many people could Mao have starved to death without obedient middlemen?
• With duteous followers, however, evil rulers killed some 260 million people in the 20th century.

The truth is that evil survives by tricking the good into doing its will. Without thousands of basically decent people confused enough to obey, evil would fail quickly. The great tragedy of our era is the extent to which evil has been successful in convincing people to service it. Good people having yielded their wills arm evil, accommodate evil, and acquiesce to its actions.

Hannah Arendt summarized it this way: "The sad truth is that most evil is done by people who never make up their minds to be good or evil."

People end up supporting evil because they don’t want to make up their minds at all. They want to avoid criticism and vulnerability, so they hold to the middle of the pack and avoid all risk. These people wouldn’t initiate murders by themselves, but in the name of duty, loyalty, unity, and/or the greater good, they cooperate with evil and give it their strength. But each plays a small part—none of them stretches so far that they’d have to contemplate the final effects of their actions.

In the 20th century, however, the actions of such people led directly to the murders of 260 million people. And they did this precisely by avoiding decisions… by merely obeying.

Sins of Obedience: People think of murder, lying, and robbery as sins, but none of those has nearly the death toll of obedience. Basically decent men and women obey agents of evil for very mundane reasons. The process often goes like this:

• Being confused and intimidated, they look for the center of the pack.
• They try not to make waves.
• They learn that they can avoid making waves best if they adopt the perspectives of their overlords. So they run the overlords’ slogans through their minds as a default program.

In the end, these people don’t make up their minds. Rather, they take on the minds of their overlords and do their will. And so, the vast majority of evil done on Earth traces back to minds and wills that have been abandoned to fear and laid on the Altar of Obedience.

So… This is what the famous quote should say:
The only thing necessary for evil to triumph is for good men to obey.
We should be painting that saying on our walls."