This page has been archived and commenting is disabled.
Guest Post: Now Playing: Cognitive Dissonance and Wishful Thinking
Submitted by Charles Hugh Smith from Of Two Minds
Now Playing: Cognitive Dissonance and Wishful Thinking
This month's Double Feature: Cognitive Dissonance and Wishful Thinking, two thrillers about floundering Central Banks and frantic Ministries of Propaganda.
The global economy is now dominated by Cognitive Dissonance and Wishful Thinking on a grand scale. The push to convince us of "normalcy" and a "return to growth" are strongly reminiscent of the Phony Year of 2007, when the subprime mortgage meltdown was toppling the entire global credit market, yet we were constantly reassured by financial authorities that it was all safely "contained."
We were promised a happy ending to the second feature, Wishful Thinking.
As the second half of 2011 begins, the level of cognitive dissonance between what we're presented as reality by the central banks, media and government--that the "soft patch" is over and the "recovery" is once again full steam ahead--and what the data says is extreme.
All available evidence suggests that credit is tightening as fear awakens in the credit markets. To mention just one such point: as the excellent Acting Man financial blog noted recently, the yield on short-term Treasury bills is now negative, meaning that investors buying these bonds are paying for the privilege of having the U.S. Treasury as the counterparty.
This strongly suggests they care only for security, that is, getting their principal returned to them, and not at all for yield (interest on their cash). If the global credit markets were healthy, why would anyone choose a negative yield?
In Survival+, I used the word derealization to describe the disconnect between what we experience and what the propaganda/marketing complex we live in tells us we should be experiencing.
The Status Quo--in the U.S., in China, and in Europe--has staved off reality for a full 2.5 years since the 2008 global financial meltdown via by adding unprecedented sums of public debt to "solve" the crises of private overleverage, overindebtedness and malinvestment.
This "fix" has already failed, but the EU has bought a few months at best with the latest bailout of Greece's Kleptocracy.
Note that the time bought by each new "fix" is diminishing with every intervention. I have likened this process to the onset of diabetes, where the body's sensitivity to insulin declines even as the body attempts to overcome the desensitizing by producing more and more insulin. Eventually the system breaks down.
Massive, unprecedented interventions bought 2.5 years of bogus "recovery" 2008-11, but that level of intervention--roughly $100 billion a month in Federal Reserve "stimulus" and $130 billion in Federal borrow-and-spend stimulus a month--cannot continue at that pace, as it is destabilizing the entire system.
In the same pattern of reduced effect from greater applications of borrowed money, the EU bought a year of "recovery" with last May's bailout of Greece. Now the latest ECB bailout, which exceeds the previous bailout in size and complexity, is buying perhaps two months before the crisis reappears, like a 1950s movie monster, even stronger and more destructive.
This systemic decline in sensitivity to central-bank/State interevention suggests the end-state of "extend and pretend" and "mark to fantasy" is drawing nearer, as the next round of stimulus, quantitative easing, bailouts, etc. will buy considerably less time for the Status Quo than the last fix.
At some point, the announcement of a new bailout or Fed "fix" will boost spirits and markets for a few days rather than a few months. At the very end of this process, the announcement of the next "fix" will crash the credit and stock markets because participants will finally understand that the fixes are only floundering, last-ditch acts of desperation which have zero chance of actually working.
In other words, neither Cognitive Dissonance nor Wishful Thinking have happy endings.
- 8011 reads
- Printer-friendly version
- Send to friend
- advertisements -


Cognitive Dissonance Bitchez
When Leon Festinger developed Cognitive Dissonance Theory in 1957 and coined the phrase, he had in mind a theory that would provide useful hypotheses for predicting irrational human behavior in unexpected situations. Since then the phrase has taken on "excess meaning" as philologists might put it.
In line with Festinger's original intentions for his theory it is not clear what a useful hypothesis could be developed for the present situation. He was fond of making predictions that once a person or group of people had committed themselves mentally and emotionally to a situation, they would discount contradictory information and only gather supporting information without a concern about it's validity - much like listeners to Fox News
Or more vulgarly said:
Dis-Cognitive Resonance Bitchez!
" much like listeners to Fox News"
I was thinking the same thing but would substitute, "Obama kool-aid drinkers still seeking 'hope and change'"
Divide and conquer. Both positions are probably correct, making most of us simple pawns.
+1
Well put!
+2
Reality Distortion Field (RDF)...
you have it right, carbonmutant.
the officers of this centrally planned empire have an interest in keeping it together, and are arrogant enough to think they can "centrally plan" the desired outcome while protecting their interests. in their minds, they still believe they have the force of inflation under their control.
the board of directors probably prefers the officers to succeed, but ultimately they are arrogant enough to believe they will not be materially affected or could benefit in any outcome. that's a fatal conceit. i'm sure most of the directors have realized the officers will not be able to control the force of inflation by now, but they aren't the ones selling it nor do they feel they have an interest in selling it.
Seems like it was just yesterday the EU bailed itself out with a historic $1 Trillion free for all...
Wow, how time flies...along with money.
The cycle of history will not be denied; it can only be staved off until, like a seized cog in a complex machine, the pressure builds and then forces a break, causing devastating damage to the rest of the machine.
I'd argue that the participants are already at the point of understanding this, and that they're all just willfully ignoring it, for no better reason than the fact that everyone else is also ignoring it.
Things won't really come crashing down until there's an inevitable misstep by the central economic planners which puts them down a dead end alley, with no further can-kicking room.
What do you think that "misstep" looks like? What are a couple of examples of what you think would represent the dead end alley that doesn't allow for more can-kicking? And for what it is worth, I'm not disagreeing at all (I know sometimes people ask questions when they are attempting to back someone into a corner... not the case here). I'm trying to picture how this unravels.
Who knows. Something that results in truly runaway inflation, supply chain disruptions for things like food or fuel, suspension of welfare benefits, rationing, something that really pisses off China, an overt grab by government at personal property or savings, etc. Whatever it is it's going to have to be enough to get people off their asses. While we all joke around about the Dancing With the Stars crowd, I think it's only a matter of time before people can't ignore what's happening because it's directly and noticably affecting their quality of life.
It can either be a controlled collapse of some kind, where TPTB are stuck making a move which they know will likely have a disastrous outcome, but which will play out on a known timeline with expected results (and which can be prepped for and spun accordingly), or something more unexpected and violent.
Nicely put. I also believe runaway inflation is the most likely next stop.
I'm certain we'll see it in the bond market or rate derivatives. At some point people will begin demanding higher rates (bond vigilantes) with enough strength to counteract Fed rate manipulation. When that happens, things will quickly unravel. How fast? I fear fast enough that I don't hold any stock or bonds out of fear I could get crushed before I know what's happening.
Everyone wants to keep dancing at the party as long as its going on but it seems many are dancing very close to the door fearing they could be the last out.
Don't know that I have a better crystal ball than anyone else, but there is the possibility of China falling apart. That might break the denail in enough people.
Like the diabetes metaphor, the markets are heading for the Tainter Endgame. Limbs will start falling off.
I believe blindness sets in first...
convulsive spasms sounds about right.
Delete of another FFF (fat-fingered fuckup).
Nice move in oil today.
And most were saying the SPR would cause oil and gas prices to plunge. Nope.
Nice to see the term "Cognitive Dissonance" getting a wider audience. If nothing else, just seeing the term compels some people to pause and reflect.
Changing the world one mind at a time. It's the way real change really happens.
For a nanosecond, I thought you penned the article.
I have.............several times. But Charles Hugh Smith is older and wiser than me and he understands that short articles get wide exposure and long articles get dumped.
I'm still in first grade finger painting when it comes to writing, so Charles picked up my slack and moved on through. Short and to the point is what my first grade finger painting teacher always whispers in my ear as I ask for a 10th sheet of white construction paper and more paint. :>)
Your handle led to me to reexamine the phrase about a year ago. It has become a very frequent topic of conversation for me.
So did I until I saw how short it was and easy to read :) No disrespect do you or the author.
I specialize in long and convoluted. It's a natural talent I've been improving upon for years. :>)
Next year I start using affirmations here and here and here and here and here and here and here.................
(Click each one folks, they are all different.)
Entirely too many links at once, for shame, you made my brain hurt. Apparently, you Sir, actually read. Contrary to popular belief this isn't good:
http://www.youtube.com/watch?v=Uvs2g5Nj0NI
American: The Bill Hicks Story
http://www.americanthemovie.com/
http://www.youtube.com/watch?v=11Fl9ZVJ7B8&feature=related
*************************************************************
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
FUCK GOVERNMENT!!! LOVE WE THE PEOPLE!!! because they are to stupid to Hate the Government and too stupid to Love themselves enough to help themselves!
http://www.youtube.com/watch?v=-qmglGWMsdk&feature=related
I hate you fuckers! and here is why! you have allowed my Country to be fucking, fucked over! over and over and over again!
Somebody woke up on the wrong side of the bed!
Love = Fucking = Love = Fucking
It's just to inform you that your post confuses people.
+100, bro. Lead us to the mountain top!
It is a remarkable condition. I think everyone has it. Holding a different view from within the safety net of your own worldview causes anxiety. Maybe its a defect that developed from the trauma of birth, of leaving the safety and sanctuary of the womb for the big bad world.
Circumstances and perceptions change. One must adapt or suffer the consequences denying they exist.
Yes, I see your point.
Does this have anything to do with people born as US citizens believing that they live in a place administered according to the Constitution of the United States of America?
More like years of repeating the same lies until they are your only "truth". Generally speaking these folks have much trouble listening to contrasting viewpoints- to the point of neurosis. My own world crumbles if it is opposed or just simply broadened a little bit.
I always thought you had some great insights but I never expected you to "dominate the world economy." Impressive! Were you behind the DSK chambermaid scandal?
cognitive dissonance + wishful thinking = viagra
And happy endings?
But, but, but Leo the K says deficit spending and monetization CAN work.
Nu-uh! This next "fix" will be different this time. It will work I tell you.
I know when I put myself into a debtor status in real estate, a car, and credit cards that all I needed to do was get into more debt for another car, added some more credit cards, and bought another home on the coast. I knew adding to my debt load would indeed lessen my debt load. This is a simple math equation of 2 + 2 = 1.
We will be teaching a course on this through all of the Ivy League schools during the start of school next year called "You Can Win With Debt."
It's funny you mention that. I once heard Donald Trump say that it's not how much money you have but how much you control. The idea is that he levered himself to the hilt and thereby became a player. That he has gone bankrupt several times seems inconsequential to him. It's an interesting tidbit, nonetheless. I doubt most Americans can see the difference between taking on debt for the purpose of investment versus taking on debt in order to sustain consumption.
" That he has gone bankrupt several times seems inconsequential to him. "
He probably finds it hard to consider it consequential, when no real consequences have been imposed on him for those bankruptcies.
Privatize the gains, socialize the losses. He understood this decades before it became well-known to the public.
Well at least in the moments he was bankrupt he didn't have control over much, me believes.
Ah, Yale grad.--what year? Milestones
European credit is weak again today, yesterday it was weak. U.S. stocks are happier about the bailout than the markets getting bailed out. Not a good sign for stocks
100% on the mark.
This systemic decline in sensitivity to central-bank/State interevention suggests the end-state of "extend and pretend" and "mark to fantasy" is drawing nearer, as the next round of stimulus, quantitative easing, bailouts, etc. will buy considerably less time for the Status Quo than the last fix.
Tyler I agree. It'll buy less time for keeping the status quo. But I think we'll see a paradoxical rise in sensitivity in terms of the destabilizing effects in the global macro economy. You hit it on the nose in your Biflation article earlier today: this is not your father's stagflation. I think it's much more unstable and new efforts by TPTB to stabilize the system, putting out fires with the money hose will have more de-stabilizing effects.
Not Tyler. Guest post = Charles Hugh Smith.
there's nothing 'they' can do to stop the unravelling. the fiat money system is disintegrating. some days, that looks like "deflation." other days, it looks like "inflation." but the simple truth is that the conditions required for a fiat money system have gone like the wind.
Give that alcoholic another bottle of vodka. Everything will be better this time. You'll see. Really. /sarc
Right, give the heroin junkie a bunch of 8 balls to inject all at once just to keep from getting too sick. Hopefully, it wont be a massive overdose and death but with this Ponzi running at these all-time insane levels, who knows?
I never used the term Cognitive Dissonance until I found ZH and read CD, TD, BK, and other acronyms of witty writers here.
Thanks CD, I have spread your words far and wide but sometimes I wonder why?
So that I can continue to increase my collection of hate emails. Passing 10,000 as we speak.
Thanks for nuttin' sailor. :>)
No hate here.. I love ya!
I'm doing my best to make damn sure you receive 10 million more hate emails within the next year. Most people hate it when you break their funhouse mirrors.
That's 70,000 years of bad luck and counting. After the first life time who cares?
They won't know who I really am when I reincarnate as Osama 2.0, so can I use you as a forwarding address?
Karma is a bitch when it doesn't go your way. :>)
I've discovered that life is short, and I have a pair of grandiose, swollen balls that rather liked to tempt being kicked! Lately I've taken the tact of using a warped version of Rogerian dialogue (as in Carl Rogers) to slay the beast. My favorite mode is to approach crowds (family, friends, acquaintances, strangers) who are gathered in larger numbers (5 or more, the bigger the better) to give them the sensation of protection. I rarely if ever will inform them of the actual reality verbatim (unless they come to me the following days). What I do now is choose local physical examples and ask questions that I am resolute to never provide the answer in a way that would inflame their defense mechanisms. I post contradictions and feign ignorance. I repeat their comments with different words that bring new semantic meanings. They get to educate moronic me. Even if asked directly, and am tempted to be drawn into vivid revelation, I deny I comprehend the answer. I just say "I'm just asking you, I really don't don't know, I was hoping you'd know"). For example, I ask questions about that orange tree right outside the window. "What fruit would you pick first? Why?" Then sublimely change the subject matter from oranges, to... well... you get it. I have to stay strong and not let them suck me into being plain worded. The wily Janus faced dissonant need to earn their salvation! Examples of questions to ask can be easily discovered in the professions of anybody. Swallowing my ego, and repressing the urge to light myself as the fire of the glorious shining light of emancipation was difficult at first, however it got easier, especially when I realized that I was actually making a difference by not being such a pompous know it all pulsating vein brain intelligence of the universe!
Also, I go after the kids at get-togethers (ages 20 down to 6 are quite open to understanding the concept of devaluation). I insidiously shame the parents! It's fun, and the kids think I'm cool while the parents remain nothing but amused. I do it indirectly. I'll play games and tear part of a dollar off. I tell the kids if they can figure out why they don't want a torn dollar I'll give them a whole one. Let the wee ones onto such joy and the world opens up in opportunities.
By the way, I'm ready for those forwarded emails. I have my forwarder set up to immediately send them ORI's way! (as I don't get to reincarnate this time. This is my last stop.)
Just what is it that you're really trying to say?
hmmmm, perhaps what others haven't.
And why are your fingers so lazy Mr Peabody?
I know you have fiery robust neurons. Pronto! Get those synapses firing and tell us, specifically, with examples what and how you have communicated lately with those who need the knowledge and a slap of perception. Step on up. Lots of members (sitting in underwear only) and lurkers with unclogged eustachian tubes await your response. ; )
The clinic tells me that I am paying the price now for abusing my fiery robust neurons during the first 45 years, or so, of my life. I have been advised to wage the eustachian tube war on all except my closet loved ones. (I can count them on one hand)
It seems when every old and worn warrior hangs his sword, there comes a younger and stronger one to carry the fight forward. You seem to fit the part nicely. You and many here at ZH. I read and listen and occasionally cut-n-paste ZH to those few who would listen, and trust heaven to help the rest.
Well done- I salute you, sir.
Dear CD: Your earlier post was inspiring. Its been fore front in my mind all day,its if you wrote it directly at me!
Don't sell yourself short. Your contribution to ZH is one of the many reasons I gravitate here daily, and yes, mostly I lurk, since I can share no insights as profound as the contributors here.
I can hardly wait for the upcoming installments. Somedays I just despair and get discouraged as my friends and loved ones look at me like I have three heads and a tin foil hat on each.
I absolutely enjoyed the soulful honesty in your last contrubution to the site and your insightful comments on many articles posted.
Just wanted to "get that out there".
The world of the ZH comment section is very different from the emails I receive privately. Many people read ZH, but will not comment because of the brutality. And while many people tell me they need to hear the ugly truth, they have also told me they need to hear about how to cope with the isolation and daily emotional assaults. I need to learn as well so I decided to start writing about it.
Thanks for your words of encouragement.
Get a room!
Seriously though, a chat room at least.
I forgot about compliments, remember those?
F the neigh sayers. Keep doing what you do, you give voice to my inner angst. It helps it really helps.
"Ah, take the cash and let the credit go,
Nor heed the rumble of the distant drum."
Partial quartan from the Rubaiyat of Omar. Milestones
++++++++++++++++++++++++++++++++++++++++++++++
Everyone who is not feeling the Heat now.. will maybe sometime in the future will begin to feel the heat and thusly find your sharing of information "Priceless"!
http://www.youtube.com/watch?v=d5tB35le3w0
It is just a matter of time before everyone! up and down the later is smacked in the face with the fact that America is a Police State.
CD,
I liked yesterday's piece very much---sensitive in words, though difficult to comprehend but still a refreshing shift from the normal hostility and anger(though funny) in the blogments.
If you have to do something----I'll look for more in the future
Besides, what else would you do?
No matter what I do I'm sure I'll be in my underwear and my bunny slippers when I do it. :)
You guys need some patience. In France, it took 80 years from the time they went fiat under John Law's scheme until heads rolled, but then only 6 years to fix it.
Perhaps, but they already suceeded. Bank's exposure to Greek debt has halved since the beginning of the "Greek crisis", and guess who is holding the other half now.
Give'em one more year and they will not only have dumped the whole load on the taxpayers, but they will also be net short on the shite. Sound familiar?
I'll no doubt be ridiculed as an arse licker, but you're well regarded CD by anyone with a brain. Keep fighting the fight.
""So that I can continue to increase my collection of hate emails. Passing 10,000 as we speak.""
I will give you a feed back of where I think you have been leading us. Let the 10,000 go and understand that there are more than 10,000 that may be gaining good stuff from reading you. The fact that you have kept count disturbs me.
You have an excellent mind that needs to be shared. Approval will not be 100%. Shake it off and rock on.
It was a joke. Really. I thought the smiley face was the give-away to the joke. :>)
I do not keep track and I don't receive many since they can hate me on-line in the comment section. :>) :>) (double smiley)
The heroin addict now needs huge injections just to keep from getting sick, well past the point of getting high anymore.
They are desperately trying to avoid the DTs.
http://en.wikipedia.org/wiki/Delirium_tremens
Full blown Trainspotting plastic tarp and puke bucket cold turkey withdrawals.
Who told you about the plastic tarp and the puke bucket?
Oh, wait a minute. :)
The dead baby crawling on the walls revisited me during a particularly hallucinagenic episode.
"We the People" will rise up and Take Back our Freedoms that were Stolen! http://www.youtube.com/watch?v=d5tB35le3w0 /
Have a Political View? Share this view on Twitter or Blog? **YOU!** are a Terrorist PER Homeland Security http://goo.gl/0YRnN See Link(s) and Official Report(s).
"We the People" will demand that everyone is treated the same, thusly a flat tax with no loop holes and / or subsidies for the top 1% of the top 1%!! http://www.youtube.com/watch?v=3w27OzQDX7Q
I am just kidding.. Fat Lazy Americans are to fucking stupid to effect any real change.
YOU CANT FIX STUPID!!
Yea I wish it were true, but the american sheeple wont even put their foot down and say NO to the TSA tyranny of getting their wife and kids strip searched SS style and then put thru full body cancer inducing scanners. Stand up? I dont think its in but maybe 1% of americans.
I am willing to Stand for / with My Fellow Brothers to try to stave off the attack on "We the Peoples" Constitutional Rights! Oops! I used a Key Phrase! I am now a person of interest to the FBI and all other idiots!
Do YOU! Believe in the Holy Bible? You are on the FED's watch List!
Do YOU! Believe in Gold over Paper? You are on the FED's watch List!
Do YOU! Exercise you 1st Amendment Rights? You are on the FED's watch List!
That is actually a double.. Mention the Constitution while exercising my 1st Amendment Rights!
That is Correct! Bring up the Constitution in America to Law Enforcement! and You are providing Law Enforcement with Probable Cause to Search / Harass / Stalk YOU!! FACT!!!
According to the Committee to Stop FBI Repression, the 14 activists’ personal belongings—including cell phones, papers and computers—are still under FBI confiscation. The federal law that criminalizes aid and comfort to a terrorist organization was upheld by the Supreme Court in June. “The court ruled 6-3… that the government may prohibit all forms of aid to designated terrorist groups, even if the support consists of training and advice about entirely peaceful and legal activities.” (Emphasis ours)
This means that no longer can Charlie Rose interview on PBS a member of Hamas (as he did this year). No longer can American peace activists, such as former President Jimmy Carter, send messages to Hamas urging compromise and reconciliation. Nor can an American Christian in the Mideast attempt to evangelize or even talk to a member of Hamas. It is now criminal to reason with a large number of the earth’s inhabitants who desperately need Christian faith and reason.
After the Supreme Court ruling, the Jewish Anti-Defamation League heralded the decision as a victory against terrorism. Actually, ADL was elated because it opened bolder possibilities for itself, as Israel’s PR representative, to broaden the definition of terrorism to include those who ideologically oppose America’s “ally in the war on terror.” Because moral and verbal opposition to Israel can be more damaging than financial or military contributions, ADL wants to make criticism of the Jewish state an act of sedition, punishable as a speech crime.
ADL, as well as its sister Jewish attack group, the Southern Poverty Law Center, offers multiple “anti-hate” programs to police and FBI. It schools them in ADL’s definitions and ideological responses to “hate criminals” and “domestic terrorists.” ADL has already described millions of anti-Obama critics as paranoid “conspirators.” (See, ADL Blasts 'Paranoid' Right: Are Millions of Anti-Obama Protestors 'Conspirators?') In its MIAC directive to Missouri State Police, ADL and SPLC described millions more as “potential domestic terrorists.” (See, Alex Jones’ “Secret State Police Report: Ron Paul, Bob Barr, Chuck Baldwin, Libertarians are Terrorists”) Just this month, SPLC smeared 18 Christian/conservative leadership organizations as hard-core “hate groups.” (See, SPLC Attacks 18 "Hateful" Christian Groups) How long will it be before the FBI considers “home-grown” terrorists as including Christian conservative “haters” – even criminalizing those who communicate with them?
Hey JW-
I don't necessarily disagree with you, but could you cool it with the cut-and-paste? I suspect most if not all of us have got your point, and it'd be worthwhile to get a little new material. If nothing else, a little rephrasing to keep things fresh might be nice.
Yeah, I got scanned once--really before I could think about it. Next time they can fondle my nuts--I'm not getting microwaved again.
What's the appropriate etiquette: "Was it good for you too?"
Appropriate etiquette is to take names and press charges for sexual assault.