”One of the greatest delusions in the world is the hope that the evils in this world are to be cured by legislation.”— Thomas Reed
“Thank you for the dose of reason,” writes D Cruz, “regarding the current narrative on global warming. Yes, we have big climate problems to deal with, but as usual our ‘leaders’ have focused on what can be profitably exploited while ignoring other dumpster fires that are destroying the quality of life just as much: pollution, economic tomfoolery, retrograde ignorance…” and the like.
When we bought our first Land Rover, we had searched online for a 2004 Discovery because that year was the last of the classic LR chassis models we liked. It took some effort to find one. Then suddenly, while driving around in our new truck, we saw classic Land Rovers everywhere.
Psychologists call it “The Baader-Meinhof phenomenon,” or the frequency delusion.
It’s a phenomenon where something you recently learned seems to appear everywhere, making it feel like it’s more common than it actually is.
Our first genuine experience with the frequency phenomenon began over two decades ago and plagues us to this day.
In early 2000, my erstwhile writing partner began using a new tool, now known as e-mail, to write about the stock market bubble in .com stocks of the day. The project was successful and continues to this day under different stewardship. You’ll remember it as The Daily Reckoning.
There were so many extraordinary stories about companies tacking on a “.com” and watching their stock scoot skyward overnight… we couldn’t believe our eyes. This was a market full of “meme stocks” way before anyone even knew what a “meme” was.
My favorite was Corning. The company best known for making fiberglass insulation for home construction suddenly became a Wall Street fixation when they dedicated part of their business to spooling reams of fiberoptic cable.
An historic price chart reveals that from a low of $8.62 on Aug, 28, 1998 Corning.com (GLW) shot to a high of $100.46 just two years later on August 25, 2000 – near the height of the .com frenzy. In another two years… August 23, 2002… GLW was trading at $1.96.
What goes up, must come down… and then some.
The investing crowd—even the armchair variety—were under the delusion that the Internet was going to connect the world with useful information, end all wars and make everyone who “got it” rich beyond their imagination.
While it worked out for some, most retail investors ended up feeding the Wall Street frenzy with their own retirement accounts.
In the interim between Corning’s nosebleed high and its post-crash low… came 9/11.
Today, we remember the events and the men and women who died, driven by duty and pride, trying to help evacuate the Twin Towers before they collapsed.
A friend and neighbor from the neighborhood where my wife grew up in New Jersey, we just learned this past month, had just gotten an internship at Cantor Fitzgerald. Cantor were the leaders in the global bond trade at the time and had operations on floors 101-105 of the North Tower. The firm lost 658 people during the attack, equal to two thirds of its employees, including the new intern from New Jersey.
Many more poignant words have been written on the events of September 11, 2001. Our goal today is not to try to do the emotions any more justice than the talented writers and eye-witness accounts can convey. There’s a time and place for remembrance and rightfully so.
The terror attack on the World Trade Center was more than just the worst attack on U.S. soil since Pearl Harbor. It was an emblem, symbolic in hindsight, that the “end of history” had not been achieved with the coming of the Information Age.
Rather, it was the beginning of a series of grandiose and unimaginably expensive popular delusions.
During the tech wreck in 2001, Bill and I undertook a study of bubbles which ended up in book form as the New York Times best-seller Financial Reckoning Day. We studied stock market bubbles going all the way back to the Tulip Bubble in Amsterdam in the mid-1600s and John Law’s Mississippi Scheme in France in the early 1700s.
Within a decade of the tech wreck we lived through yet another delusion that no-income, no-asset (NINjA) mortgage loans could be bundled up, sold to pension and sovereign wealth funds, and everyone could own a home… and get rich… at the same time.
That delusion melted in the Panic ‘ 08.
The bailouts and the Fed quantitative easing (QE) programs that followed spurred bubbles in commodities, cryptocurrencies, and pot stocks.
If anything, we learned popular delusions plague modern society consistently. (See: Charles McKay’s Extraordinary Popular Delusions and Madness of Crowds, ed. 1841.)
Stock market bubbles are one thing, but popular delusions have an insidious side rooted in politics, too. Following 9/11 the country was swindled into believing we had an obligation to invade Iraq because Saddam Hussein was up to his ears in Weapons of Mass Destruction (WMD). The invasion of Afghanistan followed and the U.S. entered its longest, costliest and some would say least effective war.
“How can you have a war on terror?” our friend Doug Casey asked early after “shock and awe” kicked off the “forever wars” in both Iraq and Afghanistan. “Terror is a tactic in war. How do you wage war on a tactic?”
The logic of it all was just fuzzy enough to make it stick.
A delusion like the War on Terror is not unlike a hurricane…
If conditions are right, a tropical storm “rapidly intensifies” into a hurricane because warm air decreases more slowly than cold air. As such, warm air from sea surface temperatures rise through the eye of the storm. As it rises, the warm air cools and gets pushed to the outer bands of the storm where it descends more rapidly than the warm air at the core.
The closed-system creates a “positive” feedback loop in which new warm air feeds an already circular beast… and sucks everything else around it into the storm… growing ever larger until the source of the warm air choked off.
In a delusion, a complex idea is so reduced to its simplest components it becomes a mantra.
“Mask up, Maryland!” was the slogan here repeated by bartenders and schoolmarms alike during the pandemic.
Regardless of what science immunologists were following during the outbreak of Covid-19, the mask and vaccine mandates created a closed loop of self-reinforcing feedback among the fearful. If you didn’t comply with vax mandates or masks you were ostracized, in the literal sense of the word.
Policy makers drove the “narrative” and fed the social media beast for 18 months. It was the first time in history that “authorities” quarantined the healthy in the face of a pandemic. Somehow, the prescription to cure the virus was, as incredulous as it still seems, to stop all economic activity.
Masks and vaccines became visual reminders the government appeared to be “doing something” to save us.
For most people, it’s easier to comply than to think the idea through.
When I asked, Bard, Google’s AI tool, told me that the combined spending for the War on Terror, estimated at $8 trillion, and the COVID-19 pandemic (another$14 trillion) tops out north of $22 trillion.
“But,” comes the refrains, “what would have been the cost had nothing been done?”
The Bard was kind enough to offer more unsolicited wisdom today, too. “The combined cost of the War on Terror and the COVID-19 pandemic is staggering,” it says. “It is a reminder of the immense human and financial toll that these events have taken. It is also a reminder of the importance of investing in prevention and preparedness to mitigate the impact of future crises.”
The grief people feel over 9/11 is real and it’s personal. But the government response turned out to be far more than “one action” spurring “an equal and opposite reaction”. In a similar pattern, pandemic policy turned out to be more harmful and longer lasting than the threat posed by the virus itself.
Granted, I’m a victim of Baader-Meinhoff; for the past 20 years I’ve seen popular delusions everywhere. But maybe the affliction is a good thing.
That will be especially true if the War on Terror and pandemic were just dress rehearsals. Something wicked this way comes…
The Daily Missive
P.S. Rhetorical question: What popular delusion do you think Bard would suggest we ”invest in prevention and preparedness to mitigate” right now? Well, one whose conditions are already primed and ready for “rapid intensification”, of course.
Write your response: here.