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March 23, 2018 - Health Ranger - Mike Adams
24:09
The Rational Insanity Paradox explained by the Health Ranger
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I'd like to introduce you to something that I call the rational insanity paradox.
This is crucial to understand because it will greatly impact your life in the months and years ahead as certain events unfold.
My name is Mike Adams.
I'm the editor of naturalnews.com.
I'm known as the Health Ranger, but I've covered many topics outside of health, such as systemic market collapses, philosophy, spirituality, and so on.
And with this topic, the rational insanity paradox, we're actually covering a very important psychosociological phenomenon, you might call it.
So let's start with this.
Most people mistakenly believe that if individuals act in a way that has good intentions as the intended outcome, in other words, they want to do something positive and they're making decisions in their own self-interest, but decisions that are positive, they think that the outcome for society will always be positive.
Especially if that decision is multiplied across many, many people.
They believe, in other words, that if one person does something positive, that's good, but if a hundred people do something positive, that's a hundred times better.
And this is kind of a delusional thinking, as I will explain here with the rational insanity paradox.
It turns out that in some contexts, which I'll describe here in great detail, individuals making rational decisions that are in their own self-interest and that are made with positive intentions...
Actually lead to aggregate insanity, which often causes a disastrous collapse, an implosion, a failure, a catastrophe of some kind that was never intended by any one individual in the group.
Who was making an individual decision that they thought was positive.
Now again, this is crucial to understand because most people in our society today believe that if they make good decisions, positive decisions, in their own self-interest to do good things, protect themselves, protect their farms, for example, protect their savings accounts and so on, they think that that will lead to a better society and a positive outcome in every case.
But it simply isn't true.
Now let's look into the details of why this is.
And this will help you understand why so many systems in society today, systems upon which human civilization greatly depends, are headed for collapse and catastrophe, even though no one wants it to happen.
And yet they are making decisions that are going to cause it to happen in the aggregate.
Here's how this works.
The most classic and easy to understand example comes with a bank, let's say, that is not financially sound, and the individuals who have deposits at that bank decide that they wish to do the right thing and protect the money that they have already earned and deposited by removing that money from the bank.
You've seen this in films and you've seen this in popular culture and finance magazines and so on.
If everybody takes their money out at the same time, what happens?
Well, it's called a bank run and the bank collapses because the bank is, of course, a fractional reserve financial institution, which means it does not carry the full deposits in terms of cash that represent the electronic records in its computer systems.
So that bank might have, let's say, $10 million worth of deposits for customers on its books but it doesn't have ten million dollars worth of cash that people can take out now this is a rather obvious example but I hope it's also instructional to realize that even though each individual may be acting in their own self-interest and not even acting in an unethical way at all after all those people earned their money that's their money that they deposited what's wrong with an individual taking out that money to protect it so that they don't lose
it right it's a rational behavior And if only one person does it, there's no problem.
But if you take that same rational decision of self-interest and you multiply it across the aggregate, instead of getting a much larger positive outcome, you get a disastrous collapse, a negative outcome.
So this is a great example of how individuals acting in a positive way with positive intentions can, in an aggregate way, cause a disastrous collapse that harms everyone.
The individuals, in other words, are acting rationally, but the outcome for the entire group is insanity.
It's insane to collapse the bank where your money exists, because then everybody loses.
So that's why I call this the rational insanity paradox.
But let's look at another example that's not so obvious, and yet it's quite current in what's happening in the world today.
Let's go to California, where you have farmers who are desperately trying to water their crops, their almond orchards, their vegetables, and so on, With water that they're pumping out of the underground aquifers.
And these aquifers are, of course, plummeting, dropping every year as this so-called fossil water is used up to water this year's crops.
Now, as the aquifers continue to drop, everybody knows that that water is eventually going to run out.
And when it does, it's going to be catastrophic because no one will be able to just get water out of the ground anymore no matter how deep you drill.
And yet, each individual farmer has made a rational decision to say, we need to save our farm or I need to water my crops and that's a positive thing.
We want a healthy farm here.
We want to grow healthy food and sell that into the marketplace and have a profit so that we can continue to operate.
These are all positive decisions.
And yet by drilling that well into the aquifer and tapping the aquifer, they are making a decision that when reflected across hundreds or thousands of other farmers, leads to a catastrophic, disastrous collapse of the aquifer and total ruin for everyone involved.
Once again, each individual makes a rational decision with positive intentions, and yet the outcome is disastrous and is in fact a contradiction of the intentions of the individuals.
So, again, the important thing to realize here is that People who have positive intentions and want to contribute to positive outcomes can inadvertently create aggregate systemic failures, collapses, catastrophes, disasters, and so on, even though they never intended to.
This is crucial to understand when we're looking at what's happening with the global debt collapse that's coming.
Stock market crashes, the ecological collapse that's happening in California with the water situation, and other systems that can be destroyed by lots of people working with positive rational decisions.
So, in other words, you often hear this on the political left, that if you just have positive intentions, if you just act out of goodwill, if you just make rational decisions, that everything will be okay.
Because, obviously, good decisions lead to good results, right?
We're always told that.
And yet, this paradox points out that, in reality, the opposite may be the case in certain contexts.
This is crucial to understand.
In other words, for the market to crash, the stock market, let's say, There doesn't have to be some evil individual running around trying to crash the market.
It can be lots of individual people trying not to crash the market, making decisions that in the aggregate lead to the crash that no one wanted to see happen.
You must understand this paradox if you hope to understand the events that are about to unfold in our world.
But let's talk about some other examples so you really get this point driven home as much as possible.
Let's say that there are 50,000 people in a stadium concert, and it's an indoor stadium with a covered roof, and they're enjoying this wonderful concert, music's playing, everybody's cheering, and then suddenly half the roof falls in.
And this has happened before in football stadiums and so on, so this is not an outlandish example.
Let's say half the roof falls in.
Many people are crushed immediately.
There's lots of screaming, death and blood and so on.
If you have not yet been crushed, what is the rational thing for you to do?
Well, there are really two options.
Some people would rush towards those who are injured to try to Help them and stop the bleeding and so on.
And there are some people in society who would do that and good for them.
But most people would actually turn around and run the opposite direction.
They would immediately try to exit the building as quickly as possible in order to save their own lives out of the fear that the roof would continue to collapse and perhaps crush them.
So this is a rational behavior, a self-preservation type of behavior that an individual would decide to do for essentially a positive reason, to save their life.
And yet, if you think about it, if everybody does this, and let's say out of 50,000 people, let's say there's 1,000 that are injured and can't move, that still leaves 49,000 people now stampeding for the exits.
And what happens?
Well, you get a human wave, a human stampede that leads to more deaths, people actually being trampled to death.
This was not the intention of any individual in that crowd.
Everyone wants to exit safely, save their own lives, and they do not intend to harm anyone else.
And yet, the physical design of the stadium does not allow for the number of people to exit with a so-called flow rate that is equivalent to the rate at which people would like to exit that building, which is very, very rapidly.
So you're going to get people pushing and shoving and trampling each other.
You've seen this on Black Friday shopping events where people trample through the doors and literally kill each other to try to get discounts on microwaves at Best Buy, right?
Or flat panel displays or what have you.
So think about that.
If they trample on each other and kill each other for discount merchandise at Walmart, Do you think they wouldn't do that to exit a collapsing stadium or some similar situation?
You know, of course they would.
And yet, none of the people in that mob, you might say, has any intention of harming anyone else.
But that is the aggregate result.
There can be a disaster, catastrophe, even fatalities that no one intended because each individual is acting in their own self-interest, making a rational decision to exit as quickly as possible.
Now this phenomenon of the rational insanity paradox also takes place at the level of nations.
It's not just an individual slash group phenomenon.
This can also happen with nations on a global scale.
And here's a great example.
You know how the buildup of nuclear arms has been called mutually assured destruction.
And the logic of this is undeniable.
When one nation acquires a nuclear missile, an ICBM, capable of being launched to strike another nation, Then that other nation has every logical reason to try to get their own weapon that they could theoretically launch at the other nation so that there is an impasse, you might say.
There is a motivation for neither nation to launch these weapons of mass destruction, knowing that they would be retaliated against by the other nation.
So this is called mutually assured destruction.
In game theory, of course, this makes good sense that if your neighbor builds a nuclear missile, you should build one too so that you have each other in check, so to speak.
It's logical.
In fact, it's rational.
And yet...
Once this begins, each party wants to build one more missile to have a leg up on their neighbor.
And when country A builds one more missile, country B feels like, well, I've got to build one more missile to match country A, and then let's add one more to that so we have a leg up on country A. Then country A sees that and says, well, we've got to build another missile, too.
Let's go to three missiles.
Let's go to 30, 50, 100, 500.
You see...
There's no end to this.
And eventually all the nations have so many nuclear missiles that they could destroy the planet 200 times over or more.
And this is really where we are today.
And it's insanity.
So you have rational decisions being made by individual nations with positive intentions to prevent war, to act in self-defense, to protect their citizens.
And yet, in the aggregate, the overall global situation becomes one of pure insanity, where there are so many weapons of mass destruction, atomic bombs on warheads that can fly in low orbit and strike halfway across the planet, for example, that the planet itself becomes threatened with the very existence of so much armament.
And this is where we are today, and this is how rational decisions can lead to group insanity or even global insanity from the perspective of individual nations.
Alright, so here's one more example to wrap this up.
Suppose that lots of people own a stock, let's call it a dot-com stock because that was such a great example, and that stock is worth $100 a share.
And they get word that that company may not be all it's cracked up to be.
Maybe it's been overhyped.
Maybe it lost a key technology patent or it turns out it doesn't really have revenues or even customers for that matter.
Suddenly, each individual wants to sell because they want to protect their investment by cashing in their stocks for, well, cash, right?
They want to get $100 a share out of that.
Well, as each individual begins to sell their shares, the market price of the shares falls.
And when a market price of a share falls, it alters the value of the shares that are held by everyone else who holds those shares.
So in one instant, if a price falls from $100 a share to $99 a share, it means that everyone who held those shares has lost a dollar on their books, even though they didn't even do anything.
They didn't sell.
They didn't buy.
They didn't even complain.
They just lost a dollar.
Well, that might motivate them to sell, too.
Because they don't want to lose more dollars, they want to have at least 99 dollars out of the 100, so they decide to sell as well.
Now it drops to 98, 97.
Now we're into a panic selling situation where individuals who are acting rationally to protect their investments simply want to recoup their investments or perhaps profit from them and take their money back out of the market.
But they have no intention of harming other people who hold those stocks.
Right?
They have a good intention to protect their investment and that's it.
But as they sell, the market prices continue to fall, negatively impacting all the other people who hold those same stocks even though those people have done nothing wrong.
So even with positive intentions, individuals making rational decisions can cause a stock to collapse.
In fact, they can cause an entire stock market to collapse, as we saw a couple years ago with Bitcoin, for example.
Here we have an online cryptocurrency, and in one day, in fact it was a day after I publicly predicted that it was overvalued, Bitcoin lost 50% of its value in one day.
And this can happen very quickly with some cryptocurrencies because their prices are very volatile.
And those who engage in owning cryptocurrencies, which I support by the way, happen to be very quick actors.
They can respond very quickly.
So prices can move radically and very quickly up or down.
So each individual might have said, well, you know what, I think this might be overvalued, whether it's a stock or Bitcoin or something else, a bond, let's say.
I'm going to go ahead and sell my share and protect my investments.
And so they do that, and everybody else is negatively impacted.
If everyone takes part in this process, the share price collapses to near zero.
And this is what we saw with the dot-com crash around 2001, when some dot-com stocks crashed to, I think, less than 1% of their peak value.
Excite.com was one of them, DrCoop.com and others.
These were dot-com stocks that were wildly overhyped on CNBC and other investment tabloid news channels.
Telling people that everybody was going to get rich and the stock market was going to go up forever.
And that sounded great to everyone, so they bought in.
But then when they began to act rationally and sell their stock prices to cash in on their profits, things began to crater.
In all, I hope this updates your worldview with some very important lessons about cause and effect.
When you begin to involve the psychology of crowds, you cannot count on good intentions always creating good results.
That may be the case sometimes, perhaps even the majority of the time, but it certainly isn't the case all the time.
Good decisions are not enough.
We have to understand the psychosocial dynamics, which means the psychology of large groups.
Once we understand those dynamics, we can begin to see that good intentions, good decisions, rational decisions can, in fact, in the aggregate, lead to disastrous results.
And finally, just think of one final example here of, let's say, the growth of government.
Individuals will always ask for more and more government in order to help other people.
We need a government department to help education and build more schools.
We need another government department over here to give food stamps to people who can't afford to feed themselves and they need this assistance.
We need a bigger government to, let's say, give people paychecks when they've lost a job, you know, welfare or unemployment or what have you.
And all of these intentions are positive.
You know, the voters and the people asking for these laws were saying, you know, let's help this group, let's help that group, let's help subsidize housing, let's help subsidize farmers, let's do this, let's do that.
These are all good intentions.
What is the aggregate effect, though, as this continues unbounded?
The answer is that you get a very large government entity whose primary role in society is to confiscate wealth from one group of people, that is the overtaxed working middle class, and then to distribute that money to other selected groups of people while wasting most of that money and then to distribute that money to other selected groups of people while wasting most of that money in This is not done with the efficiency of, let's say, church charities.
The government first takes $100 and then wastes about $80 and maybe gives $20 to its intended use, usually even less than that.
So again, we have a result where each individual was acting with compassion, was saying we want to help others, was even saying, well, let's create this body, this government to do that for us, and yet the end result is a big brother government with a giant IRS running tax audits on everybody,
confiscating profits, crushing the profitability of small businesses, which harms their ability to hire other people and create jobs, and a government that people fear because it's always coming after them to confiscate their money.
So again, good intentions can lead in the aggregate to disastrous results.
So this is the rational insanity paradox.
Keep this in mind as you observe and interpret world events that are unfolding before you right now.
And remember that just because something goes bad and fails doesn't mean that anyone ever intended it to do so.
Good people can make rational decisions that lead to catastrophic results.
Thank you.
So what is the solution to all of this?
Well the solution is actually difficult for modern society to grasp.
The solution is to have a complex and highly intelligent understanding of cause and effect in the context of psycho-sociological situations.
But it's not an easy thing.
It's certainly not apparent.
Most people do not think ahead very far.
They cannot really extrapolate the behavior of groups and accurately see what results might emerge because of that group behavior.
Most people think that if they alone act individually, that's good enough.
So the real solution is actually awareness, to become aware of exactly what I'm pointing out here, that the rational insanity paradox exists, and that individuals acting in good faith can, in the aggregate, lead to disastrous results.
Once we understand that this phenomenon exists, then we may have a better chance of stemming the tide of such events getting out of control.
We may be able to intervene.
We may be able to design structural systems that are more resistant to this, for example, being more redundant.
In the fractional reserve banking system, a great example of a possible solution would be to raise the reserve requirement of these fractional reserve banks so they are more resilient or, let's say, more resistant to cash withdrawal bank runs.
In the stock market, similar redundancy and resilience is improved by, let's say, limiting investors buying and selling stocks on margin because margin purchases multiply the effects of every stock move.
You eliminate the ability for margin and you have actually more price stability and less volatility in stock trades.
In the case of nuclear weapons and mutually assured destruction, well, you can negotiate international treaties to say, hey, let's set a limit on this, a mutual limit, and get to some level of sanity that we can agree on and even perhaps start de-escalating the weapons.
And so you've seen this over the past few decades as well, where countries like Russia and the United States have begun to attempt to dismantle and de-escalate the mutually assured destruction weaponry.
And bring us back from the brink of potential destruction.
So in every case, there are things that can be done once this dynamic is recognized.
The hard part today is getting people to recognize this paradox.
And that is exactly why I'm recording this and sharing this and asking you to share it as well.
The more people understand that this exists...
The more chance we have of building in systems to help prevent these things from taking place and causing widespread harm, and ultimately the safer we will be in terms of finances and stock markets.
Even things like having a sufficient number of lifeboats on ships at sea, which is a lesson, of course, that was learned on the Titanic.
There we saw that each person acting rationally to evacuate the ship Actually, in the aggregate, led to a mass catastrophe because there weren't enough boats.
So again, it's not the people's fault.
It's the fact that the system was designed in a way that did not account for the aggregate behavior of a psychosocial group or the psychology of a large social group.
So there are things that we can do, but it starts with awareness.
So please share this.
Thank you for listening.
My name is Mike Adams.
Again, the Health Ranger.
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