As Telegram learned, regulators in the U.S. are a major barrier to new projects looking for funding anywhere in the world.
The United States Securities and Exchange Commission’s vigor in pursuing initial coin offerings, or ICOs, has become a major boogeyman within the crypto community.
Most recently, the case against Telegram ended with that company abandoning its planned open network and Gram tokens, which raised $1.7 billion. The question before the crypto community is now: Have we witnessed the death of the ICO?
The answer is yes, in that, with all due fear of predictions, we will never see the likes of 2017’s ICO boom again. That vision of an ICO is indeed dead.
This is not the end for new tokens. But, until laws change comprehensively, the massive capital raise that leads to a token that trades freely seems like a thing of the past.
Bird’s-eye view of SEC registration
The SEC came out of two landmark laws passed at the height of the Great Depression. The commission has substantial power over the sale of securities — a broad category of investments that generally entail either stake in an entity or debt to it. They are distinct from commodities, which will be described later. One of the SEC’s most significant powers is seemingly simple: Anyone offering securities to the U.S. public must register that offering with the SEC.
SEC registration requires a company disclose a great deal of its financial information, as well as decision-making power to the public. Not surprisingly, many companies don’t want to. Not that long ago, the assumption was that SEC registration had nothing to do with crypto. That has changed in the past three years.
Since cryptocurrencies don’t fall more obviously into the rest of the potential definitions of securities, their classification depends on the much-contested term “investment contracts.” What exactly constitutes an investment contract is determined by the Howey Test, a critical result of the ruling in SEC v. W.J. Howey Co. (1946) that remains the basis of the definition of a security today:
“For purposes of the Securities Act, an investment contract (undefined by the Act) means a contract, transaction, or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party.”
The point is that investment contracts entail an investor handing over their money to another entity and, depending on that entity’s work, to see profits. Commodities, on the other hand, derive their value from the market. Different laws govern their trade.
The assumption is that there is no entity that has an overwhelming control over a commodity like oil, so there is no way to register a responsible entity. Royal Dutch Shell, however, has to register with the SEC to sell stock in the U.S., meaning that critical information about their operations is publicly available to anyone, even non-investors.
The guiding principle is that if a firm is going to raise money from public trading, they have to be more transparent than you can reasonably expect of smaller enterprises. In exchange for that transparency, publicly traded companies get access to a lot more capital. Understandably, the SEC’s interest in crypto expanded along with the bottom lines that ICOs were generating.
Brief history of the SEC’s role in crypto: Early years
In the early years of the Bitcoin network, the SEC was slow to involve itself. It was an arcane region of the internet that remained a novelty. The SEC largely either considered it no threat to investors or didn’t know what to do with it.
The SEC’s first Bitcoin-linked prosecution was in 2013. The commission charged Trendon Shavers with running a ponzi scheme promising huge returns based on a unique BTC investment strategy that didn’t exist. At the same time, the regulator issued a general warning to investors against such schemes using virtual currencies.
Fraud that they are, Ponzi schemes fall to the SEC to prosecute because they entail false promises of work from a third party. Shavers’ scheme was not that new. The point of contention in the Shavers case was whether an investment received in Bitcoin could even be considered “money” per the Howey Test. The court found it could, setting a critical precedent.
A new era of SEC scrutiny after the DAO report
The issue of ICOs remained unsettled for years, however. The DAO’s 2016 meltdown during its ICO, in which users invested ETH in exchange for DAO tokens, changed things. The event, which also gave birth to the Ethereum Classic hard fork, also compelled the SEC to issue the DAO Report of July 25, 2017. This report confirmed that The report confirmed that the SEC would not prosecute Slock.it, the firm largely responsible for the DAO. But, crucially, it also determined that the DAO was indeed an unregistered securities offering and, next time, the SEC would not be so merciful.
"Anybody who had been touting [a new token] before the DAO report was ok," said attorney John Berry, who left the SEC’s enforcement division in 2019.
Those ICOs that came before the DAO report benefited from some grandfathering in, remaining unscathed if they are demonstrably decentralized. Most regulators accept Bitcoin as a commodity, and if the current CFTC chairman gets his way, Ether seems set to get the same treatment, despite its ICO.
"No, Ethereum can't happen again today, because the first part of the Ethereum story, the capital raise, was a security," Philip Moustakis, a founding member of the Cyber Unit within the SEC’s enforcement division, explained to Cointelegraph.
Since the DAO report, the question has been how a new token can come into being that operates like Bitcoin or even Ether. Despite the anonymity of Satoshi Nakamoto, both of those networks owe their early years to core groups of developers who, were they to operate in the same fashion in 2020, might well face the wrath of the SEC.
On the flip side, Peter Van Valkenburgh of Coin Center told Cointelegraph that:
"I think you could still do Bitcoin. From the beginning of our advocacy in this space, we usually have at least one sentence saying, if you really want to build good decentralized networks, Satoshi was able to build one without a pre-sale."
He did, however, agree that a project like Ethereum, which held an ICO, would be more problematic were that ICO to happen today.
As an example of a pre-DAO token that is still having trouble with the SEC, Ripple Labs remains busy denying that they were responsible for XRP, a token they retain an overwhelming stake in. One Ripple executive compared the relationship with Chevron’s to oil — a clear attempt to paint XRP as a commodity rather than an investment in Ripple Labs.
But what about the aftermath? Let’s examine some high-profile encounters between new tokens and the SEC.
Block.one and EOS — $4 billion netted relatively peacefully
An interesting case study is that of block.one and EOS. Block.one, a firm that produces open-source software, was the driving force behind the EOS ICO. Netting $4 billion in total, it remains the largest ever. In addition, it is an interesting case study both because the year-long ICO began just a month before the SEC issued the DAO report, and the firm included an advisory on the site for its ICO against U.S.-based investors participating.
The SEC went on to investigate the EOS ICO, but would end up settling with block.one for $24 million. Whether it was just timing with the DAO report, or that the EOS Tokens were non-transferrable after the purchase period, or the fact that the purchase agreement’s explicit prohibitions on investors from the U.S. or China, the SEC didn’t seem to think it had a strong case.
"The fact that the SEC settled for $24 million — I think that indicates that the SEC saw some risk in their position," said John Berry. Relative to the capital raised during the ICO, $24 million is peanuts, the kind of expense that a company would gladly chalk up as an opportunity cost. However, it doesn’t provide any security to current projects. Block.one came away from the encounter relatively unscathed, but the SEC did not commit to a public reason.
"I would caution those in the industry against modeling their ICOs after Block.one's," said Philip Moustakis. "To me there's no clear message to take away from Block.one. At best, we're reading tea leaves."
Moreover, the settlement with the SEC is not the end of block.one’s potential liability for securities law violations. Starting in April, multiple class action lawsuits alleging that block.one violated both federal and state securities law in their ICO. These are still in their early stages, but show that the firm is not entirely out of the woods.
In the same vein as EOS, the ICO for Tezos (XTZ) predated the DAO Report. At $200 million, it was, at the time, the largest in history. Though the SEC never filed any formal action against the firm, a class action representing U.S.-based investors in the project accused the Tezos Foundation and affiliate Dynamic Ledger Solutions of violations of securities laws. The class is currently finalizing a settlement for some $25 million. The same case brought to light that the SEC is investigating the project on the same charges, and the class-action settlement would not necessarily protect the foundation from further SEC pursuit.
The SAFT Framework to appease the SEC
Over the course of 2017, lawyers in the space worked to conceptualize a new framework, a “Simple Agreement for Future Tokens,” or SAFT. Several heavy hitters in the industry released a white paper in October. As the EOS project had done, the SAFT Framework conceptualized a distinction between the initial sale of rights to tokens and the distributions of the tokens themselves.
The first leg would be securities, sold only to “Accredited Investors” using the SEC’s Regulation D to exempt the firm from full registration as a publicly traded company — a step EOS had not taken. That money would go to a registered centralized entity, who could use it to build out the network on which the tokens would operate in a manner free of that central entity. The early accredited buyers would be able to sell their tokens to the general public, even in America, as freely as they can Bitcoin. In theory.
The SEC never formally endorsed the SAFT Framework. However, statements from Chairman Jay Clayton near the end of 2018 indicated support for the concept that virtual currencies can go from being securities to not being securities. In June of the same year, William Hinman, head of the SEC’s fintech office FinHub, made similar comments.
However, the SAFT framework has seen mixed results, and recent events suggest that the SEC is capricious when it comes to firms making the switch from initial funding round to token issuance.
Canadian messaging app Kik got in trouble for using a SAFT in an ICO in September 2017 and remains locked in a deathmatch with the SEC. However, part of their issue was that the app itself was failing, so its Kin token struck many as a lifeboat on a sinking ship rather than an earnest project. Kik had also already had issues with the SEC’s Canadian equivalent.
Often held up as the great success story of the SAFT era, Protocol Labs managed to raise $257 million in an ICO for Filecoin shortly after the DAO report. The firm touted its eagerness to comply with the SEC and decentralize so that Filecoin’s network can operate independently, as a mechanism to provide peer-to-peer file storage. Though by all accounts the SEC is content with Protocol Labs, the firm has yet to launch its network, the most recent estimate being for Q3.
The launch of a mainnet will be the critical test, as Telegram found out. Telegram, the most high-profile project to use the SAFT Framework, is also the most spectacular failure and will very possibly be the last.
Telegram and the failure of the SAFT framework
Last week, Telegram announced that it was backing out of its planned Telegram Open Network. As mentioned earlier, the ICO for TON’s native Gram tokens raised $1.7 billion before the SEC filed an emergency action stopping their distribution in October.
The Telegram case has been brief and heated. The firm tried to follow the SAFT Framework by registering its purchase agreements — NOT the Gram tokens — under a Reg. D exemption. This was effectively a promise to sell those contracts exclusively to accredited investors. The disagreement really starts here.
Per the SAFT Framework, Telegram was hoping that the SEC would accept that the Gram itself was not a security. For its part, Telegram agrees that they had made every effort to keep the SEC involved so as to avoid exactly this sort of action. The SEC’s counterargument was that the Grams were still securities, largely because Telegram had no luck convincing either the commission or the judge that the network, TON, was actually complete.
The state of TON is critical for the “third party” prong of the Howey Test. If the network is still dependent on Telegram’s development, the argument goes, the Gram tokens still constituted an investment in the company’s work.
The issue is that Telegram was verifiably working with regulators throughout the process. It’s spooky for potential future companies looking to raise capital to fund projects that a project with the technical and financial backing of TON wasn’t able to appease regulators and will have to give back a sum of money that puts Telegram itself in jeopardy.
"The Judge basically presumes there would be a crime before there was a crime and is therefore intervening in a way that sends a bad signal to other projects," said Kristin Smith of the Blockchain Association, which wrote multiple amicus curiae briefs defending Telegram in the case. "From our perspective at the Blockchain Association, this is why we need to have an additional regulator and/or legislative solution that provides a legal pathway."
What Telegram represents is the collapse of a project backed by the Pavel and Nikolai Durov, two brothers who had already launched two massive online platforms (in addition to Telegram, the Russian social media platform, VKontakte). Moreover, TON seemed well-intentioned and it was clearly well-funded, though Telegram has only offered to return some of the funds invested. The fact that the SEC stopped it in its tracks will be ominous to all future prospective issuers. It’s a new era, and the case is still in court.
In his letter announcing the end of Telegram’s involvement in TON, Pavel Durov concluded by wishing future projects luck:
“You are fighting the right battle. This battle may well be the most important battle of our generation. We hope that you succeed where we have failed.”
Right now, nobody is sure how to take up that mantle. In a fascinating development, TON’s open-source version launched shortly before Telegram withdrew its involvement. While Telegram may be hard-pressed to reimburse investors, the functioning of the independent network without Telegram could very well play to their advantage in the court case. The SEC’s argument presumes that the network is dependent on Telegram’s work as a third party. The commission might still maintain that the network was not functional enough to be considered independent as of its original launch date. But if TON works now without Telegram’s active involvement, that certainly strengthens their argument that they were building a project that would leave the confines of the Howey Test.
On the other hand, if the open-source network falls apart, it could prove the SEC’s argument that Grams were indeed investments into Telegram and needed to be treated as securities independent of the initial purchase agreements all along.
Is everything a security by default?
A critical question that still stands is what new projects would be immune to classification as securities.
Speaking with Cointelegraph back in October, U.S. Representative Warren Davidson (R-OH) commented wryly on the position that the SEC has put new projects in:
“They’re literally told if you want to launch a token, whatever you think you want to do with it, come check with the SEC first. [...] And you can grovel. If you grovel well enough, then we’ll give you a no-action letter. You have hundreds of companies waiting on no-action letters. They’ve approved two. You can’t raise capital while you’re waiting for that.”
Philip Moustakis explained that the SAFT framework had underestimated the scrutiny that the SEC would apply to tokens the firms hoped to issue as non-securities:
"Just because there's some distance in time between the sale of SAFT and the sale of a token doesn't mean that the SEC isn't going to consider that token separately as a security. [...] All of what I just said is based on the model of ICOs from 2017, 2018, in which each token represents a share in the issuer, and that is the original sin that needs to be addressed."
For their part, the SEC’s fintech wing, FinHub, declined to comment on whether it's possible to hold an ICO within the US without assuming it classifies as a security and also declined to direct Cointelegraph to anyone internally willing to go on the record about recent actions, instead deferring to the same two no-action letters that Davidson referenced back in October — TurnKey Jet and Pocketful of Quarters.
Two utility tokens in closed circuits have passed the Howie Test as non-securities
Respectively from April and July of 2019, TurnKey Jet and Pocketful of Quarters are the only two to have made the cut of no-action recommendations to the commission.
In TurnKey Jet’s case, the commission noted that it is selling tokens so that buyers can buy plane tickets for the same price outside of bank hours — no expectation of profits, and no wallets outside of TurnKey’s system, so the tokens are fairly locked into their value of $1 and occupy a specific role of convenience for a single airline.
Similarly, Pocketful of Quarters operates a gaming platform that offered users unlimited access to tokens at fixed prices. Those tokens, however, had no usage outside of the dedicated platform Pocketful of Quarters had the platform built out without funds from the sale of tokens.
Neither of these ICOs presents any sort of functional cryptocurrency. Instead, they are relatively pedestrian tokens, solving issues of convenience within closed and fairly limited systems.
Utility tokens like these fit more cleanly into Jay Clayton’s analogy of the Broadway ticket that people can trade but which gives you access to just a single show. A classic cryptocurrency that people use as payment for services that do not derive directly from the issuer is a more threatening endeavor. Moreover, the SEC didn’t issue any formal feedback on the matter, so they can retract or reverse any tentative guidance to be derived from these no-action letters.
What about staying out of the U.S.?
One tricky element of digital assets is their ability to cross borders freely. The U.S. SEC plays a major role in global financial regulations due to the size of the country’s economy and investment market.
When it comes to cryptocurrencies, the SEC has claimed potential jurisdiction over any token that could make its way to U.S. investors — given the technological savvy of many in the crypto world, difficult to avoid. EOS, in fact, tried. Many of the people most interested in these investment opportunities are those most capable of operating via VPNs and other technology that fudges geographical origins.
Telegram, in its response to the court’s preliminary injunction barring distribution of Grams, argued that only $424.5 million of the $1.7 billion they had raised was from U.S. investors. They wanted to distribute the remaining Grams, even offering the safeguard of “configuring the TON digital wallet to preclude U.S.-based addresses.”
The court may have reasoned that this was too little, too late. They may also have been sceptical of Telegram’s claims, given that they never believed TON to be complete anyway.
Arguably the most famous example of regulators shutting down a nascent cryptocurrency was Libra, which Congress attacked directly, without the SEC needing to file anything. Much to the annoyance of the House of Representatives Financial Services Committee, Libra set up shop in Switzerland rather than the U.S. And despite the elaborate schema of the Libra Association — which sought to distribute responsibility for the authority through an international union of companies and away from U.S.-registered company Facebook — Congress seemed pretty well-equipped to put the clamp on the project by treating it as a Facebook project and bringing CEO Mark Zuckerberg in to testify. Despite recent updates to the white paper, many still want to label Libra a security.
Why not just register as security tokens?
Not surprisingly, Security Token Offerings, or STOs, have taken on a more visible role. Functioning as professed securities, they use technologies learned from crypto including blockchain to provide quicker, reliable global trading of assets that fall cleanly within the SEC’s basket of what constitutes a security.
Blockstack, for example, sold $23 million worth of its STX tokens after filing a Reg. A+ exemption, a process that reportedly cost the firm millions. No SAFT. STX are functional tokens and remain securities.
To all appearances, Blockstack’s approach seems to be working, in the sense that the SEC has not taken any action against the firm. However, registration as a security limits a token’s trading options.
Muneeb Ali, CEO of Blockstack, weighed in on the challenge STX faces.:
“Internationally in several jurisdictions, it is clearly treated as a utility token — it already trades on Binance, for example. And we got legal opinions from those jurisdictions because the regulations are different and currently there's no U.S. exchange for us. But the fact that U.S. exchanges — either a regulated exchange needs to exist, no license has been given out from the SEC yet for such regulated ATSs [Alternative Trading Systems] or an exchange — or you achieve sufficient decentralization to the point that even in the U.S., it is clearly a utility and not a security.”
Blockstack’s clear aim is to continue decentralizing its token so that it metamorphizes out of the cocoon of security status. Unfortunately, there’s no clear template for doing so within the SEC’s current framework. This presents curious hypotheticals.
"Imagine if the company, say Blockstack, decided to dissolve, but the network continued to run, because it's open-source," Coin Center’s Peter Van Valkenburgh theorized on the current state of security tokens. "At that point it's sort of ridiculous. Who is there to file disclosures?"
Many at the SEC are interested in such transitions. In 2018, William Hinman of the SEC’s FinHub commented:
“If the network on which the token or coin is to function is sufficiently decentralized — where purchasers would no longer reasonably expect a person or group to carry out essential managerial or entrepreneurial efforts — the assets may not represent an investment contract.”
Earlier this year, after the Telegram case had begun, SEC Commissioner Hester Peirce began championing a safe harbor for projects looking to decentralize, but the COVID-19 pandemic seems to have completely wiped that proposal off the commission’s radar for now.
Given, however, that the conversation surrounding COVID-19 response has shifted from emergency action to longer-term financial action, we may be about to witness new motions to encourage companies to build and seek capital. For example, the SEC recently loosened its crowdfunding requirements.
"After the last financial crisis, there was the JOBS Act," said Kristin Smith, regarding Peirce’s safe harbor. "A couple of months from now, I think that's going to be a very live and active conversation."
The Death of the ICO?
Projects will continue to form, and if they don’t ask for money they don’t have to worry about this question. As Coin Center’s Peter Van Valkenburgh told Cointelegraph recently:
“Since the beginning of our advocacy in this space, we usually have at least one sentence saying, ‘if you really want to build good decentralized networks, Satoshi was able to build one without a pre-sale.’"
Projects looking for funding, however, are looking at a rough path ahead. Institutional financial players have been examining blockchain technology more intently for private usages, but we’re looking at a new era.
We’ll have to watch out for whether Blockstack can turn its STX into non-securities, or Filecoin can launch its network without an SEC run-in, or even what happens to Telegram and Libra. Without a major change in laws, it’s hard to envision a new major project coming about and transfiguring an ICO into an accepted public currency like Bitcoin, given regulatory hawkishness.
Though this isn’t the end of new crypto projects, the window of time when you could ask for funds to start a new coin and watch it leave your stable seems to be closed. But that’s not to say it won’t open again.
Bernard Stiegler was, until his premature death, probably the most important philosopher of technology of the present. His work on technology has shown us that, far from being exclusively a danger to human existence, it is a pharmakon – a poison as well as a cure – and that, as long as we approach technology as a means to ‘critical intensification,’ it could assist us in promoting the causes of enlightenment and freedom.
It is no exaggeration to say that making believable information and credible analysis available to citizens at present is probably indispensable for resisting the behemoth of lies and betrayal confronting us. This has never been more necessary than it is today, given that we face what is probably the greatest crisis in the history of humanity, with nothing less than our freedom, let alone our lives, at stake.
To be able to secure this freedom against the inhuman forces threatening to shackle it today, one could do no better than to take heed of what Stiegler argues in States of Shock: Stupidity and Knowledge in the 21st Century (2015). Considering what he writes here it is hard to believe that it was not written today (p. 15):
The impression that humanity has fallen under the domination of unreason or madness [déraison] overwhelms our spirit, confronted as we are with systemic collapses, major technological accidents, medical or pharmaceutical scandals, shocking revelations, the unleashing of the drives, and acts of madness of every kind and in every social milieu – not to mention the extreme misery and poverty that now afflict citizens and neighbours both near and far.
While these words are certainly as applicable to our current situation as it was almost 10 years ago, Stiegler was in fact engaged in an interpretive analysis of the role of banks and other institutions – aided and abetted by certain academics – in the establishment of what he terms a ‘literally suicidal financial system’ (p. 1). (Anyone who doubts this can merely view the award-winning documentary film of 2010, Inside Job, by Charles Ferguson, which Stiegler also mentions on p.1.) He explains further as follows (p. 2):
Western universities are in the grip of a deep malaise, and a number of them have found themselves, through some of their faculty, giving consent to – and sometimes considerably compromised by – the implementation of a financial system that, with the establishment of hyper-consumerist, drive-based and ‘addictogenic’ society, leads to economic and political ruin on a global scale. If this has occurred, it is because their goals, their organizations and their means have been put entirely at the service of the destruction of sovereignty. That is, they have been placed in the service of the destruction of sovereignty as conceived by the philosophers of what we call the Enlightenment…
In short, Stiegler was writing about the way in which the world was being prepared, across the board – including the highest levels of education – for what has become far more conspicuous since the advent of the so-called ‘pandemic’ in 2020, namely an all-out attempt to cause the collapse of civilisation as we knew it, at all levels, with the thinly disguised goal in mind of installing a neo-fascist, technocratic, global regime which would exercise power through AI-controlled regimes of obedience. The latter would centre on ubiquitous facial recognition technology, digital identification, and CBDCs (which would replace money in the usual sense).
Given the fact that all of this is happening around us, albeit in a disguised fashion, it is astonishing that relatively few people are conscious of the unfolding catastrophe, let alone being critically engaged in disclosing it to others who still inhabit the land where ignorance is bliss. Not that this is easy. Some of my relatives are still resistant to the idea that the ‘democratic carpet’ is about to be pulled from under their feet. Is this merely a matter of ‘stupidity?’ Stiegler writes about stupidity (p.33):
…knowledge cannot be separated from stupidity. But in my view: (1) this is a pharmacological situation; (2) stupidity is the law of the pharmakon; and (3) the pharmakon is the law of knowledge, and hence a pharmacology for our age must think the pharmakon that I am also calling, today, the shadow.
In my previous post I wrote about the media as pharmaka (plural of pharmakon), showing how, on the one hand, there are (mainstream) media which function as ‘poison,’ while on the other there are (alternative) media that play the role of ‘cure.’ Here, by linking the pharmakon with stupidity, Stiegler alerts one to the (metaphorically speaking) ‘pharmacological’ situation, that knowledge is inseparable from stupidity: where there is knowledge, the possibility of stupidity always asserts itself, and vice versa. Or in terms of what he calls ‘the shadow,’ knowledge always casts a shadow, that of stupidity.
Anyone who doubts this may only cast their glance at those ‘stupid’ people who still believe that the Covid ‘vaccines’ are ‘safe and effective,’ or that wearing a mask would protect them against infection by ‘the virus.’ Or, more currently, think of those – the vast majority in America – who routinely fall for the Biden administration’s (lack of an) explanation of its reasons for allowing thousands of people to cross the southern – and more recently also the northern – border. Several alternative sources of news and analysis have lifted the veil on this, revealing that the influx is not only a way of destabilising the fabric of society, but possibly a preparation for civil war in the United States.
There is a different way of explaining this widespread ‘stupidity,’ of course – one that I have used before to explain why most philosophers have failed humanity miserably, by failing to notice the unfolding attempt at a global coup d’etat, or at least, assuming that they did notice it, to speak up against it. These ‘philosophers’ include all the other members of the philosophy department where I work, with the honourable exception of the departmental assistant, who is, to her credit, wide awake to what has been occurring in the world. They also include someone who used to be among my philosophical heroes, to wit, Slavoj Žižek, who fell for the hoax hook, line, and sinker.
In brief, this explanation of philosophers’ stupidity – and by extension that of other people – is twofold. First there is ‘repression’ in the psychoanalytic sense of the term (explained at length in both the papers linked in the previous paragraph), and secondly there is something I did not elaborate on in those papers, namely what is known as ‘cognitive dissonance.’ The latter phenomenon manifests itself in the unease that people exhibit when they are confronted by information and arguments that are not commensurate, or conflict, with what they believe, or which explicitly challenge those beliefs. The usual response is to find standard, or mainstream-approved responses to this disruptive information, brush it under the carpet, and life goes on as usual.
‘Cognitive dissonance’ is actually related to something more fundamental, which is not mentioned in the usual psychological accounts of this unsettling experience. Not many psychologists deign to adduce repression in their explanation of disruptive psychological conditions or problems encountered by their clients these days, and yet it is as relevant as when Freud first employed the concept to account for phenomena such as hysteria or neurosis, recognising, however, that it plays a role in normal psychology too. What is repression?
Strictly speaking, an operation whereby the subject attempts to repel, or to confine to the unconscious, representations (thoughts, images, memories) which are bound to an instinct. Repression occurs when to satisfy an instinct – though likely to be pleasurable in itself – would incur the risk of provoking unpleasure because of other requirements.
…It may be looked upon as a universal mental process to so far as it lies at the root of the constitution of the unconscious as a domain separate from the rest of the psyche.
In the case of the majority of philosophers, referred to earlier, who have studiously avoided engaging critically with others on the subject of the (non-)‘pandemic’ and related matters, it is more than likely that repression occurred to satisfy the instinct of self-preservation, regarded by Freud as being equally fundamental as the sexual instinct. Here, the representations (linked to self-preservation) that are confined to the unconscious through repression are those of death and suffering associated with the coronavirus that supposedly causes Covid-19, which are repressed because of being intolerable. The repression of (the satisfaction of) an instinct, mentioned in the second sentence of the first quoted paragraph, above, obviously applies to the sexual instinct, which is subject to certain societal prohibitions. Cognitive dissonance is therefore symptomatic of repression, which is primary.
Returning to Stiegler’s thesis concerning stupidity, it is noteworthy that the manifestations of such inanity are not merely noticeable among the upper echelons of society; worse – there seems to be, by and large, a correlation between those in the upper classes, with college degrees, and stupidity.
In other words, it is not related to intelligence per se. This is apparent, not only in light of the initially surprising phenomenon pertaining to philosophers’ failure to speak up in the face of the evidence, that humanity is under attack, discussed above in terms of repression.
Dr Reiner Fuellmich, one of the first individuals to realise that this was the case, and subsequently brought together a large group of international lawyers and scientists to testify in the ‘court of public opinion’ (see 29 min. 30 sec. into the video) on various aspects of the currently perpetrated ‘crime against humanity,’ has drawn attention to the difference between the taxi drivers he talks to about the globalists’ brazen attempt to enslave humanity, and his learned legal colleagues as far as awareness of this ongoing attempt is concerned. In contrast with the former, who are wide awake in this respect, the latter – ostensibly more intellectually qualified and ‘informed’ – individuals are blissfully unaware that their freedom is slipping away by the day, probably because of cognitive dissonance, and behind that, repression of this scarcely digestible truth.
This is stupidity, or the ‘shadow’ of knowledge, which is recognisable in the sustained effort by those afflicted with it, when confronted with the shocking truth of what is occurring worldwide, to ‘rationalise’ their denial by repeating spurious assurances issued by agencies such as the CDC, that the Covid ‘vaccines’ are ‘safe and effective,’ and that this is backed up by ‘the science.’
Here a lesson from discourse theory is called for. Whether one refers to natural science or to social science in the context of some particular scientific claim – for example, Einstein’s familiar theory of special relativity (e=mc2) under the umbrella of the former, or David Riesman’s sociological theory of ‘inner-’ as opposed to ‘other-directedness’ in social science – one never talks about ‘the science,’ and for good reason. Science is science. The moment one appeals to ‘the science,’ a discourse theorist would smell the proverbial rat.
Why? Because the definite article, ‘the,’ singles out a specific, probably dubious, version of science compared to science as such, which does not need being elevated to special status. In fact, when this is done through the use of ‘the,’ you can bet your bottom dollar it is no longer science in the humble, hard-working, ‘belonging-to-every-person’ sense. If one’s sceptical antennae do not immediately start buzzing when one of the commissars of the CDC starts pontificating about ‘the science,’ one is probably similarly smitten by the stupidity that’s in the air.
Earlier I mentioned the sociologist David Riesman and his distinction between ‘inner-directed’ and ‘other-directed’ people. It takes no genius to realise that, to navigate one’s course through life relatively unscathed by peddlers of corruption, it is preferable to take one’s bearings from ‘inner direction’ by a set of values which promotes honesty and eschews mendacity, than from the ‘direction by others.’ Under present circumstances such other-directedness applies to the maze of lies and misinformation emanating from various government agencies as well as from certain peer groups, which today mostly comprise the vociferously self-righteous purveyors of the mainstream version of events. Inner-directness in the above sense, when constantly renewed, could be an effective guardian against stupidity.
Recall that Stiegler warned against the ‘deep malaise’ at contemporary universities in the context of what he called an ‘addictogenic’ society – that is, a society that engenders addictions of various kinds. Judging by the popularity of the video platform TikTok at schools and colleges, its use had already reached addiction levels by 2019, which raises the question, whether it should be appropriated by teachers as a ‘teaching tool,’ or whether it should, as some people think, be outlawed completely in the classroom.
Recall that, as an instance of video technology, TikTok is an exemplary embodiment of the pharmakon, and that, as Stiegler has emphasised, stupidity is the law of the pharmakon, which is, in turn, the law of knowledge. This is a somewhat confusing way of saying that knowledge and stupidity cannot be separated; where knowledge is encountered, its other, stupidity, lurks in the shadows.
Reflecting on the last sentence, above, it is not difficult to realise that, parallel to Freud’s insight concerning Eros and Thanatos, it is humanly impossible for knowledge to overcome stupidity once and for all. At certain times the one will appear to be dominant, while on different occasions the reverse will apply. Judging by the fight between knowledge and stupidity today, the latter ostensibly still has the upper hand, but as more people are awakening to the titanic struggle between the two, knowledge is in the ascendant. It is up to us to tip the scales in its favour – as long as we realise that it is a never-ending battle.
"I Can't Even Save": Americans Are Getting Absolutely Crushed Under Enormous Debt Load
While Joe Biden insists that Americans are doing great - suggesting in his State of the Union Address last week that "our economy is the envy of the world," Americans are being absolutely crushed by inflation (which the Biden admin blames on 'shrinkflation' and 'corporate greed'), andof course - crippling debt.
The signs are obvious. Last week we noted that banks' charge-offs are accelerating, and are now above pre-pandemic levels.
...and leading this increase are credit card loans - with delinquencies that haven't been this high since Q3 2011.
On top of that, while credit cards and nonfarm, nonresidential commercial real estate loans drove the quarterly increase in the noncurrent rate, residential mortgages drove the quarterly increase in the share of loans 30-89 days past due.
And while Biden and crew can spin all they want, an average of polls from RealClear Politics shows that just 40% of people approve of Biden's handling of the economy.
Crushed
On Friday, Bloomberg dug deeper into the effects of Biden's "envious" economy on Americans - specifically, how massive debt loads (credit cards and auto loans especially) are absolutely crushing people.
Two years after the Federal Reserve began hiking interest rates to tame prices, delinquency rates on credit cards and auto loans are the highest in more than a decade. For the first time on record, interest payments on those and other non-mortgage debts are as big a financial burden for US households as mortgage interest payments.
According to the report, this presents a difficult reality for millions of consumers who drive the US economy - "The era of high borrowing costs — however necessary to slow price increases — has a sting of its own that many families may feel for years to come, especially the ones that haven’t locked in cheap home loans."
The Fed, meanwhile, doesn't appear poised to cut rates until later this year.
According to a February paper from IMF and Harvard, the recent high cost of borrowing - something which isn't reflected in inflation figures, is at the heart of lackluster consumer sentiment despite inflation having moderated and a job market which has recovered (thanks to job gains almost entirely enjoyed by immigrants).
In short, the debt burden has made life under President Biden a constant struggle throughout America.
"I’m making the most money I've ever made, and I’m still living paycheck to paycheck," 40-year-old Denver resident Nikki Cimino told Bloomberg. Cimino is carrying a monthly mortgage of $1,650, and has $4,000 in credit card debt following a 2020 divorce.
"There's this wild disconnect between what people are experiencing and what economists are experiencing."
CBS: Do you attribute the inflation crisis to the pandemic or Biden?
WISCONSIN VOTER: "It's been YEARS now since the pandemic — I'm not buying that anymore. At first I did; I'm not buying that anymore because yogurt is STILL going up in price!" pic.twitter.com/apahb65scB
What's more, according to Wells Fargo, families have taken on debt at a comparatively fast rate - no doubt to sustain the same lifestyle as low rates and pandemic-era stimmies provided. In fact, it only took four years for households to set a record new debt level after paying down borrowings in 2021 when interest rates were near zero.
Meanwhile, that increased debt load is exacerbated by credit card interest rates that have climbed to a record 22%, according to the Fed.
[P]art of the reason some Americans were able to take on a substantial load of non-mortgage debt is because they’d locked in home loans at ultra-low rates, leaving room on their balance sheets for other types of borrowing. The effective rate of interest on US mortgage debt was just 3.8% at the end of last year.
Yet the loans and interest payments can be a significant strain that shapes families’ spending choices. -Bloomberg
And of course, the highest-interest debt (credit cards) is hurting lower-income households the most, as tends to be the case.
The lowest earners also understandably had the biggest increase in credit card delinquencies.
"Many consumers are levered to the hilt — maxed out on debt and barely keeping their heads above water," Allan Schweitzer, a portfolio manager at credit-focused investment firm Beach Point Capital Management told Bloomberg. "They can dog paddle, if you will, but any uptick in unemployment or worsening of the economy could drive a pretty significant spike in defaults."
"We had more money when Trump was president," said Denise Nierzwicki, 69. She and her 72-year-old husband Paul have around $20,000 in debt spread across multiple cards - all of which have interest rates above 20%.
During the pandemic, Denise lost her job and a business deal for a bar they owned in their hometown of Lexington, Kentucky. While they applied for Social Security to ease the pain, Denise is now working 50 hours a week at a restaurant. Despite this, they're barely scraping enough money together to service their debt.
The couple blames Biden for what they see as a gloomy economy and plans to vote for the Republican candidate in November. Denise routinely voted for Democrats up until about 2010, when she grew dissatisfied with Barack Obama’s economic stances, she said. Now, she supports Donald Trump because he lowered taxes and because of his policies on immigration. -Bloomberg
Meanwhile there's student loans - which are not able to be discharged in bankruptcy.
"I can't even save, I don't have a savings account," said 29-year-old in Columbus, Ohio resident Brittany Walling - who has around $80,000 in federal student loans, $20,000 in private debt from her undergraduate and graduate degrees, and $6,000 in credit card debt she accumulated over a six-month stretch in 2022 while she was unemployed.
"I just know that a lot of people are struggling, and things need to change," she told the outlet.
The only silver lining of note, according to Bloomberg, is that broad wage gains resulting in large paychecks has made it easier for people to throw money at credit card bills.
Yet, according to Wells Fargo economist Shannon Grein, "As rates rose in 2023, we avoided a slowdown due to spending that was very much tied to easy access to credit ... Now, credit has become harder to come by and more expensive."
According to Grein, the change has posed "a significant headwind to consumption."
Then there's the election
"Maybe the Fed is done hiking, but as long as rates stay on hold, you still have a passive tightening effect flowing down to the consumer and being exerted on the economy," she continued. "Those household dynamics are going to be a factor in the election this year."
Meanwhile, swing-state voters in a February Bloomberg/Morning Consult poll said they trust Trump more than Biden on interest rates and personal debt.
Reverberations
These 'headwinds' have M3 Partners' Moshin Meghji concerned.
"Any tightening there immediately hits the top line of companies," he said, noting that for heavily indebted companies that took on debt during years of easy borrowing, "there's no easy fix."
Sylvester researchers, collaborators call for greater investment in bereavement care
MIAMI, FLORIDA (March 15, 2024) – The public health toll from bereavement is well-documented in the medical literature, with bereaved persons at greater…
MIAMI, FLORIDA (March 15, 2024) – The public health toll from bereavement is well-documented in the medical literature, with bereaved persons at greater risk for many adverse outcomes, including mental health challenges, decreased quality of life, health care neglect, cancer, heart disease, suicide, and death. Now, in a paper published in The Lancet Public Health, researchers sound a clarion call for greater investment, at both the community and institutional level, in establishing support for grief-related suffering.
Credit: Photo courtesy of Memorial Sloan Kettering Comprehensive Cancer Center
MIAMI, FLORIDA (March 15, 2024) – The public health toll from bereavement is well-documented in the medical literature, with bereaved persons at greater risk for many adverse outcomes, including mental health challenges, decreased quality of life, health care neglect, cancer, heart disease, suicide, and death. Now, in a paper published in The Lancet Public Health, researchers sound a clarion call for greater investment, at both the community and institutional level, in establishing support for grief-related suffering.
The authors emphasized that increased mortality worldwide caused by the COVID-19 pandemic, suicide, drug overdose, homicide, armed conflict, and terrorism have accelerated the urgency for national- and global-level frameworks to strengthen the provision of sustainable and accessible bereavement care. Unfortunately, current national and global investment in bereavement support services is woefully inadequate to address this growing public health crisis, said researchers with Sylvester Comprehensive Cancer Center at the University of Miami Miller School of Medicine and collaborating organizations.
They proposed a model for transitional care that involves firmly establishing bereavement support services within healthcare organizations to ensure continuity of family-centered care while bolstering community-based support through development of “compassionate communities” and a grief-informed workforce. The model highlights the responsibility of the health system to build bridges to the community that can help grievers feel held as they transition.
The Center for the Advancement of Bereavement Care at Sylvester is advocating for precisely this model of transitional care. Wendy G. Lichtenthal, PhD, FT, FAPOS, who is Founding Director of the new Center and associate professor of public health sciences at the Miller School, noted, “We need a paradigm shift in how healthcare professionals, institutions, and systems view bereavement care. Sylvester is leading the way by investing in the establishment of this Center, which is the first to focus on bringing the transitional bereavement care model to life.”
What further distinguishes the Center is its roots in bereavement science, advancing care approaches that are both grounded in research and community-engaged.
The authors focused on palliative care, which strives to provide a holistic approach to minimize suffering for seriously ill patients and their families, as one area where improvements are critically needed. They referenced groundbreaking reports of the Lancet Commissions on the value of global access to palliative care and pain relief that highlighted the “undeniable need for improved bereavement care delivery infrastructure.” One of those reports acknowledged that bereavement has been overlooked and called for reprioritizing social determinants of death, dying, and grief.
“Palliative care should culminate with bereavement care, both in theory and in practice,” explained Lichtenthal, who is the article’s corresponding author. “Yet, bereavement care often is under-resourced and beset with access inequities.”
Transitional bereavement care model
So, how do health systems and communities prioritize bereavement services to ensure that no bereaved individual goes without needed support? The transitional bereavement care model offers a roadmap.
“We must reposition bereavement care from an afterthought to a public health priority. Transitional bereavement care is necessary to bridge the gap in offerings between healthcare organizations and community-based bereavement services,” Lichtenthal said. “Our model calls for health systems to shore up the quality and availability of their offerings, but also recognizes that resources for bereavement care within a given healthcare institution are finite, emphasizing the need to help build communities’ capacity to support grievers.”
Key to the model, she added, is the bolstering of community-based support through development of “compassionate communities” and “upskilling” of professional services to assist those with more substantial bereavement-support needs.
The model contains these pillars:
Preventive bereavement care –healthcare teams engage in bereavement-conscious practices, and compassionate communities are mindful of the emotional and practical needs of dying patients’ families.
Ownership of bereavement care – institutions provide bereavement education for staff, risk screenings for families, outreach and counseling or grief support. Communities establish bereavement centers and “champions” to provide bereavement care at workplaces, schools, places of worship or care facilities.
Resource allocation for bereavement care – dedicated personnel offer universal outreach, and bereaved stakeholders provide input to identify community barriers and needed resources.
Upskilling of support providers – Bereavement education is integrated into training programs for health professionals, and institutions offer dedicated grief specialists. Communities have trained, accessible bereavement specialists who provide support and are educated in how to best support bereaved individuals, increasing their grief literacy.
Evidence-based care – bereavement care is evidence-based and features effective grief assessments, interventions, and training programs. Compassionate communities remain mindful of bereavement care needs.
Lichtenthal said the new Center will strive to materialize these pillars and aims to serve as a global model for other health organizations. She hopes the paper’s recommendations “will cultivate a bereavement-conscious and grief-informed workforce as well as grief-literate, compassionate communities and health systems that prioritize bereavement as a vital part of ethical healthcare.”
“This paper is calling for healthcare institutions to respond to their duty to care for the family beyond patients’ deaths. By investing in the creation of the Center for the Advancement of Bereavement Care, Sylvester is answering this call,” Lichtenthal said.
Follow @SylvesterCancer on X for the latest news on Sylvester’s research and care.
# # #
Article Title: Investing in bereavement care as a public health priority
DOI: 10.1016/S2468-2667(24)00030-6
Authors: The complete list of authors is included in the paper.
Funding: The authors received funding from the National Cancer Institute (P30 CA240139 Nimer) and P30 CA008748 Vickers).
Disclosures: The authors declared no competing interests.
# # #
Journal
The Lancet Public Health
DOI
10.1016/S2468-2667(24)00030-6
Article Title
Investing in bereavement care as a public health priority
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