Carl McGhie

We humans like to organize our perceptions into categories. It makes it easier for us to communicate and to keep track of things. But sometimes the impulse to organize our thoughts into buckets is a problem. I’ll give you the best example of that today.

Most of us believe that our brains are special because they are the center of our consciousness. Some people also believe brains are where your free will and your soul lives. We also believe brains are somewhat of a closed system when it comes to our thoughts. It feels as if your brain produces some random thoughts, wrestles with those thoughts, and turns them into bodily actions. That makes the brain a special little organ that is doing its own thing in isolation and letting the rest of the body know about it later. In other words, we put our brains in the “brain” bucket. All by itself. Doing its thing.

That’s a huge mistake.

Today I’ll tell you how the brains-is-special framework for looking at life is one of our biggest sources of unhappiness. In my worldview, also known as the Moist Robot Hypothesis (from my book on that topic), humans are wet robots that respond to programming. If you aren’t intentionally programming yourself, the environment and other people are doing it for you. Luckily you have a user interface to your brain. And that interface is your body. Your body is collecting inputs from all over and feeding them to your brain to reprogram it.

What kind of results would you get from your laptop computer if the user interface responded only to random inputs from the environment, such as wind, temperature, and other unplanned events? Your computer would be useless. The inputs would be virtually random and the outputs would be garbage. That’s why we consider the user interface to be part of the computer.

Your brain is a computer too. But we mistakenly believe it is also its own user interface. In other words, we see the brain as some sort of closed system that is stimulating its own thoughts, wrestling with those thoughts, and producing an output that it sends to your body. This way of viewing yourself works fine in the sense that humans have done a good job of staying alive and reproducing. And that’s all evolution asks of us. If we reproduce, we have done all we needed. Evolution doesn’t feel the need to improve our awareness of reality beyond that point. 

But allow me to suggest another framework for viewing your brain. My claim is that this new framework will give you the means to program your brain with intention instead of letting the environment do it randomly. All you need to do is reframe your body to be part of your brain. Let me give you some examples to see how powerful this reframing is.

In your old worldview, where the brain is its own user interface, you often found yourself feeling sad, grumpy, tired, angry, and other negative emotions. And you probably felt a bit helpless to stop it. Your brain was determining your mood – seemingly on its own – and the rest of your body simply responded to it like a puppet on a string. That’s the most common worldview, and I watch how debilitating it is to people. They go through life in continuous mental anguish, feeling helpless to do anything about it.

Contrast that worldview with what I call the Moist Robot Hypothesis that says your body is the user interface of your brain system. Give your body the right inputs and you can reprogram your brain.

For example, you know from experience that being hungry can make you cranky. But unless you are conscious of that body-mind connection – and often we are not – it is easy to assume the brain is operating on its own to make you cranky. 

The Moist Robot Hypothesis says that all you needed was some food to reprogram your brain to more positive thoughts. In this case your digestive system was the user interface to your brain.

I am sure you have noticed that your mental state is deeply influenced by diet, exercise, sleep, sex, stress, and lots more. And I’m sure you make some effort to do those things the right way when you can. But if you think those actions are influencing only how you feel, and not your actual thoughts, you don’t understand the basic nature of human beings. And this is the key takeaway:

The source of your thoughts is your body, not your brain.

When I am not feeling good, I don’t ask my brain to fix things on its own. I manipulate my environment until my thoughts change. That’s because I see my body as the user interface to my brain. I don’t let my brain think whatever it randomly wants to think. I constrain it to productive thoughts by manipulating my environment.

For example, any time I feel tense, I go exercise as soon as I can. It’s good for my health in general, but I do it specifically to program my thoughts from negative to positive. I do the same with sleep, diet, sex, stress, and even my choices of entertainment. I don’t let negative inputs into my brain via my body (the user interface) and my brain responds by not producing negative thoughts.

I take this concept so far that I will leave a room when the topic goes negative and I don’t want my user interface to send those impulses to my brain. I never apologize for doing this. I just say I don’t want this conversation in my brain and leave.

The old me believed that my brain was special, and that it was going to think whatever it was going to think. Unfortunately, what it usually thought all through my twenties and thirties was severely traumatic memories that put me in a state of continuous suicidal urges. Today my thoughts are almost entirely positive and optimistic. The difference is that I learned to crowd out the negative thoughts by manipulating my environment. I tune my body with a healthy lifestyle so it feels good, and that encourages positive thoughts. And I flood my mind with fascinating mental puzzles and challenges – usually work-related – so there is no space for negative thoughts. The brain likes to focus on one thing at a time. So I make sure it is focusing where I want it. I never let my mind wander to bad territory. When I feel it happening I either change what I am doing or I flood my brain with stronger thoughts that have more emotional firepower.

My old traumatic memories are still in my brain, but I atrophied them to the point of being inert. They hold no power over me now.

I realize that the concept I’m explaining is both obvious and radical at the same time. On one hand, you know from experience that your thoughts are directly influenced by what your body is experiencing. But because you also believe your brain is the special vessel of your free will, consciousness, and soul, you might believe the brain can also make its own independent decisions. It can’t. It is a computer that responds to inputs. Give it the right inputs and you’ll get the right outputs. And your body is the user interface.

To convince yourself that my framework is valid, take an inventory of the people in your life who are unhappy. Ask some questions about what they are doing about their unhappiness. Rarely will the person say they are working on their body to fix their minds. 

Now take an inventory of your more well-adjusted friends. Watch the degree to which they manipulate their bodies to manage their minds. Once you see the pattern, you will start to see it everywhere.

I just changed your life. You won’t know how much until later.

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California passed a new law that says you can’t use your mobile phone in your hand while driving. It was already illegal to text, but now it is also illegal to use other apps with your phone in hand. I recommend getting a dashboard mount, as shown, and using my startup’s free app, WhenHub, to reduce the need to text on the way to meeting people.

In the picture below you can see me about to leave the garage. Several friends already “joined the approach” as we say, so we can watch each other approach our meeting spot on a common map. All approaches time-out after the trip so you aren’t accidentally tracking anyone. No need to text on the way to the meeting because you already know where everyone is at.

By the way, I told you in other blogs that one of my motivation tricks involves working on projects that have huge potential. This one will literally save lives by reducing texting-and-driving. That’s the sort of thing that makes it a joy for me to wake up every day. Look for something like that in your life. It will have a huge impact on your thoughts and energy.

Suppose you run a manufacturing business—let's say, for example, widgets. Your customers are loyal and steady, but you are never completely certain when they are going to show up asking you to satisfy their widget desires.

Given this uncertainty, you consider two different strategies to meet the needs of your customers. One option is to produce a large quantity of widgets at once, store the product in your warehouse, and when a customer calls, pull the widgets out of inventory as required.

A second option is to simply wait until buyers arrive at your door and produce widgets on demand, which you can do instantaneously and in as large a quantity as you like.

Thinking only about whether you can meet customer demand when it presents itself, these two options are basically identical. In the first case you have a large inventory to support your sales. In the second case you have a large—in fact, infinitely large—"shadow" inventory that you can bring into existence in lockstep with demand.

I invite you to think about this example as you contemplate this familiar graph of the Federal Reserve's balance sheet:

I gather that a good measure of concern about the size of the Fed's (still growing) balance sheet comes from the notion that there is more inherent inflation risk with bank reserves that exceed $1.5 trillion than there would be with reserves somewhere in the neighborhood of $10 billion (which would be the ballpark value for the pre-crisis level of reserves).

I understand this concern, but I don't believe that it is entirely warranted. My argument is as follows: The policy strategy for tightening policy (or exiting stimulus) when the banking system is flush with reserves is equivalent to the strategy when the banking system has low (or even zero) reserves in the same way that the two strategies for meeting customer demand that I offered at the outset of this post are equivalent.

Here's why. Suppose, just for example, that bank reserves are literally zero and the Federal Open Market Committee (FOMC) has set a federal funds rate target of, say, 3 percent. Despite the fact that bank reserves are zero there is a real sense in which the potential size of the balance sheet—the shadow balance sheet, if you will—is very large.

The reason is that when the FOMC sets a target for the federal funds rate, it is sending very specific instructions to the folks from the Open Market Desk at the New York Fed, who run monetary policy operations on behalf of the FOMC. Those instructions are really pretty simple: If you have to inject more bank reserves (and hence expand the size of the Fed's balance sheet) to maintain the FOMC's funds rate target, do it.

To make sense of that statement, it is helpful to remember that the federal funds rate is an overnight interest rate that is determined by the supply and demand for bank reserves. Simplifying just a bit, the demand for reserves comes from the banking system, and the supply comes from the Fed. As in any supply and demand story, if demand goes up, so does the "price"—in this case, the federal funds rate.

In our hypothetical example, the Open Market Desk has been instructed not to let the federal funds rate deviate from 3 percent—at least not for very long. With such instructions, there is really only one thing to do in the case that demand from the banking system increases—create more reserves.

To put it in the terms of the business example I started out with, in setting a funds rate target the FOMC is giving the Open Market Desk the following marching orders: If customers show up, step up the production and meet the demand. The Fed's balance sheet in this case will automatically expand to meet bank reserve demand, just as the businessperson's inventory would expand to support the demand for widgets. As with the businessperson in my example, there is little difference between holding a large tangible inventory and standing ready to supply on demand from a shadow inventory.

Though the analogy is not completely perfect—in the case of the Fed's balance sheet, for example it is the banks and not the business (i.e., the Fed) that hold the inventory—I think the story provides an intuitive way to process the following comments (courtesy of Bloomberg) from Fed Chairman Ben Bernanke, from last week's congressional testimony:

"Raising interest rate on reserves" when the balance sheet is large is the functional equivalent to raising the federal funds rate when the actual balance sheet is not so large, but the potential or shadow balance sheet is. In both cases, the strategy is to induce banks to resist deploying available reserves to expand deposit liabilities and credit. The only difference is that, in the former case, the available reserves are explicit, and in the latter case they are implicit.

The Monetary Policy Report that accompanied the Chairman's testimony contained a fairly thorough summary of costs that might be associated with continued monetary stimulus. Some of these in fact pertain to the size of the Fed's balance sheet. But, as the Chairman notes in the video clip above, when it comes to the mechanics of exiting from policy stimulus, the real challenge is the familiar one of knowing when it is time to alter course.

By Dave Altig, executive vice president and research director of the Atlanta Fed