You're listening to Teip on today's show, we have neuroscientist John Gauld. John has over 15 years of experience practicing on the brain in various specializations like epilepsy and numerous others. During the show, we cover some really fascinating topics, like how you process information subconsciously and how to take advantage of it, how reflexive functions between your conscious and your subconscious, portions of your brain work, how certain tricks of the brain can cause investing mistakes and much, much more so without further delay.

Here's our interview with John.

You are listening to the investor's podcast where we study the financial markets and read the books that influenced self-made billionaires the most. We keep you informed and prepared for the unexpected. Hey, everyone, welcome to the Investors podcast, I'm your host president, pish, and as always, I'm accompanied by my co-host, Stig Brotherson. And like we said in the introduction there, we got John Galt with us. John, welcome to the Investors podcast.

Hey, it's great to be here, thanks so much for having me. I'm super excited to have this candid conversation about a topic that I'm really passionate about. In fact, my wife was in my office the other day and she came out and asked me when we were on a walk. She goes, why do you have so many books about the brain on your desk right now? And I said, well, I'm getting ready to talk to a guest that really knows this stuff inside out and I've got to be up on my game.

So she was laughing. So really excited to have this chat with you, John.

Me as well. So I want to start off the conversation by reading a passage out of a book that was very influential to me that I just thoroughly enjoyed. The name of the book is Consciousness in the Brain. And here's the particular section that I want to read to the audience and then kind of get your thoughts on it. So here's how it goes. Learning who we are is a statistical deduction from observation. Having spent a lifetime with ourselves, we reach a view of our own character, knowledge and confidence that is only a bit more refined than our own view of other people's personalities.

We remain largely ignorant of the actual unconscious determinants of our behavior, and therefore we cannot accurately predict what our behavior will be in circumstances beyond the safety zone of our past experiences. Our self is just a database that gets filled in through our social experiences in the same format with which we attempt to understand our minds, and therefore it is just as likely to include glaring gaps, misunderstandings and delusions. For me, this was just such a fascinating paragraph in this book because it's really getting down to conditioning in the environment that you're in.

Talk to us about some of the stuff that's going on in this. So you're right, there's a lot to unpack there, and what I would say is that stand to gain, he's an incredibly intelligent individual. I mean, this gets down to deep philosophical stuff. I think when I initially heard you read that, I thought we're bombarded by stimuli every day. We don't know how these stimuli always affect us. Do they form strong or weak connections?

Are they going to continue to be strengthened? Do they reach our consciousness or just our subconsciousness and things like what areas of the brain are involved in processing the stimuli? When I hear that particular passage and I think of all claims like this, I think it can get really technical. I think claims like this in my mind greatly disagree with our logical understanding of our self. I think the greatest challenge in neuroscience is that we still don't understand some of the basics of the central nervous system.

But when you get into consciousness, I think from a lot of the reading that I've done, the dispute about the function of consciousness seems to be based on a dichotomy. Either consciousness is a useless byproduct of brain activity or we evolved it as an extra function to solve certain tasks. And I certainly think it's the latter. And I know Dr. Dehaene would agree with that. Dean argues that the function of consciousness is to transform incoming data points into a clear summary, and then that information can then be carried forward in time, manipulated sequentially and communicated to others.

So when I read that book, I'm thinking about the passage you just read. One sentence that really stuck out with me was it was at the very end of the book. And he said, as you close this book to ponder your own existence, ignited assemblies of neurons, literally make up your mind. And so I remember reading that and then thinking and asking myself what happened to me thinking or me making up my mind in certain situations. Because you're getting at whether it was a subconscious opinion or if it was a conscious opinion or flex of a nature.

Exactly. You think about those number of sentences that you read at the beginning and you think about all of the information that we got from that book, and I think some of the main things that we learned as we went through is that neurons act entirely outside of our knowledge. Right. Just like they do in artificial intelligence, if you're like designing. Exactly, exactly, yeah. And so if ignited assembly of neurons or somehow what we are, then we have no idea what we are or what it is we are supposed to be doing.

And so when I think about that paragraph, I mean, this stuff is deep. It's incredibly deep. That's kind of my thinking on those particular sentences. I'm a huge fan of his and I think that he is an incredibly deep thinker about this stuff. But I think there's a lot to be learned here. And it further illustrates the fact that this is still a working hypothesis. I mean, we're still trying to figure out a lot about consciousness.

We were so lucky to be speaking with Robert Cialdini author Influence and Persuasion, and we talked with him about his book Thinking Fast and Slow. And Cialdini just couldn't believe the Kahneman didn't talk about the powerful concepts like prospect theory that he won a Nobel Prize for. He instead focused on the simple yet powerful concept, like being able to hold only one thought at the time.

Could you talk to us about this idea, what is happening?

And at the same time, what is happening in the brain as we are processing all that information? I think that's incredibly fascinating and I think that it really speaks to how much our brain processes, all of these individual stimuli and how it really has to hyper focus on certain things in order to figure them out. The idea, I think, here is that our brains need cooperation across networks or entire regions of the brain. I think any given problem must be split into tiny fragments to be dealt with in parallel across the entire densely interconnected network.

I think this implies that the networks make one large coordinated step at a time, running at several oscillations per second. And not only are we restricted to attending consciously to only one problem at a time, but we cannot even unconsciously be thinking about another. There can be no background processing or clever unconscious thoughts.

So, as Cornerman said, we can't have two thoughts at once. And so I know from my own experience, sometimes it might seem like we can be thinking about more than one thing at once because the frequency of change of thought can be so rapid and may seem as though it came all at once. But it is always just one thought after another. And so one way I think you can think about this is utilizing optical illusions. For instance, my kids are really into optical illusions right now, especially my older daughter.

There's an older optical illusion where you see this picture and there's essentially two animals in it. There's a duck and there's a rabbit. And when you look at it, you can either see the duck or you can see the rabbit. But no matter how hard you try, you can't simultaneously see the duck in the rabbit at the same time. And so I think this is a really good example of how our brains are only kind of able to hold on to one thought at a time.

Consciously and from a subconscious standpoint, I think that there's probably a lot of stuff that's going on. But even that subconscious thinking is a separate entity than the conscious thinking that's going on. It's interesting that you brought up this idea of the optical illusions, because in this book that we originally were talking about, this consciousness in the brain by stand, he provides this amazing example of binocular rivalry in this study that was conducted. The original study was conducted by Charles Wheatstone.

But what he was talking about in the book was, I think, the variations on this original study for the audience. This is what we're talking about that he describes in the book. If you take to toilet paper tubes so that you isolate each eye so that one eye would have a toilet paper tube, the other eye would have a toilet paper, tubes that you're only able to see one thing in each of your eyes and you were able to basically split everything else out.

And he put two different objects.

Let's just say one was a rabbit with a white background, and then the other one would be a flashlight with a white background. And when your eyes are isolated and can only see one of the two, he was curious as to what you would see consciously. Would you see a mixture of the two or what would it be?

And what was so fascinating about this study is only one of the two images would be seen by The Observer. So I might look at it and see a flashlight and you might look at it and see the rabbit.

And what was interesting was, is the person would look at it, it would change from one to the other at whatever frequency, maybe every five or 10 seconds it would oscillate. What you were seeing, it would be almost like, poof, instead of seeing a flashlight, now you're seeing the rabbit where this really got interesting and that he talks about in the book is he then put the two different images on a screen that had a certain refresh rate.

And on one of the images, it would flash something different, but it would do it in such a short frame. It'd be like one out of every 60 frames per second. It would change the pictures ever so slightly, but it would only do it on one side. And what he was able to do is they were able to prove that in this example, where only one of the images was being changed, the person who was observing it would always just see that one image.

So like, let's say the image with the flashlight was being tampered with when the observer was looking at both images and the ones being tampered every 60 frames. But if you were looking at it normally, just by itself, you would never even notice that the one frame is being tampered with. But in this situation, the oscillation from one picture to the other, as the person had the binocular test set up on there, it went away. The back and forth went away in the brain, became fixated on the one that was just having the one frame that was being altered.

And even though the person wasn't consciously aware that there was some type of tampering being done, they were unable to see the other object under this tampered situation. So the brain was picking it up, but yet it wasn't conscious to the observer. I found that totally mind blowing, that processing is actually happening and it's proof that the processing is being done, even though it's not consciously aware to the observer. So when I first read that, I was kind of thinking to myself, what else is happening behind the scenes that my brain is picking up?

And what was also fascinating about this, John, and I'm curious to hear your thoughts on this, is in that exact scenario, they were able to observe that. Let's just say the person was fixated on the flashlight. They asked them, hey, did you ever see a rabbit at any time? The person said, no, just emphatically never saw it. Right. But they could tell by brain imaging that the person's subconscious was actually seeing the rabbit.

They have proof of that through the brain imaging. So talk to us a little bit about some of this stuff. That stuff is incredible. What I would be curious about, too, is how often is that your dominant eye that's actually picking up, you know, that's focusing in on one image versus the other? I would guess that it's a lot of the time. Right. So this basically boils down to conscious axis hypothesis. And the conscious axis hypothesis emphasizes an important property of consciousness, which is the global axis of information in the cerebral cortex.

So the brain has multiple cerebral networks doing different things in parallel, and many of the systems do unconscious processing of information. When a mental object becomes conscious, many systems will synchronize their processes around analyzing and manipulating that mental object. So I think in that situation, that's probably what's going on where the person has become extremely conscious of one object versus the other. But the way this works is information becomes conscious through something that's called a top down tension, whereby depending on whether we are absent or present mentally in the situation and then the strength of the stimulus is going to determine how much those inputs will be assumed by our brain.

So, for example, in the situation that you're talking about, we have this visual stimuli that's coming in and the stimuli is exciting are retinal receptors in the back of our eyes. And these messages are then relayed on to the thalamus and then from the thalamus. It's sent back way back of our brain because that's where our primary visual cortex is from here. There is a lot of stuff that's going on if there's interference from previous or subsequent stimuli and if it's great enough, the response to the stimulus weakens as it passes on to other cortical areas where it may weakly encourage behaviors in ways called subliminal perception.

However, in the absence of strong inhibition, the prefrontal and parietal cortices will send messages back to the primary visual cortex and then the messages will continue to reverberate and amplify throughout the brain. So this stuff actually gets into a lot of the stuff the Dehaene actually discusses quite a bit, which is that global workspace network and really subjectively dictates the experiences that we have and whether they're going to be conscious or unconscious. So there's so much going on there. You know, I think it's so fascinating when you think about the fact that clearly there are two totally different images that are being displayed to your eyes, but your eyes are only really focusing on one.

And why is that yet, like you said? And if they're able to represent that in a way where it shows that the person is still actually able to see the other object, it's just not becoming something that's conscious to a higher cortical areas. So, I mean, that's kind of what I'm getting from it is if you look at the study, I think a lot of it really kind of boils down to, again, where are we at?

Are we present? Are we focused? Are we in the moment, as they say? And then what kind of strength is there in that visual stimulus in that case?

So, John, what I'm thinking about, as you say this what pops into my head is this reflexivity property and what is happening between the subconscious that's been filtered even before I have conscious access to it. In this example, it could be a rabbit that's not even in my conscious access. So you have this filtering mechanism that is taking place in this reflectivity of the conscious and subconscious mind. What is being filtered and how much am I controlling it? When I first heard you say that, the first thing that I thought about was, you know, sleeping at night and I'm sure you have probably had this experience in your life where you're trying to work through something that is extremely difficult.

Right. And you're trying to wrap your mind around it and you just can't seem to figure it out. And then you're like, you know what? I'm just going to sleep on it, as they say. Right. So you go to bed and in the middle of the night and this has happened to me a number of times, you'll wake up and you'll be like, I know exactly what I need to do or I totally understand what's going on there.

And you're not consciously thinking about it because you're sleeping. Right. But yet, like you said, we have these reflexive loops, these subconscious loops that are continuing to process that information and help us try to figure out what's going on.

It you know, I think the difficulty in life is that there's so many distractions out there. Right. And so our brain has to deal with a massive amount of information that constantly floods it from all the senses. And it's incredible that we can focus on what's important in tune the rest out. Right. I mean, to me, that's just amazing. You know, our prefrontal cortex, for instance, would just get completely overwhelmed if there weren't particular circuits within the brain that inhibited certain signals and then allowed other signals to be able to continue on for us to be able to really hyper focus on those things.

And so I think the main thing that I really think about with regard to that question is a person's ability to focus on something and their ability to filter those things so that, like I said, they can allow certain stimuli to have a more prominent effect and then other stuff to just kind of fall to the wayside. I guess if you want to say that the way I kind of think about it is that every time we think or feel or do something in our life, we strengthen a particular pathway.

And, you know, from a psychological standpoint, you can see how that can have such a profound effect. I mean, if you've been told your whole entire life that you're not good at something and you just continue to subconsciously allow those things to cycle through your brain over and over again, you might not even know that those things are happening.

And yet they're having a profound effect on your life. And so, as they say, habits are well traveled pathways. Right. So I think that a lot of times that's what it is like if we're studying a particular scientific phenomenon like I've done in the past. And we're likely deeply thinking about these different ideas and are trying to figure them out. The more we work through and think about them, the more we strengthen those pathways, the more reflexive I think that thinking becomes.

And it gets to the point where, like I was saying with us, hearing what a horrible person we are earlier in our life, it reaches our subconscious and it almost becomes automatic. And so these same examples have been written about thousands of times over the years. I mean, I know in us talking in the past, you had mentioned Einstein. And, you know, that's a perfect example of how he was able to kind of think through some of these really complex ideas that he had to work through to basically achieve all of the brilliant things that he was able to achieve in his life.

Let's take a quick break and hear from today's sponsor.

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All right, back to the show. So it's funny you bring up the dreaming part. So I want to tell you a funny story that happened to me. So I had a buddy that I flew with whenever I was stationed in South Korea. We flew together. So this took place probably 10 years later. We were talking on the phone and he was in grad school. At this point, he told me he goes, Presson, I had a weird dream last night.

I said, Oh, yeah, what was that? Because for whatever reason, so and so that we used to fly with in South Korea, it was in the dream. Well, a little bit more context on my friends. And my friend was a company commander. He was in charge of the entire company of Apaches that we were flying. And then he had a whole organization of pilots that worked for him that were his soldiers in his organization.

And the particular person that he had mentioned. I knew right away because he did not think very highly of this person. Right. And I was kind of one of the lazier pilots in his organization. And I said to him immediately, I said, Are you working on a group project in grad school? Is somebody being lazy on the project?

He just he just paused. There was like dead silence. He didn't say anything. And then he just started laughing really hard. He says, how in the world did you come to that? And I was like, that person is in your subconscious and represents some sort of label. Right. And then his experiences that he was having right now are getting stitched or getting put into his subconscious in order to allow for quicker reaction time or whatever. And it's just how your brain wires itself at night for whatever reason.

And so when I said that to him, he started laughing so hard. And I'm kind of curious because this is an observation that I've had through the years, as it seems almost like at night, that the experiences that we're having or that we're pondering a lot through the day in kind of our frontal lobe and our neocortex. Right. It almost seems like it's wiring itself or stitching itself to these past experiences, these past labels that we have saved deep into our unconscious mind.

And it seems like it happens at night. Is this something that you've heard other people talk about or is this something that's documented? I've never read this anywhere. I'm kind of curious if this is something that's actually documented. I actually have not read a lot about it either. It's just from my own understanding of the nervous system and then, you know, thinking about all these situations like you were just saying, where for whatever reason, subconsciously, you're able to just figure out these unbelievable things as you're sleeping at night.

I mean, it goes back to essentially that at the beginning of our discussion, when we were talking about that paragraph from Stanton's book, where our self is just a database that gets filled in through our social experiences. Right. I mean, in that case, like you talking about your friend and having this experience where one of the individuals that he was in charge of was just not pulling their weight, was lazy or whatever, they obviously had a profound effect on him.

He wasn't able to kind of squash that, you know, get that under control. And then it was revisited in his own experiences that he was dealing with presently. So, I mean, this is crazy stuff. Let's talk about some of these concepts in relation to investing. One of the most important concepts for investors to understand as they want to understand how the brain is processing information. There's a couple that come to mind, one that I think is really interesting that I been doing more reading about is neuroeconomics.

I also think bias is a really, really interesting focusing first on the idea of the neuroeconomics. One study that I read recently, it was a study that was focusing on 15 brain-damaged participants that had normal IQ and the areas of their brain responsible for logic and cognitive reasoning were completely intact. What they found is that when they conducted the study, this study suggested that the participants that lacked emotional responsiveness actually had a significant advantage. When they played a simple investment game, the emotionally impaired players were more willing to take gambles that had high payoffs because they lacked fear.

And then the players with undamaged brains were more cautious and reactive during the game and wound up with less money at the end. And then Daniel Kahneman has run some really cool studies with a number of different neuroscientists, one that I thought was pretty fascinating, dealt with players who were given twenty dollars and then they were asked to play a simple gambling game that involved 20 rounds of basically tossing a coin. And if they won the coin toss, they earned two dollars and fifty cents.

If they lost the coin toss, they had to give up a dollar so they could choose to not play in any given round, in which case they just kept their dollar. So from a logical standpoint, you know, if you had to think about it, obviously the best strategy with a coin toss would be to do every single round of the game. Right. Because since the return on a win has a much higher reward, obviously, than the potential loss, the risk and the risk in each round was 50 50.

It just makes sense that you would just continue to do each and every round. The players with emotion related brain damage took a more logical strategy like I just talked about, and they invested approximately eighty four percent of the time while the non brain damaged individuals invested just 50 percent of the time. And so, as you can kind of guess, the emotionally impaired individuals outperformed the non brain damaged participants. And so what did they extract from this? While the researchers obviously initially believed that fear had a lot to do with the poor performance from the non brain damaged participants, and then when they took all that information and went a step forward with it, what they found is that many of the brain damage players who did well on these specific studies actually did not perform well when it came to making financial decisions in the real world.

Many of them went bankrupt. Their lack of fear and judgment led them to get mixed up with people who took advantage of them. So I think what they found was it indicated that emotions can play an important role in protecting us as well, even if they sometimes interfere with rational decision making. Humans develop this fear response as a survival mechanism to protect ourselves from predators. You know, if you're out running along a path out in the woods and you come upon a curly branch that's laying on the ground, you know, I'd venture to guess that a lot of people would probably jump in excitement or jump out of the way because they thought, is that a coiled snake sitting on the ground?

And there's a reason for that, that we have those automatic responses to protect us. However, in a world where people are constantly trying to take advantage of you, this fear system can be oversensitive, reacting to dangers that don't actually exist and tend to push us toward decisions that don't make a lot of sense. So I really, really think the neuroeconomic stuff is pretty fascinating. And then from the other stuff that I, I was kind of talking about dealing with biases.

I mean, they play such an incredible role in investing decisions that people make every single day. I'm sure your self can think of a number of situations where you let your own bias affect the way you made a particular decision and investment that you did. The decisions that we make as humans show that we tend to try to oversimplify and make irrational choices. Our brains tend to default to fast, intuitive, automatic and emotionally charged decisions. And these are mostly due, again, to our survival instincts that we have when we look at the world with our biases, we tend to place filters up that can alter our perception and our decisions.

So part of becoming an investor, and I'm obviously not a incredible investor by any stretch of the imagination, I enjoy doing it. I've done it quite a bit. But becoming an investor, you have to educate yourself, right? You have to know how different investments work, but you also have to try to overcome your biases because they can derail you really easily and your investment strategy. There's a number of different types. I'm sure a lot of people have heard of the number of different biases that are out there.

One confirmation bias you can flip on any news station, CNN, MSNBC, Fox News, and know that there is an incredible amount of confirmation bias going on and fear you don't have to look too far. But confirmation bias plays a big role in investing, too, because we tend to put more weight on opinions that help to support our own opinions on things. So there's the gambler's fallacy. That's another perfect example of bias. So let's say you as an individual watched the S&P close on the upside five trading sessions in a row.

So your place is short on the spider because you think there's a good chance that the market will drop. But the thing is that past events don't connect future events. Right? So the market being up five consecutive days in a row is basically irrelevant. Another one that I think is really, really interesting and I think is part of the reason why Buffett was so successful in Mongar is the whole bandwagon effect. You know, they didn't follow that path.

There's a ton of bandwagon effect going on right now in the markets. I mean, you don't have to look too far to see that. And Buffett and Munger just resisted that. Their big philosophy and there's lots of quotes out there, but one that really sticks to my mind is be greedy when others are fearful and fearful when others are greedy. So I think that really speaks to our biases. And then one that really stands out in my mind, because I certainly have run into this same issue in the past, is the loss aversion bias where, you know, we have a stock in our portfolio that is down so much, but you just don't want to sell it, right?

Because you don't want to admit that you made a poor decision and you're thinking to yourself, all this is bound to go back up. But the reality is, in a lot of these situations, you'd be better off taking your money out, go and put it in a different invest and maybe a higher quality stock or something, and your outcomes would probably be infinitely better. So, John, recently I saw a video of David Eagleman, who also just has incredible books on the brain.

I highly recommend pretty much anything he has written and he's written quite a bit. He was wearing a jacket that provided inputs on his back and then the inputs that were being put into his back. It was almost like these plastic. I'm going to call them needles, but they're not needles. It was like these it was like poking them in the back. It was like a matrix of them. And it was based on the stock market's performance. These inputs somehow correlated to stock market performance.

Then I've also read in David talks about this in some of his books where they're using these sensors, for example, the tongue, they're using these sensors on the tongue in order to create vision for people. And so I just find this totally crazy. Talk to us about what's going on, like how is that even possible? And then just like how the brain is wiring itself off with something like this.

David Eagleman is a brilliant Stanford neuroscientist. His belief is that there should be more to the human sensory perception than just our traditional senses of sight and touch and sound and taste and smell. Eagleman has dedicated his career to studying how the brain takes in signals and constructs consciousness. And during his career, he became really interested in something that's called synesthesia, which is essentially a neurological condition in which stimulating one of our five senses creates a simultaneous perception of another one, such as individuals who can hear color.

And so I think he kind of took that continue to study a lot of that. I mean, a lot of his work on synesthesia showed that human sensory perceptions are not an objective reproduction of reality, but instead an inference that the brain draws from the signals it receives. So about a decade ago, his research led him to this really fascinating piece of technology that you were talking about, which he called the best or the versatile extra sensory transducer. And it's a wearable device that these individuals wear over their torso and it has a number of different vibrating motors in it.

And what's really fascinating is that the vest can take in a number of different types of real time data, such as sound waves or, as you said, stock market trends. And it turns that data into dynamic patterns of vibrations and the motors. And so he studied the heck out of this stuff. And within just a few weeks of studies with his patients, Eagleman was able to help train his subjects, to learn to associate those vibrations with specific inputs, like teaching the sound of a letter for an individual that's deaf or the news of a particular stock increasing in value.

So it's Eagleman opinion that the data received through this vest will become second nature subconscious, like we've talked about in the past. And it's going to give us almost a sixth sense, you know. That's just use and touch. I couldn't imagine if you're doing something like Lydda and then that's being somehow programmed into your subconscious, Eagleman is just really kind of leveraging the five senses that we already have and then kind of tapping into where that's getting wired into the brain via adding sensors to the touch specifically.

That's exactly it touches one of the most important senses that we experience as humans, I mean, it has a profound impact in our lives and there's been tons of psychological studies that have revolved around touch and its importance for children and adults alike. And so, like you said, I think he's really kind of hitting on that, but focusing more on different avenues that are taking advantage of that particular stimulus.

Let's talk about Elon Musk's NewLink. And Elon, as we know, can overpromise at times. But he was suggesting that there were going to have to 300 people working on providing stimulation directly into the brain.

What are some of your thoughts on this NewLink project?

Some of the things that Musk wants to accomplish with his electronic brain computer interfaces. He wants to cure blindness and paralysis and deafness. I know that there's a heavy emphasis on mental illness and he wants to help people be able to do activities without fear or discover the nature of consciousness, any number of things. It sounds incredible. I think you my take have kind of pointed toward it being in its early stages. I think a lot of people were kind of disappointed, to be honest with you, on the rollout of the whole neuro link.

They kind of said it's speculative at best at this point. The implants have been attempted in the past and they've had kind of a mixture of results in animals.

So what I would say is that Musk just doesn't have enough evidence that really kind of points to its effectiveness at this point. But with that said, I think if we've learned anything from history, it's that we can't rule out human ingenuity. And Elon Musk is just incredible. I mean, I remember watching the whole SpaceX launch with the two American astronauts and just. Basically being in awe by the absolute precision of that rocket landing on the International Space Station and the two astronauts were essentially just sitting there in their seats.

I mean, I don't think they were doing a whole heck of a lot. I think it was all programmed into the computer systems and the rocket. So I think it makes you really appreciate how amazing all the things are that he's trying to accomplish. And my philosophy in life is that whenever people say things can't be done, I say, you know what? You just wait because you might be proven wrong. I mean, I remember my dad talking about the World's Fair in Seattle in the early nineteen sixties.

And some of the demonstrators that were there, we're talking about two people communicating with each other on video screens at a distance. I mean, that's what we're doing right now. And so I think the difficulty here with Neuro Link is that, as I've said before, the brain is incredibly complex. And to have you know, we need to probably have more of an understanding in order to better understand how these can actually perform. And so it's my opinion that we have a ways to go.

He had to raise some money, though, yeah. So, John, recently you recommended a book to me privately. We've been talking for a little bit now and you recommended this book called Self Comes to Mind. And the really big point that I got out of this book, which I had never even thought about this idea before, was biological value. And as a value investor, this really struck a chord with me in how our bodies are conducting this biological value.

So talk to us about biological value and why it's important. So Damasio's book is incredible, biological value is essentially how we manage life, like the cells are able to self regulate through homeostatic mechanisms. We all operate on that same exact principle. In the book, he takes a modern retake on neural correlates of consciousness. The most important idea in his book, in my opinion, is the functional role of homeostasis and how it creates the biological value of life regulation.

These principles are extremely important because as organisms grow in complexity to the point of possessing a brain, they are able to construct maps of the body in order to monitor those homeostatic ranges among a number of other things. And then eventually these maps begin to correspond to events and ideas rather than simply the organism itself. This centering cell process allows the organisms to better adapt to their environment, to plan ahead, to make decisions and eventually reflect on themselves in more abstract terms.

Consciousness helps us figure out these principles and helps us understand how they influence so many aspects of our minds and our culture. So when I heard you initially see the question, I'm curious from your investment background, how do you see biological value as a foundation in macroeconomics?

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That's p b dot less type experience, a saving in your shipping costs with a free trial of Central online from Pitney Bowes. All right, back to the show. If I was just going to simplify at all, and I'm thinking about a thermostat in my house, and let's just say that it automatically will turn on the heater when it gets to a certain temperature and it'll turn on the air conditioning when it gets to a certain temperature. What people mostly focus on are those limits, the bottom limit and the upper limit.

But I think a lot of people fail to think about or the units that are being used to measure the amount between those two limits and how we just automatically assume that they're fixed, that it's we're counting with one and then it turns into two and then three. Right. And I think that's just not such a given in reality is specifically with where we're in the economy.

But what I found fascinating in the book when I was talking about the brain is how important this is in this regulation process of those units that are measuring how the cells are going to respond, how the neurons are going to weight their response and how they integrate with the rest of the network. And it really got me thinking, and I know you and I talked previously in private about some of this and how it relates to the macro economy. And so I know that's why you were asking me.

But when I look at the world right now, what we have is a fundamental change in those units that we're using to measure everything. And it really it comes to the cost of capital and how much we think interest rates should be, because that unit of account that we're measuring, everything in these field units are getting debased constantly. And so when we're relating this back to biology, one of the things that was talked about in this book, Self comes to mind, is when a person does not have a good biological value system, the life form typically doesn't make it very long or that it has major dysfunctions in the way that it's able to just perform its normal lifestyle or the life that it's living.

It just wreaks havoc. And I guess when I'm looking at our global economy and central banks coordinated across the globe are adjusting their unit of account or that biological value system that we just kind of take for granted. And it's getting inflated and debased. The system can't function appropriately. And that's kind of where we're at. I think that's right, I mean, I think, like you said, it all comes back to homeostasis when we continue to give too much of a good thing.

Obviously, there is a lot of people that argue that it's not a good thing, but in their eyes, I'm not certain they even know what they're doing sometimes. Or maybe it's become as we've talked about privately, it's become such a habit that it's just reflexive. Right. They're just seeing a certain problem and they're dealing with that in a reflexive way in order to help bring the system back to midline.

If you want to say from that standpoint, that's great, Segway into a next question. What is a common misperception about the brain? One thing that I think is commonly misconceived and I've had conversations with people about this in the past, is the idea that we only use 10 percent of our brains. It's pretty fascinating to think that the human brain has so much untapped potential in our brain, represents essentially three percent of our bodies weight and it uses 20 percent of our bodies energy.

So it's an incredibly active organ to think that at any given moment we're utilizing such a small portion of our brain I think is silly and it's been disproven.

And John, you are talking about the conscious axis. We only have conscious access to 10 percent. But in the background, the subconscious mind is literally running around the clock. But it's not filtering everything off to the conscious mind. Is that a better way to frame it? That's a great way of thinking about it. There's so many processes that are going on, right? I mean, just think when we're out walking and, you know, at the same time we might be listening to music and we're also trying to observe the environment that's all around us, you know, at any given moment which aspect of that is consciously accessible to us.

Right? Well, it depends, again, on what part we are focusing on at any given moment. Are we focusing on the music we're listening to or podcast or are we focusing on our cadence or are we focusing on beautiful rainbow in the sky? Right. Perfect example is today I had to run out to this place and get a sandwich, which I really like the sandwiches here and I'm in my car and when I'm in my car, I'm listening to audiobooks like that's just what I do.

Well, I got this sandwich and I sat down in the car and I was like, you know what, I'm not turn it on the audiobook. I'm not turning on music. I'm going to sit here and I'm going to eat my sandwich before I go anywhere because I want to enjoy the sandwich.

And I knew that if I turned on the audio book, I would have eaten the sandwich and not even realized or tasted it or anything. I would have just it would have just been done. And all I would have heard was the book. So it's a perfect example of what you're describing. Yeah, and I think when you talk about that, what it really brings up in my mind is this whole idea of mindfulness and meditation, because this has become something that's been studied quite a bit in the last number of decades.

I mean, obviously, the practice is something that's been around for a long time. Right. But being more present and actually being more aware of all the sensations that we're exposed to is something really interesting to think about, especially when we look at the topics that we've discussed so far and our conscious and subconscious, because you wonder. How much would that alter every single day if we've trained ourselves to be hyper focused on particular things that we're doing and not be distracted by what's going to happen in the future or what's going to happen in the past, I mean, you think about I can't tell you how many times I've gone to the shower and got to where I thought I was done and then thought, did I wash my hair yet?

You know, it's not safe and I don't have a lot of hair.

But but it's the same exact thing that you're talking about with regard to the sandwich. I've had that happen to me so many times, I've just I'm with you. And that was a perfect analogy because I can totally relate to that one. Getting back to this whole idea of us utilizing only 10 percent of our brains, I think even from an evolutionary standpoint, I think it would be pretty terrible idea in my mind to spend so much time and energy growing such a large brain if it wasn't used right.

I don't know. I mean, I hear people say that a lot of it is been perpetuated by movies like Limitless with Bradley Cooper back from 2010, 2011, whatever it was. But that's one of the common misconceptions that I think I hear from a lot of people that don't know a lot about the nervous system. John, I know you've looked into a really interesting study of probiotics, and I think it really highlights an interesting aspect about the brain.

Could you please talk to us about that? They're obviously a supplement that you hear people talking about quite a bit, it's no surprise, I think to most individuals that gut bacteria can include gut health, but it probably comes as more of a surprise that they might have a profound influence on the brain and our behavior because they're finding this incredible connection between the gut and the brain. It's been known for a long time that there is a significant component of the nervous system that's found in the gastrointestinal tract, but they're finding a lot of links with the central nervous system.

Parkinson's disease is a neurodegenerative disorder that affects neurons that produce dopamine in the substantia nigra and the midbrain. And scientists appear to have found a link between Parkinson's disease and the gut. Misfolded proteins called alpha synuclein are the primary hallmark of Parkinson's disease. And these proteins, what they do is they clump together and they destroy dopamine producing cells in the brain. And the destruction of those cells causes all the different symptoms that we see, such as tremors with Parkinson's disease.

There was a study that was done a little while back and the journal called Neuron, which showed a model of Parkinson's disease. And what the researchers did is they injected that protein, that alpha synuclein protein into the muscles in the mice gastro intestinal tract. And in the experiment, these clumps traveled from the gut to the brain through the vagus nerve, which is cranial nerve 10. And within a few months, the mice developed symptoms that mirrored Parkinson's disease in humans.

It's incredible. And after these studies, some researchers have begun asking the questions about whether pre or probiotics might help to avert Parkinson's disease. And they've done some studies with roundworms around our model that basically suggests that this theory might be worth pursuing. So really fascinating stuff. So let me ask you this on the stomach, so we have all this gut bacteria, which is just fascinating in itself because they've got their own genome. And I mean, there's trillions of them, right?

That different bacteria that is helping digest the food and to then they're breaking down the food and then the food is passing through our gut lining the mucosa, your spinal cord, which also has gray matter, the neurons down there in a similar geographical area as your stomach is conducting, sensing it's making subconscious decisions as to the secretion in your stomach. And so I guess I get frustrated when I hear there's five senses because I think about all the sensing that's happening just in your stomach alone, and then it's hitting that neural net that's down there in your spinal cord and then making all these types of decisions.

And it's all outside of our conscious access. I just find it fascinating. It's crazy. It's incredible, and as I'm sure you're aware, I mean, all the way up and down her spinal cord, we have grey matter. And so there's a lot of reflexive loops that are going on there that are receiving this information and then sometimes just sending information right back out and how to deal with that information that's coming in. So tell us a really cool story about the brain, like one of the coolest stories you've ever heard, because any time I read a book that's like I uncover a really neat or interesting story that I just had never heard and it just fascinates me.

So as a person as well, read as you are on this topic, I'm kind of curious what one of the neatest stories is that you got. I don't know why this story kind of sticks out in my head, I don't know, I just think the whole idea of these they're called mirror neurons is just so fascinating to me. There's a story that I talked about in one of my lectures in the past, and it revolves around a physician from Mass General Hospital in Boston.

His name is Joel and he has a condition that's called Mirror Touch Synesthesia. And it's basically the ability to feel other people's touch, pain and emotions as if it was happening in his own body. So if Joel sees someone scratch their head or frown or sees someone else get punched in the arm, he feels it. It's incredible to think about that. It's almost like he's hyper empathetic. If Joel is injecting a person with something, he feels a sensation of the needle going into his own arm.

If he sees someone with an amputated arm, he feels a sensation or feels as if he also has an amputated arm.

And, you know, to take it a step further, he feels other people's emotions, too. So you have almost like this ultimate form of empathy. And the interesting thing about it is that we all experience another person's world to some extent in our lives as well. You know, I mean, I can just think of any number of situations where this phenomenon has happened to me when I've taken my kids out for ice cream or whatever. But we have our our mirror neurons to thank for those responses.

And these are these are neurons that are found in a number of different regions in the brain and. They help us to act in the same way as Joel, but the difference is that most of us receive veto signals from other cells that help to dampen the mirror neuron activity and allow us to distinguish what's happening to us versus what's happening to someone else around us.

And when I think about this, you know, I think, like I was saying, you know, when I go and have ice cream with my kids, let's say I opt out and having ice cream and my my child is sitting there eating a delicious bowl of ice cream from some ice cream shop that we decided to go to. I'm sitting there and I'm observing them, eating it, and I'm understanding that particular action. And I've caught myself actually almost imitating taking that scoop ice cream and putting my mouth like I see I'm eating and I have my mouth open like I'm going to do it myself.

Right. But yet we're able to kind of reduce that activity from those mirror neurons and allow us to say, no, that's not me. That's my child eating the ice cream. Whereas in this patient's case, you know, Joel's case, he can't do that. And so I don't know. I mean, like you said, there's a lot of different examples out there of a really, really cool studies know. I'm sure you're aware of the patient, Eugene, or he's known as EPI, who had the the lesion from viral meningitis.

He had a central nervous system that it basically knocked out a portion of his material, temporal lobe, and he was no longer able to create new memories or have any short term memory. This is a guy who's been studied to no end in neuroscience. But, you know, it actually further illustrates the whole idea of the 10 percent portion of our brain that's being used because, I mean, if you have a small little area in our brain that when it gets knocked out, has such a profound effect.

I mean, I think it really speaks to how powerful all these little tiny areas are in our brains. And so in Eugene's case, this patient that had this viral encephalitis, I mean, it drastically changed his life to the point where he had breakfast in the morning. He wouldn't remember. He'd have like five, six breakfasts. Right. It's interesting, I read a study and then the person was talking about criminals and people who just do just the most heinous crimes and the person who is being interviewed, they were asked, well, what's the common thread amongst these people?

And the common thread was that they lacked empathy, that they had no empathy for anybody other than themselves.

So I find it really interesting your first comment there about the mirror neurons and how forget the person's name that you had mentioned. But basically he was overly empathetic.

And it almost seems like maybe there's some type of neurological condition for some of these folks that are, you know, serial killers and whatnot, that they have literally no mirror neurons, like it's being dampened so much that they don't have any type of mirror neuron response. Fascinating, though. You wouldn't be hard pressed to find that a lot of these individuals that are having this lack of empathy. They most likely had some kind of stressor early in life, some traumatic event that significantly impacted them.

And so, again, it probably impacted them so much that subconsciously, like you were saying, their empathy was dampened significantly to the point where they can do things that blow you away. And you would think to yourself, how could anyone do that? But for them, it doesn't seem like it's a big deal and then begin to activity again. So what they don't have conscious access to is just further reinforcing that lack of empathy.

Exactly. John, if someone's found this conversation fascinating, they want to learn more about the brain. Could you point to two or say three books? Honestly, I think one is self comes to mind. I think Antonio Damasio's book that I recommended to you is a fabulous book to read. As we talked about, it's incredible from a biological standpoint, but yet it has so much applicability to the macroeconomics. Like you discussed Stand Haines book that you basically opened up our conversation with is another it's mind blowing.

I mean, it's an incredible book. There is so much to kind of think about as you kind of go through that book. And then another one that I really enjoyed is the brain that changes itself. It's by an author. His name is Norman Doidge, I believe. And it touches on a topic in neuroscience called neuroplasticity. And I think it's a really fascinating area. There's been a lot of study on it and kind of essentially overturns a very old idea that our brains are immutable.

So I think those three are a great start for people that may find this stuff interesting and kind of want to delve in more to it. All right, John, I know you don't have a website, but you are active on Twitter and you are posting about things brain related, also investing related. So to give people the handle of your Twitter account and we also have a link to that in the schnitz. My Twitter handle is new dog, that's can you deal JGI 19 and my username is John Galt.

Well, John, we really appreciate having you on the show, and this has just been a really fun conversation for us and hopefully we have an opportunity to do it again in the future. Gosh, I would love it, I had a great time and I really appreciate the opportunity to have these discussions with you guys. All right, John, thank you so much. And for everybody else, we'll see you guys next week. Thank you for listening to talk to access.

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