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We need to separate the UFO/UAP phenomenon from the accounts of those who claim they’ve been contacted or abducted by aliens. The sheer number of cases argues against all of them being hoaxes or hallucinations.
However, as Jack Brewer documents in his excellent book The Greys Have Been Framed: Exploitation in the UFO Community, the primary source of evidence touted by the UFO community—memories recovered by abductees under hypnosis—is unreliable, to put it mildly. Hypnosis is not a trustworthy method of retrieving memories, and may actually be harmful. Sadly, as Brewer notes:
Traumatized individuals are then at risk of sustaining deeper emotional damage while failing to seek qualified professional treatment. Such professional treatment is often discouraged within the UFO community in lieu of compiling so-called evidence of fantastic encounters with extraterrestrials.
Contactees may have various reasons for concocting stories of ETI encounters from just wanting to feel special to out-and-out delusions resulting from psychosis. Sadly, there are traumatized individuals whose treatment is of lesser importance to those who are most willing and eager to hear their stories—true believers desperate for “evidence” of ET’s existence.
The intelligence community doesn’t have to work very hard to push the ETI meme. The UFO community is doing just fine with that on its own.