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This paper begins by recounting concerns, raised by various American psychologists regarding psychological consequences of US counterterrorism policies following the attacks of September 11, 2001 (9/11.) Predictions made by a task force created by the American Psychological Association to consider the likely social effects of US counterterrorism policies have proved accurate. These include not only fear, but widespread crippling panic resulting from vague warnings and lack of suggested actions; discrimination, resulting from increased emphasis on in-group vs. out-group identities; hate crimes against those perceived as members of out-groups, and lack of tolerance for antiwar perspectives. Recent, increasingly radical, changes in policy, such as widespread surveillance of US citizens’ actions and communications by various US agencies, have led to more dire consequences, with many now concerned that the US is at risk of becoming a police state. The combined and interactive effects of earlier and more recent changes in US counterterrorism policies have caused serious, sometimes terrible, consequences. This paper explains how these consequences have become part of a vicious circle: frightened, passive, and unable to collaborate in rational attempts to manage the threat of terrorism, citizens have not begun to consider how to prevent future instances of homegrown terrorism.