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I thought polygraphs didn't work. Or is there classified information showing that they do?

Whether the machine works or doesn't work is irrelevant if they convince you during the poly that it does work. I had one, and the technician was far more intimidating than the machine. If I had something to hide, by the end he would have gotten it out of my I'm sure.

Right, often they are simply used to indicate when a line of questioning is stressing out the subject and to continue on that line.

When people are "prepared" for the polygraph (say a mole) they are often trained to construct alternative mental models that would let them answer damaging questions without appearing anxious.

For example, they might organize an obvious seemingly accidental meetup in a some monitored public place (train station) with a foreigner from a specific country so when the question is asked "have you met with foreigners from country X" they can say "yes, I sat next to one when taking the train".

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