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'Financial Times' Issues 103-Year-Old Correction (2017)
- kleiba 4y agoOf course the issued correction was rather new in 2017, the report it corrected was what was 103 years old. But I guess only overly pedantic souls like myself get bothered by stuff like that.
- lukas099 4y agoI think being a programmer messed me up for a while in that it made me overly precise like this. I had to consciously learn to turn it off in normal conversation.
- calgarymicro 4y ago> Along with its correction, the paper adds this note: >> "The same edition of the paper also demonstrated a good understanding of the FT's readership, noting with 'interest' and 'encouragement' that champagne production had not been affected by the Great War effort." Lol, fair enough.
- rwmj 4y agoI wonder why they bothered going through with the fake bond purchase, rather than simply manipulate the published numbers of bonds sold? Unless the Bank was also keeping it a secret from central government?
- floren 4y agoThe government did actually need the money, it's just that saying "bond sales fell short so we got it from this bank" would look worse.
- duxup 4y agoWere there maybe too many people who might find out that the bonds weren’t bought? Having a couple straw buyers and actual money to use for the war would seem to be easier to hide and utilize.
- nl 4y agoIt was a real bond purchase. The money just came from the Bank of England reserves, and the BoE was private at the time (although had very strong links to the Government). Eg: The episode marked an important step on the Bank’s transformation from private institution to a central bank.. A decade after the Armistice, the altered role of the Bank prompted creation of a Parliamentary commission to examine its functions, ultimately setting it on a path to nationalisation See https://bankunderground.co.uk/2017/08/08/your-country-needs-funds-the-extraordinary-story-of-britains-early-efforts-to-finance-the-first-world-war/ https://bankunderground.co.uk/2017/08/08/your-country-needs-...
- cik2e 4y ago>> So instead of allowing the disappointing truth to come out, the Bank of England secretly funneled money to hide the gap. I believe that's what was meant by "fake". In other words, inauthentic. As far as the transformation from "private institution" to central bank, are you suggesting that this was a form of Open Market Operations?
- nl 4y agoI took fake to mean that they made up a sale and created money out of nothing (or something). This isn't what happened. They took money from their reserves and spent it. > As far as the transformation from "private institution" to central bank, are you suggesting that this was a form of Open Market Operations? Hu? No, the Bank was nationalised. I don't really understand what you mean or are trying to say.
- dilippkumar 4y agoAccording to one bitcoin maximalist[0] this was the real origin of fiat currency. I’m not sure I understand everything that is said nor fully believe, given that it’s a bitcoin maximalist dumping on fiat currency, but what I took away was that the english pound was redeemable for gold. When they did this fake bond purchase, they just minted new pounds (that didn’t have gold backing it) and used that to buy back these bonds in secret. This is significant because there was a fear of a bank run in England at the start of the war where everyone was afraid that this would happen. The Bank of England had to assure everyone that they wouldn’t do this to stop the bank run - and so, when they actually went ahead and did it, they kind of had to keep it secret [0]. https://youtu.be/gp4U5aH_T6A https://youtu.be/gp4U5aH_T6A
- dragonwriter 4y agoAs best historians can determine, fiat currency originated in 11th Century China; with absolute confidence we can say it didn’t originate in 20th Century Britain.
- thaumasiotes 4y ago> As best historians can determine, fiat currency originated in 11th Century China This is untrue; for example, fiat currency was already in use in Seleucid Persia (which began in the 4th century BC). It wouldn't be even minorly difficult to turn up other examples; any time there's a fixed exchange rate between coins of different metals, one of those coins is fiat.
- nl 4y ago> When they did this fake bond purchase, they just minted new pounds I didn't watch the video but if this is what they said it's wrong. The Bank of England had the money in their reserves and they used that.
- hgomersall 4y agoWhich is wrong - the Romans realised that money should carry the face value of the coin over its commodity value, enforced by the power of the state (and taxation). It was kind of forgotten in the middle ages, when coin was a weird hybrid of its face value and its commodity value (much of the monetary shenanigans for hundreds of years was concerned with maintaining face value in light of fluctuating commodity prices).
- ggm 4y agoAnother aspect of the british war debt, is that it was carried for hundreds of years. Rolling the specific consols into a unified public debt and then eradicating it wiped out the history of people sitting on long-tail bond payments from wreakage of the South Sea Bubble onwards. Basically, until they rolled them up you could have a stable (if low rate of return) income denominated in Napoleonic war debt, if you wanted it, right up into the modern (1980s) era [edit: actually consols == consolidated fund == prior consolidation of these historic debts. gilts were from time to time issued, like Churchills '27 issue for the WW1 debt ]
- nl 4y agoI find this history really interesting. Apparently there was a weird set of loans the UK took from the US during WW1 where the US put a moratorium on repayments during the Great Depression, and then loan payments never restarted: > These loans remain in limbo. The UK Government's position is this: "Neither the debt owed to the United States by the UK nor the larger debts owed by other countries to the UK have been serviced since 1934, nor have they been written off." That and a bunch of other interesting things about the history of the UK debt are in http://news.bbc.co.uk/2/hi/uk_news/magazine/4757181.stm http://news.bbc.co.uk/2/hi/uk_news/magazine/4757181.stm
- pasc1878 4y agoI thought it was only feely redeemed until 2015. This does show how the 2010s had historically low interest rates as new bonds were always more expensive for the government until then
- zokier 4y ago
- mcescalante 4y ago(2017) should probably be added to the title. Really enjoyed this and noticed the published date after I read it.
- dang 4y agoAdded. Thanks!
- ggm 4y agounderwriting happens. sometimes its banks. sometimes its the (state) bank. if there was a time the ruling classes would argue for lies in the national interest, its war time. I cannot imagine a government embarking on war who would say "well.. we asked you to fund it, but alas, the city said we're losing so the bond wasn't there and we've decided to cancel the war"
- kneebonian 4y ago"Economics never stopped a war in progress" - Helmuth VonMoltke
- adastra22 4y agoIsn’t it economics that stopped WW1 though?
- csours 4y agoDepends on where you draw the lines. Exhaustion of resources stopped WW1. Those resources include money, material, and men.
- hgomersall 4y agoI think that's the point - it was just materials and men, not so much money.
- dools 4y agoAnyone with knowledge of how government finances work knows that the central bank will never allow a bond auction to fail, and the central bank will never bounce a treasury cheque.
- deleted 4y ago[deleted]
- throw0101c 4y agoSee also The Lancet's updating of their original 1858 obituary of John Snow: > Dr John Snow: This well-known physician died at noon, on the 16th instant, at his house in Sackville Street, from an attack of apoplexy. His researches on chloroform and other anaesthetics were appreciated by the profession. versus the 2013 one: > The journal accepts that some readers may wrongly have inferred that The Lancet failed to recognise Dr Snow's remarkable achievements in the field of epidemiology and, in particular, his visionary work in deducing the mode of transmission of epidemic cholera. * https://www.thelancet.com/journals/lancet/article/PIIS0140-6736(13)60830-2/fulltext https://www.thelancet.com/journals/lancet/article/PIIS0140-6... * https://www.newsweek.com/lancet-corrects-john-snows-1858-obituary-63035 https://www.newsweek.com/lancet-corrects-john-snows-1858-obi... * https://en.wikipedia.org/wiki/John_Snow https://en.wikipedia.org/wiki/John_Snow Better late than never I guess.
- geenew 4y agoIt's pedantic to say, but, based on what they said, their original was not incorrect, simply less exhaustive than it could have been. It could (and, seems to) be that the fellow's work on anaesthetics was seen as more important than his work on cholera. Given the (often overlooked) importance of modern anaesthetics, I can easily believe this.
- TedDoesntTalk 4y agoYet they were precise enough to mention that he died at 12:16 PM.
- thaumasiotes 4y agoBeing minute-level precise about quantities that can't be known to the minute isn't exactly something to point to to suggest that their other coverage was uncharacteristically sloppy.
- joewalker_ 4y agoI believe in this case that the reference to "noon, on the 16th instant" is referring to the 16th day of the month, not the minute after 12:00 - so, he died at noon on June 16. Encyclopaedia Britannica lists his date of death as 16/06/1858 (https://www.britannica.com/biography/John-Snow-British-physician https://www.britannica.com/biography/John-Snow-British-physi...) "Instant" means the current month, "ultimo" refers to the previous month and "proximo" the next (https://www.oxfordreference.com/display/10.1093/oi/authority.20110803100005710 https://www.oxfordreference.com/display/10.1093/oi/authority...).
- HervalFreire 4y agoSort of reminds me of the claim made by FDIC that they can back up all accounts in SVB. Maybe they can, but it's mainly the illusion that maintains the economy.
- lettergram 4y agoBetter question on that front is how it’s legal. It’s not what congress passed or the FDICs charter / mission statement. So it’s kinda just “we’re doing it, even if it’s illegal” Kinda like how they gave everyone a year or more where they could live in a place without paying rent via some BS CDC power that didn’t exist.
- dvt 4y agoThe legal loophole is that it's essentially a levy on the (other) banks, not the taxpayer. The comedy, of course, is that "bank customer" and "taxpayer" are more or less the same set of people.
- rafram 4y agoKind of, but I don’t pay any fees for my bank account(s) and I don’t expect to in the future, even with the small insurance rate increase levied by the FDIC to cover making SVB depositors whole. Making loans with my money is profitable enough for my bank that they don’t need to charge fees.
- failrate 4y agoTrust that the invisible hand is keeping itself busy funneling dark money.
- aaa_aaa 4y agoOh where is the free market in this?
- misssocrates 4y agoWhat corrections might be issued about our time in 100 years?
- InCityDreams 4y agoCrypto?
- quickthrower2 4y agoIs this an open invitation to downvote-immune conspiracy theories. If so, I'm in :-)
- simula67 4y ago> "We are now happy to make clear that none of the above was true," the FT wrote. Why are they happy?
- remexre 4y agoIt didn't sound like the FT was privy to this at the time?
- zarzavat 4y ago“Happy” as in satisfied or content, not as in joyous. e.g. “I’m happy to throw out the trash for you”, doesn’t mean you’ll be smiling the whole way through (unless you’re some kind of weird trash fetishist)
- deleted 4y ago[deleted]
- RexFactorem 4y ago[flagged]
- aaa_aaa 4y ago"John Maynard Keynes, the economist who famously advocated for public spending to stimulate economies during recession, knew about the deception, the researchers say. In a memo marked "Secret" he called it "a masterly manipulation," while also warning that it was not sustainable in the long run." I could not help noticing the hypocrisy of him. Also when I read the end of the paragraph I chuckled recalling his famous "In the long run we are all dead"
- benkara 4y ago[dead]
- leokennis 4y agoThis is one of the reasons I love reading British publications like the FT, Economist etc. While they are serious publications, at the same time they do not take themselves too seriously. They seem to be keenly aware of their standing and how they (and their readers) are perceived and communicate this in subtly humorous ways. Come to think of it, this seems to go for basically all British people I know.
- dalbasal 4y agoThere is some British humour to this, but I think this is FT taking themselves seriously. It's an old case, but timely and relevant. The story, now being old and quaint, provides a lower complexity, lower stakes model for monetary actions of the present.
- dalbasal 4y ago100 year old events allows us, to some extent, to sidestep some of the deep feelings monetary discussions tend to evoke. These things recur. Tricks from the Napoleonic wars are reused during WWI. WWI lessons form the basis of WWII's monetary systems, which lead pretty directly to modern monetary systems and theories. This event is not at all unrelated to the new deal, allied WWII monetary policies, lend lease, the marshall plan, Keynesianism, New Keynesianism (eg Friedman/monetarism) and into the present day. the Bank(ers) ... purchased the securities in their own names with the bonds then held by the Bank of England on its balance sheet. To hide the fact.. bonds were classified as holdings of 'Other Securities' in the Bank of England's balance sheet rather than as holdings of Government Securities." The BoE prints £350m of bonds. The BoE sells £100m to the public. BoE declares/lies that they successfully sold all £350m. The BoE buys the outstanding £250m of bonds itself using a virtual credit line backed by BoE bonds. Once the final transaction is completed, £250m of new money exists in government accounts and can be used to fund the war. This is exactly how UK/US/Etc government deficits work today. Bonds are created. Some are sold. The rest is bought (or kept) by the Fed/BoE itself. The "deception" allows order to remain in the banking world while also allowing governments to fight the war/depression/deficit. These days, the outright lies are not strictly necessary. Instead, we rely on complexity of ritual, bureaucracy and bond market transactions to "cover our tracks." One thing that has changed in society (if not in central banks and treasuries) is that "what gives money value" has become a non-question. I think that was different 100 years ago. The researchers write: "The long-held laissez-faire principles of the Liberal and Conservative parties were thus sacrificed to raise the capital upon which the War's outcome depended." This is a cliche. During the great irish famine 70 years prior, both the King and Prime Minister were involved in almost identical schemes. There are lots of examples. To me, the odd part is that we can't play it straight and admit that governments invent money... or that it's OK that they do. Every policy that relates to banking, central banking, money printing or such requires some sort of lie. Just like now, FDIC bails out ostensibly uninsured accounts/banks. This seemingly has to come with an assurance that it's not what it looks like... even though it obviously is. IE, it's not weird that money works like this. It is weird that we have to pretend like it doesn't.
- hgomersall 4y agoMaintaining the illusion that the government operates like a household is all part of the economic theatre that underpins much of fiscal and monetary policy. The moment sufficient people realise that money can be created for whatever the government needs, people will start asking why then can it not be created to benefit society in general. It's getting increasingly untenable as people realise that there is always money available to bail out this or that bunch of wealthy influentials.
- lonelygirl15a 4y agoReminds me of when the New York Times apologized to Robert Goddard when it turned out that rockets worked fine in outer space after all. https://www.forbes.com/sites/kionasmith/2018/07/19/the-correction-heard-round-the-world-when-the-new-york-times-apologized-to-robert-goddard/?sh=49269e604543 https://www.forbes.com/sites/kionasmith/2018/07/19/the-corre...