'Financial Times' Issues 103-Year-Old Correction (2017)
npr.org
npr.org
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 ]
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
This does show how the 2010s had historically low interest rates as new bonds were always more expensive for the government until then
Thus if we were to reframe our understanding of timelines considering organization size.
Less than a few hundred people could be measured in time scales of a few weeks.
Large organizations with thousands of people change and move on time scales of years or decades.
Then understandably nations would often move on the time scales of centuries to do things, simply because of inertial forces.
I wonder how much of the discontent and mudslinging that now happens is a result of everything in our personal lives suddenly becoming faster without the rest of the human organizations surrounding it being able to speed up as well.
> regardless of ethics
Yes, that's the bad part.
Tom Scott has a video about bonds that are being serviced continuously for more than 370 years: https://www.youtube.com/watch?v=cfSIC8jwbQs
In the 1960s, There was a partial rapprochement with the west and the USSR paid out holders of shares in Baku Oil fields, if they could produce the paperwork...
- Tsar-era government debt had understandingly been repudiated by the communist government and mostly traded as a collector's item, with individual bonds framed or used as bathroom wallpaper or just chucked out. But enough of it was still in peoples' hands that the USSR had to pay it off before they could get access to to debt markets in the 80s.
- IG Farben shares continued to be listed and traded into the 21st century. I remember in the 80s a few crass English friends of mine who worked in the City bought and sold some shares, mainly amused that a Reichsmark-Sterling exchange rate was still available and in fact fluctuated, entirely for the trading of this one "asset".
Finance can be weird, yet hard nosed sometimes.
It was only in 2015 that, according to the Treasury, British taxpayers finished ‘paying off’ the debt which the British government incurred in order to compensate British slave owners in 1835 because of the abolition of slavery. Abolition meant their profiteering from human misery would (gradually) come to an end. Not a penny was paid to those who were enslaved and brutalised.
The British government borrowed £20 million to compensate slave owners, which amounted to a massive 40 percent of the Treasury’s annual income or about 5 percent of British GDP. The loan was one of the largest in history.
[1] https://www.bankofengland.co.uk/working-paper/2022/the-colle...
Eight year old 'news' now, but still relatively recent given it was a near 200 year note.
I wonder how that compares (perhaps as percentage of GDP or per capita or so) to the expenses of the American civil war.
(Also, would be a bit odd for the British government to pay people who were not enslaved by it, but instead by private individuals)
With the forenote that I'm opposed to slavery, British companies and wealthy individuals purchased (or owned) copper from Welsh mines (or some other commodity) which they traded in Africa with African nations in exchange for humans (who were purchased already 'enslaved') and then either further traded in the Americas to plantations or used directly in plantations owned.
eg:
https://www.walesonline.co.uk/news/wales-news/uncomfortable-...
This was a large and complex business enterprise and didn't involve formal enslavement by the British Government.
The Abolition referenced above was the British Government outlawing slavery within its territories and by its citizens - as an act of Government it was only supported on the promise of slave owners (which included nice little old widowed grannies of modest means with a 2/6 th share in a slave left by an uncle) being recompensed for their forfeited property.
The funds that flowed to former British slave owners went on to establish canals, factories, rail lines, develop colonies in Australia, etc.
The main reason why it is not commonly seen that way anymore is that history is written by the winners.
Hmm... I'm now wondering if North Africa should be paying reparations as the ones who did the actual enslaving.
Doesn't sound right. It only came into existence in 1914, so only one "hundred" since then. What are I not seeing? :)
https://amp.theguardian.com/business/blog/2014/oct/31/paying...
> 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/PIIS0140-6...
* https://www.newsweek.com/lancet-corrects-john-snows-1858-obi...
* https://en.wikipedia.org/wiki/John_Snow
Better late than never I guess.
"Instant" means the current month, "ultimo" refers to the previous month and "proximo" the next (https://www.oxfordreference.com/display/10.1093/oi/authority...).
That said, I believe the significance of Snow's 1854 findings were not yet widely appreciated in 1858, and in this case the omission in the original obituary seems understandable and reasonable.
His work on cholera was completely ignored for years and he gave up on trying to convince people about Germ Theory and went back to anaesthetics.
I am confused. What is the Lancet blaming its readers for? Why was this inference wrong?
Interesting to contrast this with the modern version, on Wikipedia:
- "Snow suffered a stroke while working in his London office on 10 June 1858. He was 45 years old at the time.[38] [...] It has been speculated that his premature death may have been related to his frequent exposure and experimentation with anesthetic gases, which is now known to have numerous adverse health effects. Snow administered and experimented with ether, chloroform, ethyl nitrate, carbon disulfide, benzene, bromoform, ethyl bromide and dichloroethane during his lifetime.[40]"
Come to think of it, this seems to go for basically all British people I know.
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.
>> "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.
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"
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"
https://www.forbes.com/sites/kionasmith/2018/07/19/the-corre...
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.
Making an argument that we should all eat this cost to avoid contagion, etc. might hold some water (and the Fed was stuck between a rock and a hard place), but let's not pretend it's not a cost we're all eating, on top of it being an inflationary move.
FDIC determined that a 100% advance dividend was appropriate, but merchandised it in a way that allows the receivership bank to continue operating as normal.
Because, when, after allowing FDIC broader discretion to decide how to resolve bank failures so long as at least insured balances were covered from the creation of the FDIC, Congress narrowed that discretion in 1991 by adopting the least-cost rule which normally prohibits FDIC from committing more from the Deposit Insurance Fund than necessary to cover insured accounts, they also permitted the FDIC to choose a higher-cost resolution when the required set of officials certified the existence of a systemic risk. (The system risk provision itself precedes the least-cost rule, but when the least-cost rule was adopted, the procedure for systemic risk waa changed and the system risk privision was made an exception to the least cost rule.)
A name is a imaginary representation, this is different from a factual claim about reality.
The bank and government claim that if I want my money they can give me my money in green physical paper bills because it exists in the bank.
Problem is that it's a lie. That's why bank runs are possible. And the current bank runs ends with another institution taking over and articulating the same lie.
It's similar to how banknotes originally were 1:1 correlated with physical gold (or whatever) in the vault, then banks realized they could lend out more notes than they have gold in the vault.
Very similar situation with electronic vs paper dollars.
Most bank deposits are created out of thin air by commercial banks when they make loans. There isn't enough paper money to cover all those deposits.
https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/m...
That's what I am saying am I not? The bank makes a business claim that they can redeem ALL of the green paper back to everyone at the same time.
But I said it's a lie. It's illusion.
>Most bank deposits are created out of thin air by commercial banks when they make loans. There isn't enough paper money to cover all those deposits.
woosh.
They never claimed this. Everyone has known about bank runs, fractional reserve banking, etc. for a long time.
But in principle the bank is suppose have cash redeemable.
Would you ever put money in a bank that you know for a fact will never be able to redeem your money ever??
Checks, account transfers, wire transfers, etc.
There is no fundamental limit on the Federal Reserve to create (or destroy) money as needed. The Fed, as other central banks, does however exercise that power very judiciously, and with specific targets (inflation, unemployment) as its foundational charter.
Note that both inflation and unemployment are not assessed by the Fed, but by an independent federal department, Labour. It's a classic instance of not giving a single entity control over both the means of control and the measurement of success.
However, in principal The bank promises redeemable cash, that's why people stay in banks. But it's a lie. Again bank runs exist because of this lie.
Everybody knows the Fed screws it all up. A wire transfer among competing banks would make the competing bank demand that the other bank redeem the transfer in green paper money.
However, because the Fed is the bank of banks, it just becomes number a change on the balance sheet of the fed.
Because whatever it is, it's a figment of your, or someone else's, imagination. Bank settlements typically occur via SWIFT: <https://en.wikipedia.org/wiki/SWIFT> <https://www.investopedia.com/articles/personal-finance/05051...>
The preferred form of a large-denomination withdrawal from a bank will either be a chashier's check or a wire transfer in virtually all cases.
I'm not sure 'imaginary' is the right word. Value is real whether or not it's a social construction.
There's a widespread misperception that money is some physical entity. It is not.
A description I've come to use is that money is the medium of greatest acceptance within a given market or region. Note that money need not be paper notes, coins, or even any sort of government issue. There's an excellent 1945 paper on the economic organisation of a POW camp which describes how an economy based largely on cigarettes and various Red Cross ration items emerged amongst Allied prisoners of Germany during WWII:
<https://www.jstor.org/stable/2550133>
In particular, it looks at what problems money can solve (and what happens when there's an insufficient money supply --- in this case, cigarettes), as well as those it cannot (an insufficiency of goods generally to transact).
At various points in time, clams, beaver pelts, cowhides, knives, massive multi-tonne stones (<https://www.npr.org/sections/money/2011/02/15/131934618/the-...>), letters of credit, and cryptographic hashes have served as money. In mediaeval Europe, Roman coins were long used in trade, well after the Roman empire itself had fallen. In parts of the world, US dollars are a preferred currency even outside the 50 states and US territories, with several countries officially adopting the US dollar as their own national currency: <https://www.investopedia.com/articles/forex/040915/countries...>.
William Stanley Jevons defined what to him were the vital set of properties required of money in Money and the Mechanism of Exchange (1877): utility/value, portability, indestructibility, homogeneity, divisibility, stability, cognixability.
<https://archive.org/details/moneyexchange00jevorich/page/30/...>
I disagree with him on the first property. Money may have an intrinsic value (as with gold or specie), but need not. In particular, the intrinsic value of money is inverse to the trust in the monetary authority itself. That is, in a low trust financial system, money typically consists of or is backed by some physical store of value. In a high trust financial system, currency tokens need have no fundamental utility (as with paper banknotes or digital accounts), but rather there is a trust in the system as a whole to function predictably and reliably.
The value represented by money is one that is socially, legally, and economically recognised. It's ultimately a tokenisation of credit and wealth. It is not directly tied to any physical characteristics (though as a medium of exchange it can be traded for any given physical commodity or service). That's not "imaginary" in the same sense that other social conventions such as which side of the road to drive on are not imaginary. Which side to drive on is entirely arbitrary as an initial social choice, but once that side has been chosen there are very real consequences to flouting the convention.
Social construct != imaginary.
<https://fred.stlouisfed.org/series/DPSACBW027SBOG>
Total US currency in circulation is ... just over $2 trillion (December 2021):
<https://www.uscurrency.gov/life-cycle/data/circulation>
Bank deposits are not all financial wealth, though they're a substantial share of it. Even given that, the facts, from the US Federal Reserve (it runs both FRED and currency.gov), are that there is nearly ten times the amount of financial wealth in bank deposits as there are green pieces of paper representing that wealth.
Federal Reserve Notes are currency used for some forms of financial transactions. They are not equivalent to the total amount of financial wealth, most of which is noted in accounts of various types.
You might also want to familiarise yourself with the various measures of money supply (spoiler: it's not little green men, erm, pieces of paper):
Once you think about currencies this way, you realize that while crypto could be used as a currency, it isn't; its a speculative investment, like a digital beanie baby.
P.S.: Aaand, ninjaed.
Having a couple straw buyers and actual money to use for the war would seem to be easier to hide and utilize.
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-...
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?
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.
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
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.
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.
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.
That's one way of putting it, though kind of specific to current discourse. You might also say the "illusion" that a central bank is just a bank. You could say the the "illusion" is that banks are firms, providing financial services for profit like any other type of service.
In times past, the "illusion" was that banks are "fully backed and solvent." It's hard to pin down exactly what the "deception" is. Almost always, it involves surprisingly moralistic language.
Our generations' "bailout story" is that bailouts are necessary for stability. But... the problem with bailouts is "moral hazard," which in current language means specifically "externalized long-tail risk." These moral hazards are what (in the current story) cause bank failures in the first place. The business cycle has been reduced to a banking cycle, and it's now described as a cycle of moral failures.
In truly modern (postmodern?) fashion, these days everyone sees that there's a lie, but no one agrees on what the lie is.
Why are they happy?