"Some implications of the Bank of England comparing itself to the MetOffice "

From Magic, Maths and Money:

At some point over the Christmas break I was cursing the fact that I was finding  it difficult to find a weather map.  That is a weather map with isobars and fronts marked on it not one with icons of cloud, rain and sun.  My favourite subject as a final year physics student was Atmospheric Physics: I was fascinated by how the differential equations delivered different weather, particularly cloud formations, based on different inputs.  Underpinning this academic interest my father taught me to sail and until I left the oil industry for academia, and lost money and free time as a result, I was a keen sailor.  This has left me with the ability to formulate my own idea of the future weather from pressure charts, and my expertise is such that my wife confidently ignores it.  Though I find pressure charts more useful than the rain icons, which I believe replace the cloud icon with a rain icon when 26 out of the 50 simulations the MetOffice runs return rain.

Meteorology also featured in a discussion of "fog" and "mist", on the BBC Radio 4's Today programme.  The meteorologist distinguished the two identical phenomenon in terms of visibility: fog is less than 1,000 m, mist indicates visibility is 1,000m-2,000m and they said terms like "thick fog" or "dense fog" are meaningless.  I checked my 1998 RYA Weather forecast book, where it said shipping forecasts do distinguish fog (200m-1000m), thick fog (50m-200m) and dense fog (less than 50m).  The distinctions the meteorologist was making come from aviation forecasts and they were ignoring maritime definitions, that describes visibility of 1,000m-2,000m as "Poor visibility", since it can be caused by mist, dust or smoke.

Two things struck me about these experiences.  Firstly the meteorologists definition reflected the relative significance of modern aviation over shipping, the public forecast definitions reflected this change in status, definitions were mutable to social status.  The weather map issue is more significant in that the maps it uses today provide the public with "the answer" (there is a 52% chance of rain tomorrow, here is a rain icon that is interpreted as rain) rather than the information to make a judgement.  I see this is an example of the transformation of the public sphere, where by a state institution inhibits the public's ability to think and criticise.  I think this type of transformation in relation to finance as being core to the lack of faith the public have in finance and the public's inability to knowledgeably criticise finance the root of financial crises.

A key episode in the transformation of finance was the 1844 Bank Charter Act.  This was a consequence of twenty years debate amongst economists on the  merits of fixing the relationship between money and gold. The currency school argued, with the support of statistics, that the easy availability of credit led to inflation and so there should be a link between the, concrete, quantity of gold and the availability of credit. The banking school argued that financial instability was a consequence of fluctuations in demand and supply and had nothing to do with the networks of banks providing credit by issuing their own notes. This argument was supported by the fact that high, not low, interest rates were associated with periods of inflation. The currency school won the argument and  the Bank Charter Act prohibited English banks, other than the Bank of England, from issuing notes and required all banks to hold Bank of England notes as a capital reserve to back up their lending. Banks could still create ‘money’ in bank deposits by lending money, which would be ‘destroyed’ once the loan was repaid but were under the centralised control of the Bank of England....MUCH MORE