Tuesday, November 2, 2021

Plausible

Plausible (pronounced plaw-zuh-buhl)

(1) Having an appearance of truth or reason; seemingly worthy of approval or acceptance; credible; believable; possibly or probably true.

(2) Well-spoken and apparently, but often deceptively, worthy of confidence or trust.  Obtaining approbation; specifically pleasing; apparently right; specious.

(3) Worthy of being applauded; praiseworthy; commendable; ready (obsolete).

1535–1545: From the Middle English, from the Latin plausibilis (deserving applause, praiseworthy, acceptable, pleasing), the construct being plausus (past participle of plaudere (to applaud)) + ibilis (ible) (the Latin adjectival suffix (now usually in a passive sense) which creates meanings "able to be, relevant or suitable to, in accordance with" or expressing capacity or worthiness in a passive sense). The meaning "having the appearance of truth" is noted from the 1560s.  The plausible has become nuanced (the comparative more plausible, the superlative most plausible) but synonyms (of the historic meaning) include credible, probable, persuasive, possible, logical, valid, conceivable, tenable, creditable, likely, presumable, sound & supposable.  Plausible is an adjective, plausibly is an adverb, plausibility is a noun; the noun plural is plausibilities (although the antonym implausibilities is probably the more often heard form.

Cynicism is nothing new and in English the meaning "having a specious or superficial appearance of trustworthiness" had been appended as early as the 1560s.  The noun has been documented since the 1590s in the sense of "quality of being worthy of praise or acceptance" although it too was soon co-opted and by at least the 1640s was also used to suggest "a specious or superficial appearance of being right or worthy of acceptance".  The adjective implausible (not having an appearance of truth or credibility) dates from the 1670s although as late as earlier in the century it was still being used in its original sense of "not worthy of applause".  There's a prejudice that "implausible" and related forms are used more often than "plausible" and its relations nut it may simply we we notice the former more and "plausible deniability" is really just a loaded way of saying "implausible".

Plausible Deniability

Plausible deniability is a construct of language to be used in situations where it’s possible to tell lies because it’s not possible for others to prove the truth.  In common law jurisdictions, it exists also as a legal concept given the evidential onus of proof falls (usually) not upon the defendant so if the opponent cannot offer evidence to support an allegation, variously beyond reasonable doubt or on the balance of probabilities, accusations can plausibly be denied regardless of the truth.  Most associated with politicians or public officials but practiced also by those in corporate chains of command, it’s used usually to deny knowledge of or responsibility for anything unlawful, immoral or in some way disreputable.  Depending on the circumstances, it can protect institutions from damage or, more typically, shift blame (and consequences) from someone senior to others lower in the hierarchy.  While the art & science of plausible deniability doubtlessly has been practiced since the origins of humanity, the phrase was coined within the US Central Intelligence Agency (CIA), apparently as early as the 1950s although it seems not to have appeared in any printed source available to the public until 1964 and became part of general use only during the Watergate crisis (1973-1974).  Some sources credit Allen Dulles (1893–1969; Director of Central Intelligence (DCI) 1953-1961) himself with the first public use but, like his brother (John Foster Dulles (1888–1959; US Secretary of State 1953-1959)), he's blamed for much.

Lindsay Lohan and her lawyer in court, Los Angeles, December 2011.

Within the CIA, it described the withholding of information from senior officials in order to protect them from repercussions in the event that illegal or unpopular activities became public knowledge.  This was a time when the CIA was lawfully permitted to assassinate people, especially uncooperative politicians in troublesome countries.  It's obviously a murky business but the consensus seems to be the CIA still kills people but never uses the word assassination and, dating from an executive order issued by Gerald Ford (1913–2006; US president 1974-1977), the agency is no longer allowed to kill heads of state.  This prohibition was presumably a kind of "professional courtesy" on the part of President Ford and one which he must have hoped would be reciprocated.  It's not difficult to guess which countries definitely have at least one executioner silently on the payroll and which almost certainly don't but most are in that grey area of uncertainty.

Alastair Campbell (b 1957; Downing Street Director of Communications & official spokesperson (1997–2003)) with Vladimir Putin (b 1952; Prime-Minister of Russia 1999-2000 & 2008-2012, President of Russia 1999-2008 & since 2012) and Tony Blair (b 1953; UK Prime Minister 1997-2007).  Mr Putin in recent years has stretched plausible deniability well beyond the point at which plausibility can be said to have become implausible. 

One fine practitioner of the art was one-time tabloid journalist Alastair Campbell, spokesman for the New Labour government during most of Tony Blair’s premiership.  Campbell added a post-modern twist in that he dealt mostly with journalists who knew when he was lying and they knew that he knew they knew.  Things evolved to the point where Campbell came to believe this was proof of his cleverness and some suspected he began to lie, even when the truth would have been harmless, just to show-off his cynical contempt for just about everyone else.  It worked for a while and certainly suited the New Labour zeitgeist but later, when employed as press officer for the British & Irish Lions on their 2005 tour of New Zealand, his effectiveness was limited because even when telling the truth, which, in fairness, he often did, the baggage of his past made everything sound like spin and lies.  The Lions lost the test series 3-0, the first time in 22 years they lost every test match on tour but nobody suggested Campbell was in anyway responsible for the on-field performance.  Still, plausibility deniability remains an essential skill in modern media management.  An example would be:

(1) You run a government in some country about which, for a variety of reasons, Western governments tend not to make tiresome complaints.  Here, you can do just about anything you wish.

(2) One of your people has run away to another country and is being really annoying.  You arrange to have him invited home for discussions over a cup of coffee.

(3) They crew sent to issue the invitation botch the job, murdering him in a quite gruesome manner (ie the method not far removed from how they dispatch them on home soil).

(4) You deny it was an execution, suggesting death happened when an argument about football or something became heated.  (Plausible denial #1).

(5) Didn’t work.  You now deny ordering any connection with the operation, saying it was an unauthorized rogue team.  (Plausible denial #2).

(6) The other country lists nineteen suspects involved in the murder and demands extradition for trial.

(7) You work out which of the suspects is most expendable and it's announced he had died in "an accident" (that and "natural causes" often a grey area you've noticed).  You hope the sacrifice will satisfy honor on both sides.  (Plausible denial #3).

(8) Problem isn’t going away, even though kind folks in many countries are helping you try to make it go away.  You have the remaining eighteen suspects arrested and locked-up somewhere reasonably pleasant and most secret.

(9) Other country is still being tiresome, maintaining people who kill others should be tried for murder in country where crime was committed.  You understand the legal point but still can't see what all the fuss is about.

(10) You arrange it to be announced the eighteen suspects are dead, all SWATE (shot while attempting to escape).  (Plausible denial #4).  The system works.

Monday, November 1, 2021

Clergy

Clergy (pronounced klur-jee)

The group or body of ordained persons in a religion, as distinguished from the laity (the non-ordained); applied especially within Christendom.

1175–1225: From the Middle English clerge & clergie from the Old French clergé (learned men) from the Late Latin clericātus (office of a priest) from clericalis & clēricus (one ordained for religious services), from the Ancient Greek κληρικός (klērikós) (of the clergy).  It’s from the Old French clergie (from clerc) in the sense of “learned men, skilled in the arts of erudition, writing and transcription” that the modern English clerk evolved, the meaning "pertaining to clerks and copyists" dating from 1798.  Clericalism sacerdotalism (power or influence of the clergy) is from 1849, very much in the spirit of the European revolutions of 1848; clericality (quality of being clerical) is from the 1650s.  Clergy, clergyman, clergywoman and (the very modern) clergy person are nouns and the adjectives adjectives clergylike, anticlergy and proclergy (all sometimes hyphenated) were in well-known during the centuries when church and secular forces contested control of British and European; the noun plural is clergies.

The legal doctrine benefit of clergy was formalised first in the 1510s and was the exemption of ecclesiastics from certain criminal processes before secular judges although in England it had been first recognized in 1274; over time it was gradually restricted being abolished finally in 1827.  Special deals for English clergy were nothing new.  The Rosetta Stone, the granodiorite stele created in Egypt in 196 BC and re-discovered in 1799 (which became the key to deciphering Egyptian hieroglyphs) included a degree granting tax-breaks to clergy, rights which in various jurisdictions persist to this day.

Clergyman was a familiar term from the thirteenth century but the more rare clergywoman was unknown until the 1670s and then just as a general descriptor of nuns.  It wasn’t until 1871 it could refer to a "woman pastor, woman of the clerical profession" but in between, it was used humorously (and disparagingly) about the domineering wife of a clergyman, an idea Anthony Trollope (1815-1882) used to great comic effect when writing of the bishop’s wife in the Chronicles of Barsetshire (1855-1867).  Clergess (member of a female religious order) was attested from the late fourteenth century; clergy-feme (clergyman's wife or woman) was first noted in the 1580s.

Church of England (and worldwide Anglican) clergy

A clergyman.  Cosmo Gordon Lang (1864–1945), Archbishop of Canterbury (1928–1942).

In the Anglican Church, there are in excess of two-dozen titles before one even reaches then levels of the right reverend and very reverend gentlemen but despite the extraordinary proliferation of styles and titles within the Anglican clergy, under canon law, there are but three types of ordained person: a bishop, a priest, and a deacon.  With very few exceptions, the people who hold other offices and titles will always be (1) a bishop, (2) a priest or (3) a deacon, with their other title(s) overlaid atop their primary appointment.  There doesn't seem to be any theological justification for all this ecclesiastical bureaucratization but as those who study organizational behavior have often noted, structures once established can quickly become established tradition and assume their own inertia.

Bishop

A member of the clergy who has been commissioned to oversee the work of a group of congregations and the priests & Deacons who serve them; that group of congregations is called a diocese.  Only a bishop may ordain persons to the order of deacon and priest; only a bishop may also ordain (also called a consecration) another bishop, but must do so in the company of other bishops and a bishop must have been previously have been ordained a priest.  In the Church of England, twenty-six bishops (The Lords Spiritual) sit by historic right in the House of Lords, the UK parliament’s upper house.

Priest

A member of the clergy who has been commissioned to preside at gatherings around the Lord’s Table (the Holy Communion) and to extend assurance of God’s forgiveness to those who truly repent of their sins.  A person who is a priest must previously have been ordained as a deacon, and continues to be a deacon throughout his or her life as a priest.  A few churches now use presbyter for this order.

Feminist Lindsay Lohan in habit with Smith & Wesson .500 Magnum in Machete (2010), makes a persuasive case for the ordination of women in the Roman Catholic Church.  In the Anglican communion, there are now even women bishops although some reactionary dioceses such as Sydney restrict women to the diaconate (ie deacons) where they may assist "real" priests although their exact role can vary between parishes.  The Sydney diocese, where there's still a hankering for popery, refuses to ordain women as priests and bishops.

Deacon

A member of the clergy who has been commissioned to proclaim the Gospel, assist at the Holy Communion, and to call the church, by word and example, to its ministry of service and healing.

Archbishop

A bishop who presides over several dioceses in a large region, a position which includes some supervisory responsibilities over both dioceses and bishops in that region.  In the Church of England, the Archbishop of Canterbury is the (nominal and spiritual) head of the worldwide Anglican Communion.

Archdeacon

A member of the clergy appointed to assist the bishop in certain administrative and pastoral duties in a diocese.  An archdeacon may administer a district comprising a group of parishes which is usually known as an Archdeaconry.  Despite the name, there is now no direct connection with the order of deacon, and an archdeacon is generally one of the priests of a diocese.  The position and title normally expires upon resignation or retirement, although certain retired archdeacons in good standing with their bishop often retain the title.

Aspirant

A person who has indicated to the bishop that he or she hopes to be ordained and is in the preliminary interview process.  Once the bishop has formally accepted their candidacy, the person is called a postulant.

Bishop-elect

A person chosen to become a bishop, but not yet consecrated; the word elect simply means chosen.  Anglican bishops are selected by a variety of means: some are elected by the clergy and laity of the diocese where they will serve, but some are selected by a specially-constituted committee (often called an Electoral College).  In England, historically, bishops were personal appointments by the monarch; now the sovereign appoints on the recommendation of the prime minister.  This process has not been without the odd hiccup.  Once, Lord Salisbury (1903; UK prime minister for thirteen years variously 1885-1902), as was the usual practice, received from the Archbishop of Canterbury the name of the two clergymen he had considered for appointment to a vacant bishopric.  Unfortunately, the spellings of the two names were similar and the prime-minister inadvertently sent to the palace the wrong name.  After the gentleman was enthroned he was informed of the error and remarked: "Oh, I daresay he will do just as well".     

Canon

Canon is an honorary title conferred upon a member of the clergy (and some lay persons) for faithful and valuable service to the church.  The standard joke in church circles is it's hard to find men of sufficient calibre to fulfil the role and once appointed, they should never be fired.

Chaplain

A member of the clergy whose employment is not in a parish or congregation, but who undertakes pastoral care and organizes worship services within a non-religious organization such as a school, hospital or the military.  There are a few special appointments where a chaplain may be a spiritual advisor and personal assistant to a bishop or a monarch.

Coadjutor

A bishop who has been appointed to assist a diocesan bishop.  Generally, a Coadjutor automatically becomes Diocesan in his or her own right, upon the retirement or resignation of the person currently in that office.

Commissary

A person appointed to exercise the administrative functions of a bishop, when the actual bishop is away from the diocese or otherwise indisposed.  A commissary may not perform any of the spiritual functions of a bishop, such as ordinations and the appointment is inherently temporary, the role expiring immediately upon the bishop’s return.

Curate

A deacon or a priest who functions as an assistant or subordinate to the Incumbent of a parish.  The word curate refers to the cure or care of souls, and while the word does suggest a primary and senior responsibility (indeed, in a French-speaking Roman Catholic Church the senior priest of a parish is called a curé), in the Anglican Church, a curate is always an assistant.

Dean

The most common meaning of this word in Anglicanism is “a priest who is the Incumbent of a cathedral, and the most senior priest of a diocese (under the bishop)”.  This title is not to be confused with academic deans and there are other Anglican officials with dean in their titles (such as Regional or District Dean) and their most familiar role is as the administrative heads of cathedrals.

Diocesan

A bishop in charge of a Diocese and it’s correct to say either the Diocesan or the diocesan bishop when referring to this office.  The Diocesan may also be referred to as the Ordinary.

Honorary (somethings)

An Honorary Assistant or Honorary Curate (and a few other variants) indicates an ordained person who functions as one of the clergy in a parish, but does so on a voluntary basis.  He or she may have other employment, or be retired from full-time paid ministry, but will preach, preside, or do pastoral care in the parish without receiving a living wage for it. The position is almost always official, formally designated as such by licence or certificate from the Bishop.  In this, honorary appointments in the church essentially mirror academic practice.

Father

Father is not actually a title, simply a form of address, a kind of courtesy title.

Incumbent

A technical term for a member of the clergy who has primary administrative, pastoral, and liturgical responsibilities in a parish or congregation.  Despite its official nature, this term is seldom used in conversation, and is often unknown among ordinary church members, who will usually refer to their Incumbent as the Rector.

Lay Canon

A non-ordained person who is given the honorary title of Canon, usually as a form of recognition for their leadership in some aspect of the church’s life.

Metropolitan

An archbishop who presides over a region of the church which may include several dioceses, bishops, and even archbishops; second only to a Primate in authority and responsibility.  Some Metropolitans are also Primates, and are officially described as Primate and Metropolitan.

Ministry Developer

In congregations and districts where the traditional clergy tasks (preaching, pastoral care, presiding etc) are divided up and done on a voluntary basis by different individuals (some ordained, some laity), the team leader is often given the title Ministry Developer.  This person is most often ordained and seminary trained, but need not be, provided only that he or she is good at enabling teamwork and communicating a rich sense of the church’s mission.

Ordinand

A person in the process of being ordained; preparation having been accomplished, the title exists only on the day of ordination.  Before, during, and after the liturgy, the brand new deacon or priest is correctly called an ordinand.

Ordinary

In a diocese or jurisdiction where there are a number of bishops, one of them always holds primary authority, and is called the Diocesan or, in some jurisdictions, the Ordinary (always with an uppercase O).  The etymology of ordinary in this context is murky but may relate to this person’s responsibility for deciding who gets ordained.

In the Anglican Church of Canada, a bishop who directs Anglican chaplains in the armed forces is also called the Bishop Ordinary.  This person is not assigned to any particular diocese and the duties of a Bishop Ordinary cross many diocesan and even national boundaries.

Parson

This is now an almost colloquial term applied to a member of the Anglican clergy.  Historically, in England it was an official designation for a salaried priest in charge of a parish.  The word derives from the Latin persona from which also is derived the very generic “person.”

Pastor

Although not a formal title in the Anglican Communion, some clergy find it acceptable, because it’s more widely understood than Rector or Incumbent.  Pastor means shepherd, and is quite suitable to use for any priest who has pastoral responsibilities.

Postulant

A person who has been accepted by the bishop as a candidate for ordination and is in the process of being trained.

Prebendary

An honorary canon, a title used almost exclusively in the UK.  Historically, in England, a prebendary was a member of the clerical staff of a cathedral or collegiate church; a paid position whose income derived from specially allocated rents of land administered by that church, the properties generating such rents was called a prebend.  Although prebend-based income is now rare (some claim it’s extinct) the honorary title of prebendary is still England.

Precentor

A person, usually a member of the clergy, who is responsible for organizing the liturgy and music of a large church (such as a great cathedral).

Presbyter

Another word for priest, both from the Ancient Greek πρεσβυτερος (presbuteros) (church elder).  There are dense theological arguments surrounding these words and while all official Anglican documents and ordination liturgies use priest, there are some places in the church which use presbyter to refer to this order, the second of the three basic Anglican orders.

Priest-in-Charge

A person who has the responsibilities and duties of an Incumbent, but on a temporary basis, the appointment always at the discretion of the bishop.

Primate

A bishop who presides over the Anglican Church in a large region, or even in an entire country.  There will be many dioceses, bishops, and occasionally some archbishops under a primate’s supervision.  The person who holds a comparable position in Scotland is called Primus and, in the US, the equivalent position is the Presiding Bishop.

Provost

Provost has many meanings in English, used also to refer to military police or the principal of a university college.  When applied to a member of the Anglican clergy, the word refers to a priest who is the Incumbent of a cathedral church.  The more common word for this position is Dean, but in Scotland, Kenya and some smaller countries, the correct title is Provost.

Rector

A priest who has primary administrative, pastoral, and liturgical responsibilities in a parish or congregation; similar to and sometimes identical with an Incumbent.  Some heads of academic schools are also called Rector but such officials need not be ordained, or connected with the church.

Regional bishop

A bishop in a large diocese who is one of several bishops, each having oversight over a specific geographic area of parishes and clergy within that diocese.  This person may be a coadjutor or a suffragan, or even the Diocesan.  Technically, regional bishops can function anywhere within the diocese, but they have a closer relationship with and more detailed knowledge of their particular district.

Regional Dean

A priest who has some pastoral and administrative oversight of a small group of parishes or congregations.  This position has less weight than that of an archdeacon, so there can be several regional deans in an archdeacon’s area of responsibility.  A regional dean is generally an Incumbent of one of the parishes in his or her Deanery.  The titles Rural Dean and District Dean refer to exactly the same function and of the three Rural Dean is probably the oldest but is falling from use as the worldwide trend of urbanisation continues.

Suffragan

A bishop who has been appointed to assist a diocesan bishop (the Ordinary).  In contrast to the position of Coadjutor, a Suffragan is not automatically the Diocesan’s successor.

Transitional Diaconate

A category of clergy who are ordained deacon in preparation for being ordained priest.  Clergy in the transitional diaconate tend to spend up to a year serving as deacons, after which ordination to the priesthood takes place following further review and inquiry.

Vicar

This has slightly different meanings in various parts of the Anglican world.  In England, a vicar is a salaried parish priest whereas in the US, they’re a priest responsible either for a mission or for an institutional chapel (a mission is a congregation that is either recently founded, or is not capable of being financially self-sustaining; a chapel is a place of worship in a hospital, or an airport, or a government building).  In many places the word vicar can be used for a priest who is acting in behalf of a senior official who is not present (similar to the English word, vicarious). 

Vocational Diaconate

A category of clergy ordained as deacons who intend to remain so for the rest of their lives, without being further ordained to the priesthood.  The role exists to provide for those who feel their vocation to be that of ministry and service, rather than presiding.

Sunday, October 31, 2021

Treasure

Treasure (pronounced trezh-er)

(1) Wealth or riches stored or accumulated, especially in the form of precious metals, money, jewels, or plate; wealth, rich materials, or valuable things.

(2) A thing, beast or person greatly valued or highly prized.

(3) As the verbs treasured & treasuring, carefully to retain or keep in store, as in the mind; to regard or treat as precious; cherish; to put away for security or future use, as money.

(4) A term of endearment in the sense of “cherish” (archaic).

1125–1175: From the Middle English tresor, (displacing the native schat) from the Old French tresor (treasury, hoard, treasure (trésor in Modern French)), from the Gallo-Roman tresaurus, from the Latin thēsaurus (storehouse, hoard; anything hoarded (source also of Spanish & Italian tesoro)), from the Ancient Greek θησαυρός thēsauros (store, treasure, treasure house) (related to tithenai (to put, to place), from a reduplicated form of the primitive Indo-European root dhe- (to set, put).  In Middle English there was also the spelling thresur, the modern spelling is from the sixteenth century.  It replaced the Old English goldhord & maðm and the meaning extended from hoards of precious metals etc to a general sense of "anything valued" from circa 1200.  The verb emerged in late fourteenth century Middle English, a derivative of the noun.  It meant literally "to amass treasure; to store up for the future" but was used also in the figurative sense as "regard as precious, retain carefully in the mind" from treasure.  The first recorded treasure hunt happened in 1913 a relatively modern alternative spelling was the now almost extinct treasuer.  Treasure is a noun & verb, treasurable & treasureless are adjectives, treasury, treasurership, treasuress & treasurer are nouns, treasuring is a verb and treasured is a verb & adjective; the noun plural is treaures.

The noun treasurer was from the late thirteenth century, from the Old North French & Anglo-French tresorer & and the Old French tresorier, from tresor.  The noun treasury (a room or vault in which to store and safeguard treasure) dates from circa 1300, from the eleventh century Old French tresorie (treasury), from tresor.  The meaning "department of state that controls public revenue" was recorded from late the late fourteenth century and the first treasury bill was issued in 1797.  An Old English word for "room for treasure" was maðm-hus and for "treasury", it was feo-hus (connected to the modern fee).  There is a connection with the noun hoard, from the Old English hord (a treasure, valuable stock or store, an accumulation of something for preservation or future use and hence "any mass of things preserved by being deposited together," from the Proto-Germanic huzdam (source also of Old Saxon hord (treasure, hidden or inmost place)).  It was cognate with the Old Norse hodd, the German Hort and the Gothic huzd (treasure; literally "hidden treasure"), from the primitive Indo-European root (s)keu- (to cover, conceal).

T-Paper

US Treasury Building, Washington DC.

T-paper (Treasury-paper) is the collective term for securities issued by United States Treasury.  The US Treasury Department sells bills, notes, and bonds at auction with a fixed interest rate.  When demand is high, bidders pay higher than face value to receive the interest rate.  When demand is low, they pay less, thus the yield declines as the price rises; at times of crisis, yield drops as investors seek security at the expense of income.  T-paper gained the name from being once issued on physical paper or cardboard) but are exist in now digital form and are also referred to as “Treasurys”.

1864 US $100 three-year treasury note (6% annual interest rate, compounded semi-annually, payable at maturity); a bearer-bond, paid over-the-counter, to whomever held the physical paper.  

Although physical paper is no longer much associated with T-paper, a linguistic legacy persists in the “coupon stripping” market.  There’s long been a secondary market for T-paper, one flavor of which is where the interest and principal components have been separated, or "stripped" so they may be re-sold as separate products.  The name is derived from the days of paper and cardboard when traders literally would separate the paper interest coupons from the paper securities.  In the secondary market, the two pieces of paper than became independent retail items, one yielding interest, the principal re-sold as a zero-coupon bond.  The correct name in the digital age is Separate Trading of Registered Interest and Principal Securities (STRIPS).  STRIPS, more than some other products, reflects the dual role of the Treasury as both regulator and participant in the financial gambling market, not itself an issuer of STRIPS (that part of the market reserved for brokers and the non-retail arms of banks), instead the maintaining the transaction and ownership register.

1976 US $5000 ten-year treasury note with 8% rate.

The difference in types of T-Paper are defined by the length of the term: the time until the bond the matures at which point it is repaid.  All T-paper are really bonds, the nomenclature just part of the jargon of the industry.  Treasury Bills are issued for less than a year, Treasury Notes for 2, 3, 5, and 10 years and Treasury Bonds for 30 years.  Still unconfirmed is whether recent discussions by Treasury about longer-term bonds will be pursued although demand seemingly exists, fifty and even hundred-year bonds mentioned.  There has been speculation about the demand which, given the amount of money said now to be “sloshing around” the system, wasn’t unexpected and the large holdings of various sovereign wealth funds may also find the longer terms attractive, for reasons political as well as fiscal.  It anyway represents one school of thought on what to do about the money supply. 

A more recent creation is the Treasury Inflation-Protected Security (TIPS), bond, the principal of which is indexed against inflation using the Consumer Price Index (CPI).  As the CPI rises, the principal is adjusted upward; if the index falls, the principal is adjusted downwards, the coupon rate remaining constant, but generating a different amount of interest when multiplied by the inflation-adjusted principal.  This has the effect of protecting the holder against the inflation rate as measured by the CPI.  The current version of TIPS was created in 1997 and is offered with five, ten and thirty year maturities.

Spikes and waves:  US T-Note yield against inflation projections and outcomes with events noted, 2000-2020.

Inflation-indexed bonds became common in government bond markets in the late twentieth century, many emerging in the inflationary environment which followed (1) the distortions in US government spending the 1960s, (2) the structural changes to the Bretton-Woods system in the 1970s  and (3) the consequences of the oil shocks in the same decade; they’re essentially a form of hedging.  In the orthodox bond market, even those issued for long terms promise the holder a fixed dollar (or whatever currency) income flow for the term of issue.  That contrasts with the outgoings of an individual or corporation because prices tend quickly to adjust to external changes and unexpected changes can increase the general level of prices, altering the real purchasing power of money which is a risk to both holders and issuers of orthodox bonds.  The indexed bond substantially reduces this risk in that the lender’s receipts and the borrower’s payments become linked to movements in the general price level.

Lindsay Lohan attending the LA premiere of Treasure Planet, Cenerama Dome, Hollywood, California, November 2002.

Again, while used as a hedge, it is still a gambling market, the incentive for governments, beyond the political attractions of being able to offer the product, being the ability substantially to reduce borrowing costs  The UK government first issued indexed bonds in 1981 as a part of an attempt to reduce (it was actually an attempt to kill) inflation.  The markets however had noted the post-war performance of successive governments and were sceptical, holders of orthodox bonds, in effect, charging the government on the basis of an inflation rate substantially higher than the government intended the outcome to be.  This is how gambling works.  In issuing indexed bonds, simultaneously the government flagged a new seriousness in monetary policy and an intent to reduce funding costs by promising to compensate investors for high inflation only if inflation did not fall.  Unexpectedly, the government’s strategy proved successful and substantial savings in borrowing costs were realised.  The effect of the increase in the money supply induced by the COVID-19 responses will ultimately produce higher inflation because, unlike the restorative measures in the wake of the global financial crisis (2008-2011) which essentially gave money only to the rich, greater disposable income was gained more widely.  If the inflation is sustained or (in response to new, unexpected events) spikes, New Zealand's approach (which included products actually marketed as "inflation-proof bonds") might be re-visited.   

The New Zealand experience was different but the small size of the market, while making it an interesting and manageable thing for modelers and analysts, does mean caution must be taken if attempting to apply that experience at scale.  The NZ government issued inflation-adjusted government securities between 1977-1985 and, in a period of historically high inflation, they were popular, eventually accounting for some 15% of domestic debt on issue.  Post-war NZ had evolved into what is possibly the West’s most extreme example of an open political system being combined with a highly regulated economy and that did tend to work until the convulsions of the 1970s to which the NZ hybrid proved unable to adjust.  The adjustments were made after a change of government in 1984 and the inflation adjusted bonds offered by tender in 1983-1984 entered a market where the official inflation target was considerably lower than the buyer’s expectation.

New Zealand Consumer Price Index (CPI) 1970-2015.

Almost immediately, the new government ceased issuing indexed debt.  Perhaps paradoxically, the same credibility gap confronted the government in its own use of more orthodox methods to cut inflation.  Because it was expected the costs of selling long-term nominal bonds would be high, in 1986, issues longer than five years were suspended, the government making clear that would prevail until their inflation target had been met or exceeded.  The approach, while textbook correct, wasn’t without risk because, although shortening the term of a government’s nominal debt can be an appropriate response where inflation outcomes are uncertain, it does heighten the risk of higher costs when rolling-over maturing debt.  As it turned out, for one reason and another, some fairly brutal, inflation was tamed and in 1995, the government returned to the index-linked market.  Many countries created markets, Finland and some of the Nordic zone as early as 1945 and Israel ten year later.  A cluster of Latin American countries issued between 1964-1972 and a number of OECD nations followed the New Zealand and UK in the 1980s although the US Treasury wasn’t active until 1997.