Emperor's New Clothes - Fake News in Finance [Chapter 5 - Increased sophistication of Fake News]

COVID-19 controversies notwithstanding, history is littered with instances of “fake news”.

“Fake news” was said to have a hand in the Roman civil war between Octavia and Mark Antony , the Jacobite’s Uprising , the French Revolution , the Spanish-American war , the First World War , the Second World War and so on.

But nowhere has the impact of “fake news” more clearly articulated than its significant monetisation in the world of finance.

We read about the “Tulip mania” during the Dutch Golden Age, when a bulb was offered for as much as 12 acres of land for its “rarity”.

Today, we call such gold rushes “Ponzi”, and in this game, Bernie Madoff, who ripped off tens of thousands of people of as much as $65 billion , would unabashedly take the throne.

While his scheme revealed the extent of the web of deception spun by one man, it was also exacerbated by a sort of “Chinese whisper”.

As one account put it, “Madoff cultivated close friendships with wealthy, influential businessmen in New York City and Palm Beach, Florida, signed them as investors, paid them handsome returns, and used their positive recommendations to attract more investors.”

When the dust (minus the gold) settles, and we count our losses, the age-old question resurfaces. “Why do we fall for a “good” story?”

Why do we suspend our judgement, and why does history repeat?

Paired with Johann Strauss "Radetzky March".

00:06: Introduction – Rising sophistication of “fake news”
00:14 -Quote by Alan Greenspan – “if I seem unduly clear to you, you must have misunderstood what I said”.
00:28 – Fedspeak
01:21 – Role of technology in disseminating “fake news”
01:26 – Tulip mania and witch hunt hysteria sparked by printing revolution
01:49 – Internet boom and dot-com
01:56 – media singing from the same hymn sheet
02:08 – Instant communications – emails, newsletters, investment websites, message boards
02:18 – Reddit WallStreetBets and Gamestop
02:31 – algorithms, click baits, shares, likes
02:44 – 2014 sell off on false tweet about White House explosion
03:05 – CYNK pump
03:24 – Echo chamber
03:37 - Herd behaviours
03:47 – Social media magnify & amplify
03:52 – Messages propagate with velocity, virality, but questionably veracity
04:01 – Trading bots and automatic triggers
04:16 – Deepfakes and ChatGPT
04:29 – what we can do
04:39 – Last words – finding the time to deliberate the ultimate challenge to overcome

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