Basically, how do we know that we aren't just reading a historical version of Monty Python ?
Satire can often times be used as great sources, it all depends on what you are using each source to investigate.
Just to use your Monty Python example, Monty Python and the Holy Grail could be used as a source for research on 20th century popular depictions of the Arthurian legends.
Even satirists who are writing satire about contemporary events can be used as valuable sources. Political cartoons are a great example. They may be satirical, but they allow historians to examine various opinions, interpretations, and reactions to historical events.
So there's a variety of materials that can be utilized as a "genuine source," and satire is certainly not exempt from that list. It all depends on what the source is being used for.
Edit: I'd like to add an elaboration on how historians can use various materials as "genuine sources." Historians can not only utilize sources that are satirical, but even fantastical. I once used the memoirs and monodies of Guibert of Nogent as a source while researching monastic life. Guibert often recounts visitations by demons and other supernatural beings. It would be a very large stretch to use this source to claim that in the 11th century, there was an abundance of supernatural creatures interacting with humans, but it would not be a stretch at all to use this as a source to examine 11th century monks' beliefs regarding the existence and nature of the supernatural. The limit of a source's use to historians does not end with its historical accuracy. Historians must interpret sources, and judge how sources can be used. It's part of what makes history so fun and interesting.
To add to the good answers already provided here, one of the major things you attempt to do is to verify information from a variety of sources. Samuel Pepys' diaries (to take an example that i was thinking about this morning) are a wealth of information on his life, and historians have used them to build our understanding of royal administration, the Admiralty, and dockyards in his time (to name areas that I'm interested in). However, Pepys was writing for an audience of Pepys, so it's important to balance his claims against other contemporaneous sources and take his statements with a healthy dose of skepticism.
In my field at least, people weren't usually very subtle with their satire. It's usually incredibly obvious when something is meant to be comical or tongue-in-cheek. My favorite primary source I've ever worked with is actually this way and actually labels itself as a "humorous description in verse." In the 19th century U.S., people were big on satirical characters like Miss Clementina Shoddy or Flora Flounce so when you see something like that you know right away that this is someone poking fun, not a story about a real person.
Basically, in my field, it was go big or go home. There's no mistaking 19th century U.S. satire as genuine story.
Along these lines, I've heard that Machiavelli's The Prince, while it was used by later politicians as a guide, is also by some people to be satire. Do we know of any other historical sources that are of disputed sincerity?
Anthropologists love finding Satire, it can give fantastic insights into the culture, sense of humour of the day, and what the cultural biases where.
Using the Archaeological record and cross referencing sources to determine erroneous or satirical documents is a vital part of Source analysis, but the kinds of lies or joke told give a lot of information, so the satirical sources are used in a different way than factually solid ones.
Historically solid sources are identified and used to create factual records of the past, while satirical sources are separated for use in deciphering cultural differences and distinctions that may help us to further understand factual sources.
Sometimes we can't tell. As a specific example, there is a discussion in some commentaries (I know I've seen it in the Farmer notes) on Bede's Ecclesiastical History on whether the somewhat strange discussion of the power of parchments from Ireland to cure snakebite is in some way a tongue-in-cheek satire on anecdotal "scientific" texts popular in the insular monastic tradition of the time. I admit I'm interested to hear more if we have any Bedists around.
Further, there are several examples I am closely familiar with in the Latin poets in which we simply lack the data necessary to know whether the author is being satirical or not, and if so, we don't know enough to get the joke. Specific instances include Catullus's profuse praise of two men in separate poems: one is a Cornelius Gallus, presumably his close friend (as he dedicates his book of poetry to him, and has what seem to be genuinely nice things to say about him), who has written a complete history either of the known world or simply of Italy (sadly, the Latin genitive is ambiguous) which Catullus praises as "well-thought-out and a great deal of labour," but contained entirely in three volumes. This may be a joke; compare to Livy's better known and still partially extant history of Rome at some one hundred forty two volumes; Catullus might be poking fun at his friends effort, or might be praising it wholeheartedly. Without Gallus's history or some other source telling us more about what it looked like, it's impossible to know for sure from the bit we are given. The second example is similar; in this poem, Catullus is full of praise for Cicero, but his overall sarcastic style, aloof tone, and the degree to which he overdoes the false modesty suggest to many scholars (myself included) that he has to be mocking the famous orator. Again, sadly, we lack the information on what the attendant circumstances to the poem were, which makes it impossible to make a "sure call" on the poem's sincerity.
From a discussion on this very topic in the book "The Inheritance of Rome: Illuminating the Dark Ages 400-1000", the writer makes the argument that we often don't know what is genuine source and what is fiction, and often times, our only source that describes events in a particular area is a single text that didn't surface until centuries later, that discusses events decades before it was written.
The book goes on further to make the argument that it is still valuable to study it, because it tells us about how people at the time thought about how things "should" work. Much in the way that if the only thing to survive about the mechanics of American politics is a copy of "house of cards", it will still give a future historian important understanding about how things like the role of the VP, speaker of the house, majority leader, whip worked, and so on.
Hey my historiography class finally pays off! While historians can use satirical sources to understand how people thought satirical writing isnt very often mistaken for actual historical documents or artifacts or how we understand history. A good historian, in his research, would be using an abundance of sources on the topic and by understanding the different schools of history such as Marxist, the annals ( im pretty sure that's how its spelled, its the idea of a complete history of everything available,) oral history ( often held highly skeptical to exaggeration or misinterpretation) or the others you begin to gain an understanding of the events and how theyre perceived. With the different schools and historians you have many different accounts of historical events where a historian will be able to cross reference sources to verify a historical event like if historian 1 says x y and z and historian 2 says y and historian 3 says z and y there's a strong chance y happened an okay chance that z happened and x was probably a stretch of the truth or a personal bias. In terms of satire if there are several accounts of a king executing a criminal or 2 ot would be a pretty solid fact where a satire might be saying the king is full of bloodlust and looping the heads off all the presents similar to a political cartoon or satire
Also I apologize for the longest run on sentance but im typing this from my phone I hope it helps!
I've been trying to read Tacitus lately. While Tacitus certainly is not funny, the commentary by Ingo Gildenhard which I'm using indicates that Tacitus, in comparison with Cicero, advances irony to "something of a master-trope". Gildenhard cites O'Gorman thus: "In contrast [to Cicero], Tacitus’ use of irony is more opaque. And indeed he often leaves it unstated of what precisely he means – even if we realize that authoritative irony is in play: in his works, irony is not a local phenomenon, applied for special effect – it is an ubiquitous feature of his narrative and authorial voice, the counterpart to his claim to be in ruthless pursuit of the truth. In Cicero, irony is an occasional figure of speech; in Tacitus, it is a pervasive mode of critique."
Of course irony isn't quite the same thing as satire, but I think the answer to your question is that we do know that our sources are generally writing with an agenda and we also often know what that agenda is. But sometimes things are a bit obscure and there's still plenty of opportunity for people to get PhDs in arguing about it.
Here's the link to the Gildenhard text, which I highly recommend: http://openbookpublishers.com/htmlreader/TA/chap02.html#ch_4
Corroboration. There's a fascinating work known as the "Augustan History", dating possibly from the late 4th century CE, which is well known among scholars for being wildly inaccurate, to say the least. It invents usurpers, makes up quotes, contains references to works unreferenced elsewhere and probably fabricated, so on and so forth. There's still some debate as to whether it's actually "satire" per se, but it's certainly less than a completely reliable source. By comparing parts of the work that are covered by other historians, such as Cassius Dio, one finds some very major discrepancies, and in resolving such discrepancies the weight of the evidence frequently decides against the Augustan History.
As others have said, though, just because a work isn't factually true doesn't mean that it can't be used as a source at all. In particular it's the most complete source known covering large parts of the Third Century Crisis (a period of prolonged chaos lasting from roughly CE 235 to CE 284), and while much of the work is misinformation that doesn't mean we can't get information about the topics and personae deemed worthy of discussion in the late 4th century from reading it.
I would also like to add that which wasnt clarified by most commenters.
Intention of the source is always taken into account when validating the accuracy and bias of an account. Its much more reliable when reading letters or a diary that was intended for personal or mutual use than a public document.
Source. History class