How to Speak Money Quotes

“economic models are, or should be: guides, aids, assistants. But there’s a tendency for them to undergo definition creep: from guides, aids, assistants to axioms, rules, laws. On the lecture platform, economists will often say things like “My model shows . . .” The striking thing about that is the idea that a model can show something. A model can imply, suggest, guide, hint, invite us to conclude; but it can’t in that strong sense “show.”
― John Lanchester, How to Speak Money: What the Money People Say-And What It Really Means

“mortgage The word literally means “dead pledge,” and if it were called that maybe more people would think twice about getting one. It is a classic example of a financial entity that would scare people off if they thought more clearly about what it is: a highly leveraged form of long-term borrowing with regular demands for cash payment against an illiquid asset that is known to be even more illiquid in difficult times.”
― John Lanchester, How to Speak Money: What the Money People Say-And What It Really Means

“There’s a joke about an efficient-market fan walking down the street, and refusing to pick up a $100 bill lying on the pavement in front of him on the basis that, if it were really there, somebody else would have picked it up already.”
― John Lanchester, How to Speak Money: What the Money People Say-And What It Really Means

“I’ve been writing about measurement a lot this year, because I’ve found that measuring progress is the only way to drive lasting success.”
― John Lanchester, How to Speak Money: What the Money People Say-And What It Really Means

“For he that hath, to him shall be given.”
― John Lanchester, How to Speak Money

“Forbes cost of living extremely well index (CLEWI) An amazing thing I came across while researching the question of just what it is that very very rich people do with their money. As Forbes says, the CLEWI is to the very rich what the CPI is to “ordinary people.” There are forty items on it, and they are hilarious, though perhaps you shouldn’t show them to your left-wing aunt if she’s suffering from high blood pressure: Russian sable fur coats from Bloomingdale’s, shirts from Turnbull and Asser, Gucci loafers, handmade John Lobb shoes, a year at Groton boarding school, a yacht, a horse, a pool, a Learjet, a Roller, a case of Dom Perignon, forty-five minutes at a psychiatrist’s on the Upper East Side (!), an hour’s estate planning with a lawyer, and, amusingly/annoyingly, a year at Harvard.36 In 2012, the CLEWI went up 2.6 percent but the CPI went up only 1.4 percent.”
― John Lanchester, How to Speak Money: What the Money People Say-And What It Really Means

“Psychology looks at people from the inside. Economics looks at them from the outside.”
― John Lanchester, How to Speak Money: What the Money People Say-And What It Really Means

“The organization is “committed to improving the state of the world.” In practice it is mainly a rich people’s club, committed to preserving the existing world order.”
― John Lanchester, How to Speak Money: What the Money People Say-And What It Really Means

“Example: a famous-to-economists finding in behavioral economics concerns pricing, and the fact that people have a provable bias towards the middle of three prices. It was first demonstrated with an experiment in beer pricing: when there were two beers, a third of people chose the cheaper; adding an even cheaper beer made the share of that beer go up, because it was now in the middle of three prices; adding an even more expensive beer at the top, and dropping the cheapest beer, made the share of the new beer in the middle (which had previously been the most expensive) go up from two-thirds to 90 percent. Having a price above and a price below makes the price in the middle seem more appealing. This experiment has been repeated with other consumer goods, such as ovens, and is now a much-used strategy in the corporate world. Basically, if you have two prices for something, and want to make more people pay the higher price, you add a third, even higher price; that makes the formerly highest price more attractive. Watch out for this strategy. (The research paper about beer pricing, written by a trio of economists at Duke University in 1982, was published in the Journal of Consumer Research. It’s called “Adding Asymetrically Dominated Alternatives: Violations of Regularity and the Simularity Hypothesis”—which must surely be the least engaging title ever given to an article about beer.)”
― John Lanchester, How to Speak Money: What the Money People Say-And What It Really Means

“value-based out of specific reductions in government spending that cause specific losses to specific people.”
― John Lanchester, How to Speak Money: What the Money People Say-And What It Really Means

“should point out that just as most economists aren’t macroeconomists, quite a lot of them have absolutely no interest in money. I don’t mean at the personal level: I mean they have no interest in money as a subject. In large parts of the discipline, or disciplines, of economics, money had come to be seen as no longer interesting at a theoretical level. Money had been solved. It was a way of keeping score of things being exchanged, but the real points of interest lay beyond and through it: it could be regarded as transparent, as safely ignorable.”
― John Lanchester, How to Speak Money: What the Money People Say-And What It Really Means

“isn’t at all clear that economics actually is a science—many people in the field like the idea that it’s a science, and refer to it as a science, but that’s more a claim than a statement of fact. The conservative”
― John Lanchester, How to Speak Money: What the Money People Say-And What It Really Means

“about. Morality and ethics are too basic, too fundamental to be given direct expression in economics.”
― John Lanchester, How to Speak Money: What the Money People Say-And What It Really Means

“blazingly furious philosophical resignation. In that atmosphere Cook and McWilliams—McWilliams having been one of the very few Irish economists to have predicted the crash—decided that since the only two things you could really do about the current predicament were laugh or cry, why not laugh? And why not, since Kilkenny was already the site of an internationally famous comedy festival, do it in Kilkenny? Hence, Kilkenomics: the world’s first-ever festival of comedy and economics, which is still running as an annual event. Every event at the festival mixes comedians together with economists. The idea behind that was brilliantly simple: what the comedians do is force the economists to stop talking entirely to each other and engage the audience instead. It was extraordinary to see how effective this was; you could see it in the body language of participants onstage.”
― John Lanchester, How to Speak Money: What the Money People Say-And What It Really Means

“A ‘bailout’ is slopping water over the side of a boat. It has been reversified so that it means an injection of public money into a failing institution. Even at the most basic level there’s a reversal – taking something dangerous out turns into putting something vital in. ‘Credit’ has been reversified: it means debt. ‘Inflation’ means money being worth less. ‘Synergy’ means sacking people. ‘Risk’ means precise mathematical assessment of probability. ‘Non-core assets’ means garbage. And so on.

These are all examples of how processes of innovation, experimentation and progress in the techniques of finance have been brought to bear on language, so that words no longer mean what they once meant. It is not a process intended to deceive. It is not like the deliberate manufacture and concealment of a nilometer. But the effect is much the same: it is excluding, and it confines knowledge to within a priesthood – the priesthood of people who can speak money.”
― John Lanchester, How to Speak Money: What the Money People Say — And What It Really Means

“The most important mystery of ancient Egypt was presided over by a priesthood. That mystery concerned the annual inundation of the Nile flood plain. It was this flooding which made Egyptian agriculture, and therefore civilisation, possible. It was the centre of their society in both practical and ritual terms for many centuries; it made ancient Egypt the most stable society the world has ever seen. The Egyptian calendar itself was calculated with reference to the river, and was divided into three seasons, all of them linked to the Nile and the agricultural cycle it determined: Akhet, or the inundation, Peret, the growing season, and Shemu, the harvest. The size of the flood determined the size of the harvest: too little water and there would be famine; too much and there would be catastrophe; just the right amount and the whole country would bloom and prosper. Every detail of Egyptian life was linked to the flood: even the tax system was based on the level of the water, since it was that level which determined how prosperous the farmers were going to be in the subsequent season. The priests performed complicated rituals to divine the nature of that year’s flood and the resulting harvest. The religious elite had at their disposal a rich, emotionally satisfying mythological system; a subtle, complicated language of symbols that drew on that mythology; and a position of unchallenged power at the centre of their extraordinarily stable society, one which remained in an essentially static condition for thousands of years.

But the priests were cheating, because they had something else too: they had a nilometer. This was a secret device made to measure and predict the level of flood water. It consisted of a large, permanent measuring station sited on the river, with lines and markers designed to predict the level of the annual flood. The calibrations used the water level to forecast levels of harvest from Hunger up through Suffering through to Happiness, Security and Abundance, to, in a year with too much water, Disaster. Nilometers were a – perhaps the – priestly secret. They were situated in temples where only priests were allowed access; Herodotus, who wrote the first outsider’s account of Egyptian life the fifth century BC, was told of their existence, but wasn’t allowed to see one. As late as 1810, thousands of years after the nilometers had entered use, foreigners were still forbidden access to them. Added to the accurate records of flood patters dating back centuries, the nilometer was an essential tool for control of Egypt. It had to be kept secret by the ruling class and institutions, because it was a central component of their authority.

The world is full of priesthoods. The nilometer offers a good paradigm for many kinds of expertise, many varieties of religious and professional mystery. Many of the words for deliberately obfuscating nonsense come from priestly ritual: mumbo jumbo from the Mandinka word maamajomboo, a masked shamanic ceremonial dancer; hocus pocus from hoc est corpus meum in the Latin Mass. On the one hand, the elaborate language and ritual, designed to bamboozle and mystify and intimidate and add value; on the other the calculations that the pros make in private. Practitioners of almost every métier, from plumbers to chefs to nurses to teachers to police, have a gap between the way they talk to each other and they way they talk to their customers or audience. Grayson Perry is very funny on this phenomenon at work in the art world, as he described it in an interview with Brian Eno. ‘As for the language of the art world – “International Art English” – I think obfuscation was part of its purpose, to protect what in fact was probably a fairly simple philosophical point, to keep some sort of mystery around it. There was a fear that if it was made understandable, it wouldn’t seem important.”
― John Lanchester, How to Speak Money: What the Money People Say — And What It Really Means

“In economics, models are spoken of as being made of physics when in truth they are made of Lego. They have that degree of provisionality and tentativeness and, importantly, rebuildability. There's a permanent invitation to take them apart and put them together again in a form that works better.”
― John Lanchester, How to Speak Money: What the Money People Say — And What It Really Means

“The maths is immensely complicated and I would love to give a full explanation of it here but unfortunately I have to rush off now because I've just remembered I've got a thing.”
― John Lanchester, How to Speak Money: What the Money People Say — And What It Really Means

“Economics is about tools. And the most important of these tools, the one without which the others won't work, is language.”
― John Lanchester, How to Speak Money: What the Money People Say — And What It Really Means

“In a RECESSION or slow-down, this makes economic conditions worse. If governments, businesses and households all have too much debt, and all set about repaying their debts at the same time, it’s an economic disaster. That’s why David Cameron had to backtrack on a speech he was planning to make to the Tory party conference in 2011: ‘The only way out of a debt crisis is to deal with your debts. That means households – all of us – paying off the credit-card and store-card bills.’ It was pointed out that this was a genius formula for making the recession worse, so he had, very embarrassingly, to withdraw the lines from his speech.”
― John Lanchester, How to Speak Money

“Having too expensive a currency can cause severe economic problems, which has been the case in many sectors of the Australian economy: the Australian dollar, its strength boosted by COMMODITY wealth, was so highly valued that it devastated the country’s retail sector – it was so easy to buy stuff from abroad using super-charged Australian dollars that local shops found it near-impossible to compete.”
― John Lanchester, How to Speak Money

“I’ve never seen any subscriber to neo-liberal economics admit the fact, but part of the way in which inequality drives economic progress – in the neo-liberal system – is by making it clear that there are severe consequences for failure. Bankruptcies, dole queues, even people sleeping in the streets; all these are human tragedies, but in the neo-liberal world view, they are also reminders of what happens if you don’t work hard enough.”
― John Lanchester, How to Speak Money

“If you are serious about hiring the best possible person for the job, this is what you should do. First, select a few traits that are prerequisites for success in this position (technical proficiency, engaging personality, reliability, and so on). Don’t overdo it – six dimensions is a good number. The traits you choose should be as independent as possible from each other, and you should feel that you can assess them reliably by asking a few factual questions. Next, make a list of those questions for each trait and think about how you will score it, say on a 1–5 scale. You should have an idea of what you will call ‘very weak’ or ‘very strong’ …”
― John Lanchester, How to Speak Money

“All the gold in the world would fit in a cube roughly twenty meters on each side.”
― John Lanchester, How to Speak Money: What the Money People Say-And What It Really Means

“Frankfurt’s big problem is that London is a much more attractive and interesting place to live, especially for the demographic who work in finance: as a former mayor of London, Ken Livingstone, put it, “Young men want to go out on the pull and do a lot of cocaine, and they can’t really do that easily in Frankfurt.”
― John Lanchester, How to Speak Money: What the Money People Say-And What It Really Means

“the words lex monetae are really just a polite Latin way of saying, “Suck it, creditors.”
― John Lanchester, How to Speak Money: What the Money People Say-And What It Really Means

“The subject under discussion, economics, purports to be a science. It”
― John Lanchester, How to Speak Money: What the Money People Say-And What It Really Means

“Note that as the cost of beans goes up, the cost of your cup might actually go down, if your favorite café switches from the more expensive, subtler arabica beans to the cheaper, stronger robusta variety. This happened in lots of places during the great coffee-bean price spike of 2010–11, so if you started noticing a few years ago that your morning espresso was making you gibber, that’s probably the reason.”
― John Lanchester, How to Speak Money: What the Money People Say-And What It Really Means

“Most hedge funds fail: 90 percent of all the hedge funds that have ever existed have closed or gone broke.”
― John Lanchester, How to Speak Money: What the Money People Say-And What It Really Means

“† Bastiat (1801–1850) was a strikingly clear-minded early advocate of what came to be known as liberal economics, whose central idea is that the state should get out of the way of free trade. He would be a lot more famous if he wasn’t French, since the French are highly distrustful of the whole notion of liberal economics and tend to see it as an Anglo-Saxon cross between a conspiracy and a mistake.”
― John Lanchester, How to Speak Money