Deciphering The 'Priestly Mumbo-Jumbo' Of The Financial World
Last year as NPR's Ari Shaprio was getting ready to move to London to become the network's London correspondent, a colleague handed him a terrific novel about the city: Capital, by John Lanchester. It's the story of a diverse group of people living on one street in London, all thrown around by the economic roller coaster of the last few years.
As Lanchester wrote that novel, he became obsessed with the complicated language of economics: Mysterious-sounding terms like "stagflation," "Libor," and "Grexit." That obsession drove him to write his newest book, How to Speak Money, a guide to deciphering what he describes to Shapiro as the "priestly mumbo-jumbo" of the financial world.
Interview Highlights
On how London has changed in recent years
I grew up in Hong Kong, and London used to seem very gray, the sky was gray, the buildings were gray, the food was incredibly gray — the food had, like, new kinds of grayness specially invented for it. And none of those is true now, you know, it's a city of extraordinary energy, diversity, vibrancy. And I was very struck by just the scale of the change. So I wanted to write a book about London today that sort of caught that feeling, and fell to thinking about what the motors for that change were — one of the big answers I thought, and still think, is the City of London, which is what we call our Wall Street equivalent.
I started reading things like Wall Street Journal, Financial Times and paying attention to the business pages, and every time I didn't understand something — which was really all the time at the start — I'd just stop and try and find out what things meant.
On the origin of the word "dollar," from the Czech town of Jáchymov, or Joachimsthal, which minted "thalers"
One of the threads in the book is to do with the oddness of money, you know, a thing that makes people go slightly nuts is when they start thinking about where does money come from? Where does its value come from? Why is it worth what it's worth, especially when it's digital ones and zeroes, dots on the screen that seem so fragile. They seem fictional, we seem to have willed their meaning into being, and yet the meanings are so consequential it shapes the texture of everyday life. So I'm very interested in that thing of the materiality of money, when you can trace money back to actual stuff. It's dug out of a hole in the ground, somebody stamps an image on it, people agree what that coin with the image is worth, and then you trade with it.
On how being a banker's son affected his entry into the world of money
A lot of people I talk to, they feel kind of defeated in advance, they feel kind of pre-baffled ... and because my dad worked for a bank — I mean, it's not the modern fancy-schmancy investment banking, it's much more the old kind of, what they used to call the 3-6-3 model, which is that you take deposits at 3 percent, you lend money at 6 percent, and you're on the golf course by 3 o'clock — and the bank he worked for is now a very big global bank, HSBC, it was then a sleepy colonial institution, Hong Kong Shanghai Bank. So I remember him coming back at some point saying, you know, his boss ... just bought a bank ... and that helped me understand that it's just like anything else, it's people who are sometimes smart, sometimes dumb, sometimes lucky, sometimes not, making bets, backing their hunches, and that I could get my head round it if I tried.
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Transcript
ARI SHAPIRO, HOST:
Last year as I was getting ready to move to London for my new job with NPR, a colleague gave me a terrific novel about the city called "Capital." It's the story of a diverse group of people living on one street in London. And they're all thrown around by the economic roller coaster of the last few years.
As John Lanchester wrote that novel, he became obsessed with the complicated language of economics. Mysterious-sounding terms like stagflation, LIBOR, and Grexit.
That obsession drove him to write his newest book, called "How to Speak Money: What the Money People Say and What It Really Means." It's a guide to deciphering what John Lanchester calls the priestly mumbo-jumbo of the financial world. Welcome.
JOHN LANCHESTER: Thank you very much, Ari.
SHAPIRO: You've not always been fluent in the language of money. Explain how writing a novel inspired you to learn this language.
LANCHESTER: I got very interested in London, in the state of London. I didn't grow up in London. I moved here as an adult.
And it's astonishing how much the city has changed. When I first saw it in the seventies - I group in Hong Kong. And London used to seem very gray. You know, the sky was gray, the buildings were gray, the food was incredibly gray. The food had like new kinds of grayness specially invented for it.
And none of those is true now. You know, it's a city of extraordinary energy, diversity, vibrancy. And I was very struck by just the scale of the change. So I wanted to write a book about London today that sort of caught that feeling and fell to thinking about what the motives for that change were.
One of the big answers I thought, and still think, is the City of London, which is what we call Wall Street-equivalent, you know, finance. And so I just got very interested in everything to do with that world because it seemed so essential to what London has become.
SHAPIRO: And so did you start reading about that world, the finance world of London, and then realize that it was written in an impenetrable language?
LANCHESTER: I did it on a more, kind of, idiot-proof basis than that. I started reading things like Wall Street Journal, Financial Times and paying attention to the business pages. And every time I didn't understand something, which was, you know, really all the time at the start, I just stopped and tried to find out what things meant.
SHAPIRO: As you flip through the book, there are all kinds of terms defined that one would expect. But there are also some surprising terms. I'm going to ask you to read the first one because I'm sure I would mispronounce it.
LANCHESTER: I don't know how to pronounce it either.
SHAPIRO: You don't know how to pronounce it either?
LANCHESTER: I'm going to take a wild guess.
(Reading) Jachymov. I bet you've indirectly referred to this place in the Czech Republic at some point in the last week. If you're interested in money, you will certainly have used it at some point in the last day, maybe even in the last hour. How so? Can you guess? Give up? Well, the Bohemian town of Jachymov is known in German as Joachimsthal.
Does that help? It was the site of a famous silver mine, a town that grew tenfold in population between 1516 to 1526 as it became the center of a boom based on the manufacture of a silver coin known as joachimsthaler. It in time became known tolar or thaler.
The coins were a standard size and form of currency throughout most of Europe for 400 years. And it's from this ubiquity that we get the word dollar. So every time a dollar is mentioned, someone is unknowingly citing this otherwise obscure spot in rural Bohemia.
SHAPIRO: So there's a term that I think might not help me read the Financial Times. But you clearly take great delight in unearthing this connection.
LANCHESTER: There's this - one of the threads in the book has to do with the oddness of money. You know, a thing that makes people go slightly nuts is when they start thinking about where does money come from? Where does its value come from? Why is it worth what it's worth?
Especially when it's digital ones and zeros, dots on the screen that seem so fragile, they seem fictional. We seem to have willed their meaning to being. And yet, the meanings are so consequential it shapes the texture of everyday life. So I'm very interested in that thing with the materiality of money.
When you can trace money back to actual stuff, it's dug out of a hole in the ground, somebody stamps an image on it, people agree what that coin with the image is worth, and then you trade with it.
And I like tracing money from those very first roots all the way through to this astonishing virtual - things like, you know, Bitcoin and things like that that also feature in the book.
SHAPIRO: You write that being a son of a banker, in some way, gave you permission to enter this world and to try to understand it, permission that others may not feel they have. Explain that.
LANCHESTER: Well, I think a lot of people - I mean, certainly, a lot of people I talked to, they feel kind of defeated in advance. They feel kind of pre-baffled.
SHAPIRO: That's a great term, pre-baffled.
LANCHESTER: You know, defeated before they started to think about it. They'll never get their hands around it. I'll never be able to understand it. I give up.
And because my dad worked for a bank - I mean, it's not the fancy-schmancy, modern investment banking. It's much more the old kind of what they used to call the 3-6-3 model, which is that you take deposits at three percent, you lend money at six percent, and then you're on the golf course by three o'clock.
And you know, the bank he worked for is now a very big global bank, HSBC. It was then a sleepy colonial institution, the Hongkong Shanghai Bank. So I remember him coming back at some point saying, you know, his boss or his boss' bosses just bought a bank called British Bank of the Middle East, BBME.
And that helped me understand that, you know, it's just like anything else. It's people who are sometimes smart, sometimes dumb, sometimes lucky, sometimes not making bets, backing their hunches and that I could get my head around it if I tried.
SHAPIRO: John Lanchester is the author of "How to Speak Money: What the Money people Say and What It Really Means." Thanks so much.
LANCHESTER: Thank you very much, Ari. Transcript provided by NPR, Copyright NPR.
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