44: What a 12-Year Knows About Money That an Economist Doesn't

SPEAKER_1 (0:00)

Put knowledge to work and grow your business with CIT. From transportation to health care to manufacturing, CIT offers commercial lending, leasing and treasury management services for small and middle market businesses. Learn more at cit.com.

Put knowledge to work.

Joe Weisenthal (0:24)

Hello, and welcome to another edition of the Odd Lots Podcast. I'm Joe Weisenthal, managing editor of Bloomberg Markets.

Tracy Alloway (0:31)

And I'm Tracy Alloway, executive editor of Bloomberg Markets.

Joe Weisenthal (0:35)

Uh, so Tracy, do you know what money is?

Tracy Alloway (0:38)

Uh, it's that thing that we all want more of, right?

Joe Weisenthal (0:43)

That seems to be the obvious answer.

That's a really good definition, actually. I think we can just pretty much leave it at that.

Tracy Alloway (0:50)

Oh, we're done.

Joe Weisenthal (0:52)

Okay, great podcast.

Uh, no, but in all seriousness, um, you know, money is one of these things that, like everyone, as you say, just sort of take for granted. We want more of it. Uh, we want to use it to buy stuff, obviously. But it's surprisingly difficult, uh, for people to define or to describe what exactly it is. And some people say it's a unit of measurements. Some people say it's a medium of exchange.

Uh, some people say it has to be backed by something. Some people say it's just this completely fictitious sociological, uh, abstract. There doesn't really seem to be any clear answer of what this, uh, of what money is, even though we sort of use it and depend on it all the time.

Tracy Alloway (1:39)

Well, I was going to say it's kind of funny, isn't it? Because you and I, obviously, when we're talking about markets, we are talking about money and the assignation of monetary values to certain assets. And then in our day to day lives, of course, we are all pursuing money in one way or another, yet we don't actually have a firm definition of it.

Joe Weisenthal (1:59)

Right. And you'd think that would be a pretty big deal that we talk about it all the time, but that don't know, uh, don't really know what it is, but we just sort of, uh, we just sort of skip to the next part, I think, usually.

Tracy Alloway (2:09)

Yeah. If we had to define our variables for every story that we write, we might be in trouble, actually.

Joe Weisenthal (2:16)

True. But it turns out that what money is, is actually a really important concept, and that, um, errors in thinking about what money is have huge implications for society and for, uh, policy that, um, that people set. And with us today, we are going to be talking with Eric Lonergan. He's a hedge fund manager, and he's also written a book about what is money, and, um, it sort of attempts to answer, at least get at an answer of what this, uh, what it really is.

Tracy Alloway (2:50)

Great.

Joe Weisenthal (2:51)

Great. So, uh, let's bring in Eric, and let's see if we can, um, see, A, what money is and why it's worth figuring out.

Okay Eric Lonergan, thank you very much for joining us on the Odd Lots Podcast.

Eric Lonergan (3:13)

It's a pleasure, Joe and Tracy. I thought you guys were doing fine, though, without me.

Joe Weisenthal (3:16)

Oh, really?

Eric Lonergan (3:17)

I'm very happy to sign off right here.

Joe Weisenthal (3:20)

So, I don't know, why did you write a book about what money is? Why is this an important topic?

Eric Lonergan (3:28)

Right, well, I guess, I've been thinking about it for a long time, so there were kind of two motivations. One was to do with book writing, and then the other one was very specifically about issues around money. So, I've given a talk, and actually a publisher came up to me afterwards and said, would you like to write a book about that? And it was on the sort of subject of finance and money.

And I really didn't just want to write something that I didn't really believe in. So, I've kind of been thinking about these issues for the best part of 20 years, and this was a chance to write down the thoughts. But the other thing that became very clear to me, is I guess I experienced an awful lot of frustration during the financial crisis, after the financial crisis and then in the euro crisis. Because, particularly sitting in the UK, it's very curious that the UK's biggest industry, both by size and strategically, is the financial sector. And yet, there is, I would say, complete lack of understanding of what's going on in the financial sector. And that was very, very apparent. And so I thought, you know, maybe I could bring those two components together to try and give some perspective on what all of these things actually mean and are about.