Anat Admati on Finance and the Capture of Language


Complete Video Transcript

0:00one of the things that the finance industry has done brilliantly as capture
0:10language yes but how what’s your view on how they’ve used language 22 their own
0:17ends many many ways the language is sort of twisted on just the word credit
0:27credit is positive Ward journal quoted you know something about trust they give
0:34you credit for something that means you know it’s a positive thing to do to give
0:41credit ok but and so we just we have this thing that you know pretty good
0:49credit is good they threatened that credit will be harmed then we gotta step
0:56back but when you when they give credit to somebody they somebody then holds
1:07them back the money and they’re very harsh about collecting that money so
1:12they can then go along in front of you to give you credit means to make you
1:18indicted now it could really good reason but there could be too much of this
1:22credit thing which in other words credit equals debt that is a negative word so
1:30there are saying I’m gonna make you indicated there’s a new democratic don’t
1:36you love it don’t have a credit card but then people in Aus live on credit card
1:41debt that they can’t ever pay and so for the record ok they charge 20% interest
1:48or something
1:49percent ok so and they get people into that into that and you know to bed for
1:56Greece and it’s a risky more and they’re charged so we are getting is this not
2:01the languages used not just too indebted individual but when you blow it up it’s
2:06the whole countries so when they their investment is the other peoples there
2:12right that’s part of their investment by the way when they say credit will suffer
2:16you know they do a whole lot of other things then give credit then lend when
2:23Jamie diamonds JPMorgan Chase invested in London way right here in london that
2:30money was excess deposits in other words money the depositors gave them that they
2:36were not lending instead they wanted to play in derivatives in that with that
2:40money because the amount of loans that JPMorgan Chase cause loans on their
2:44books is a fraction not afford fraction of their deposits and then they have
2:50another trillion plus of other debt so we do a whole lot of things some of them
2:57are not even financial another this is an enormous conglomerate or hedge fund
3:00that there’s a little bit of banking on the side so in other words there’s a lot
3:04of confusion about you know JPMorgan Chase or or Barclays origins PC being a
3:09quaint little back when in fact Deutsche Bank and the big banks major you know
3:18hedge fund conglomerates the size of which the economy doesn’t see anywhere
3:22else and then when they get in trouble they’re saying 10 or so to be governed
3:29actually we know we have witnessed will pay a fine will pay a fine was not the
3:35cost of doing business
3:36break the law you know nobody’s responsible too bad
3:41you know let’s just you you can’t let us pray because they can’t I would be
3:45harmed if so lets you know I’m not too large decline because we can’t take that
3:50you know I gotta make money enough to to pay the fine and so bad so I can listen
3:58to you and I can lead to your government and I can learn to you and business too
4:05much work and to go to do business lending that most of these banks do is
4:12minuscule small but lots of other stuff gets done so that’s a lot of the
4:17language and then of course there is the word capital now you read a book called
4:21capital the 21st century but the word is used everywhere in economics to my in
4:27different things in bed you using that word and then they trick you into
4:33thinking that the word capital is something that banks to set aside just
4:38like cash rainy-day funds and so when they say oh you know you importing
4:44capital crime into me and therefore I can learn when the requirement was
4:49basically saying no issue I wouldn’t invest so just paid dividends to
4:57shareholders have learned that money and today I know its profits they use
5:02profits and there will be capital they are retained dispenser profit when they
5:08choose to pay the album Born then scream that they can’t land because we told
5:13them to not use a hundred sent that to to to make their lawns with 22 have a
5:18little bit of absorbency ability when they lose to have just a little bit just
5:23a few percentages which nobody lives like that I mean with no regulation of
5:28company become so in that it is the banks but then they use the word capital
5:32to confuse people about what is even the regulation about and then they spend it
5:36that terrible things will happen if you impose that kind of regulation which
5:39only brings them closer to the absolute minimum the day would impose on other
5:45people when they learned as boers life is good people give them money easily
5:50including all of us as deposits when we give the money to the back
5:54is deposited it’s called the deposit which again is confusing world workers
5:58when you deposit you think you giving you know your suitcases deposit it’s
6:02there for you but you making along to the bank and the bank is gonna go
6:08invested than its gonna tell you that you want the long from them and then
6:14that money they forget the day all to you and you mean why I think that the
6:19money they’re so here we are with the Department not even realize that their
6:26their their deposit is the banks that everybody forget it’s there that because
6:33they were you know and so take risks with and take the upside and you know if
6:43they can find the positives were gonna be the passengers and central banks and
6:47somebody will solve their so-called liquidity problems so there’s another
6:51plain words which is everything is always in the plumbing always in the
6:54plumbing just liquidity liquidity and severe warning when it is used all over
6:58my god you could it is suffering because of these regulations which could be true
7:02because of these regulations are really stupid really not it’s interesting you
7:08say that because ordinarily just be asking for proposed regulation
7:11bureaucracy very discriminating when I don’t like all the regulations
7:15regulations are completely counterproductive in some of the way
7:18they struck the regulation is coming productive they say all women to judge
7:22what’s risky or not belong to grace probably safe to the regulation is is
7:31distorting away from business lending the regulations thing going west of here
7:36we view it as a riskless when it’s actually with campaigns high return of
7:40course the things we do that they just respond to incentives if you put so in
7:45other words almost everything that’s wrong
7:48has to do with their capacity that makes people nervous every time the fragility
7:54which includes a lot of two way too much debt and way too many ways to hide
7:59at and regulation and then with just two percent in that way in other words
8:10that’s what’s wrong with the actual system what’s wrong with the debate is

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