The Meaning of Money

Michael Lewis has become the great teller of modern morality tales around money: from the story of how high finance bubbled up, then popped, in Ireland and Iceland to the story of how a handful of eccentric thinkers saw a mortgage crisis brewing before it took down the world economy in 2007 and 2008.


In his latest book, Flash Boys: A Wall Street Revolt, Lewis sounds worried. After that last great crash, finance has gone digital. The action has moved off the downtown trading floors and into black-box servers stationed in New Jersey. Wall Street’s work has become so automatic, algorithmic and obscure that ordinary buyers and sellers have less understanding than ever of what’s happening with their savings.

In Flash Boys Michael Lewis focused on the practice of ‘high-frequency trading’ — a game of arbitrage conducted in the course of microseconds, well handled on Radiolab. But in a new afterword he says HFT is just a symptom of a larger problem. The market’s big players have once again abdicated their “clear responsibility to protect investors… and to create a fair marketplace,” meaning that the game may be more dangerous than ever.

So we’re asking the $64,000 question: can we build a more crash-proof, less leveraged, more equitable financial system? Our guest Jeremy Allaire would argue that the technology known as Bitcoin can do just that: bring back transparency and a simple standard of honest exchange. But we’re reminded that the American dream runs on credit — and we may just be too dependent on the boom-and-bust market we’ve made.

Life Under The Cheese-Grater

London — ever more a 21st-century financial capital — is undergoing the building boom. Our guest John Lanchester — novelist-journalist who’s become an obsessive wrestler of big-money topics — can see those buildings from his study window, and he’s (ever so slightly) flustered.

Lanchester says the meaning of those enormous buildings — nicknamed the Gherkin, the Spire, the Walkie-Talkie, the Cheese Grater — comes from their being built without a context, comically dwarfing the Tower Bridge and what’s left of that Dickensian skyline.

Hear our whole conversation with John Lanchester below, and — even more — buy his high-spirited book on How to Speak Money:

The Not-So-Mighty Dollar

On Medium you can read a piece asking what Bitcoin technology might actually accomplish by our newest producer, Pat Tomaino:

Here’s what I learned. Whether you see Bitcoin as a solution depends on who you are and how you define the problem. While the debate continues, here’s a rough scorecard on Bitcoin, what it can do, and for whom.


And there’s a longer piece by Max Larkin about Berkshares, a small but resilient local currency used in Berkshire County, Mass.:

One thinks of a few Berkshire towns — like North Adams, out of Berkshare buying range — as monuments to the power of modern capital: how it all but literally floats in and floats out of a place. Like a kind of slow-motion weather event, money has whipped into Detroit, and Haverhill, Mass., and Gary, Ind. —  building up their physical plant and infrastructure so long as that promoted profit —  then whipped out and away, leaving something skeletal and defunct behind it.

This is, by the terms of the market, a morally neutral phenomenon. Monopoly capitalism of this kind is indeed like weather, in that one accomplishes nothing by complaining about it.



Guest List
Michael Lewis
best-selling financial journalist and author of Liar's Poker, The Big Short, and most recently, Flash Boys: A Wall Street Revolt.
Jeremy Allaire
Boston-based serial entrepreneur, founder of Brightcove and Circle, a new digital money platform
Alex Gourevitch
political philosopher and historian of capitalism at Brown University, author of From Slavery To The Cooperative Commonwealth
John Lanchester
financial journalist, novelist of Capital, and author, most recently, of How To Speak Money.
Reading List
Michael Lewis Reflects on His Book Flash Boys, a Year After It Shook Wall Street to Its Core
Michael Lewis, Vanity Fair
When Michael Lewis published Flash Boys last spring, the world of high-frequency trading he wrote about was so obscure it was hard to predict what would happen after the whistle blew. A year later, some of the key players are catching on: big pension funds are peeved about flash trading, regulators are shooting letters to exchanges, and some of the smartest flash boys have abandoned the "dark pools" for greener pastures. In a new afterword, Lewis describes one big lesson he's taking away:
That some minority on Wall Street is getting rich by exploiting a screwed-up financial system is no longer news. That is the story of the last financial crisis, and probably the next one, too. What comes as news is that there is now a minority on Wall Street trying to fix the system...All they need is a little help from the silent majority.
Scalpers, Inc.
John Lanchester, London Review of Books
We dialed South London this week to talk with John Lanchester—our other favorite financial explainer—about our culture of money, what it buys us, and what it doesn’t. He read Flash Boys, too, and came away with many of Lewis’s concerns. But, he also found a larger indictment of capitalism:
...I found it hard not to think about those missing oceanographers, the computer geniuses and engineers and physicists and entrepreneurs, all those brilliant minds, all that passion and energy disappearing into the black hole of money, lost to all the more productive and interesting things that we humans can do. It’s hard not to feel a sense of loss when you think of what these people would have done, if they hadn’t been sucked into the enterprise of making money out of money. If we ever get enough distance to look back with some sense of perspective on the delirium of modern finance, I think this is what will stand out clearly: that sense of human and intellectual waste.
Wall Street Executives from the Financial Crisis of 2008: Where Are They Now?
William D. Cohan, Vanity Fair
This catch-up with the doomed and not-so-doomed Wall Street titans of 2008 reads like an inventory of everything we didn’t learn from the last crisis. After Congress called him a “villain,” former Lehman Brothers CEO Richard Fuld dodged criminal and civil charges and then resurfaced for a second act in China. Even that seems less outrageous than the fact that Lloyd Blankfein and James Dimon (still ensconced at Goldman Sachs and J.P. Morgan, respectively) survived to help spin the oral history of the crash.
The Bitcoin Boom
Maria Bustillos, The New Yorker
After the 2008 crash and Eurozone aftershocks, institutional trust is a resource that's even scarcer than new jobs, housing starts, or sane fiscal policy. Bustillos took a relatively early look at Bitcoin—through the lens of the Cypriot bank-runs—and found people looking to put their trust in just about anything but the current financial order...even a start-up crypto currency:
The weakness in existing currencies stems from lack of faith in institutions—particularly central banks, which are often in league with commercial and investment banks. When a government bails out a failed bank or insurance company—in essence, by printing money—the net effect is that the currency as a whole is debased, in favor of a few and at the literal expense of everyone else, which amounts to a fair description of today’s global financial system. Hence the sudden appeal of bitcoins, which appear, for the moment, at least, to be immune to the machinations of inept or crooked bankers and politicians.
Is Bitcoin the future of money? Or a bubble about to burst?
Aleks Krotoski & Alex Hern, The Guardian Tech Weekly podcast
The Guardian’s Tech Weekly podcast takes the measure of Bitcoin. It’s a little currency with big questions, and it may never be circulated widely enough to be bus fare or someone's weekly allowance. Even so, Bitcoin has hopes and dreams riding on it that speak to our frustration with the global money order and what we’re not getting from the big banks.
Michael Lewis's Flawed New Book
Felix Salmon, Reuters
And another critical view on Flash Boys, from the ascendant financial journalist and podcaster Felix Salmon. Felix sees the HFT criticisms as missing the point — trying to build a corruption narrative around a more arcane in-house market problem.

Related Content

  • In his book “Trading for a Living: Psychology, Trading Tactics, Money Management,” Alexander Elder explains how people have difficulty with the concept of time.

    Everyone understands time, right?
    Warren Buffett understands it and George Soros understands it ……and never the twain shall meet.

    This is actually pretty silly from a Schumacher-ian perspective:
    “I think this is what will stand out clearly: that sense of human and intellectual waste.”
    What we really need is more wealth to be created and distributed in the form of localized environmental solutions. An overabundance of wealth would be forced into this economic model: small scale + geometric returns.

  • Cambridge Forecast


    The ROS discussion on American financial pathologies was excellent.

    A historical view would show you that Anglo-America has a tendency towards the colonization of the poor by the rich that goes back. Anglo-America keeps wanting to revert to Dickensian life.
    Here are two examples from movies:


    There’s a moment in the movie “Reds” where Warren Beatty’s “John Reed’ mentions in passing the Plumb Plan, which is described thus:
    “Glenn Edward Plumb (1866 – 1 August 1922) was an American lawyer who was famous for proposing a radical
    plan for cooperative railway ownership, the Plumb plan, in 1918. He founded the
    Plumb Plan League to support the proposal. Despite strong support from
    organized labor, including railroad workers, miners and farm workers, the plan
    was not adopted.”



    “Howards End” by E.M. Forster gives us a glimpse of Thatcherism about a century ago.
    “Henry Wilcox” (Anthony Hopkins in movie version) has some very exploitative
    Africa business and nonchalantly misdirects Leonard Bast whose life is
    characterized by total economic insecurity. Wilcox represents a kind of “vast
    carelessness” to use the phrase describing Tom and Daisy Buchanan in “The Great

    Wilcox has mindlessly caused Bast to quit his job at the Porphyrion Fire Insurance Company:

    Chapter 22 of the novel contains this vastly careless “Thatcherite” exchange:

    “Oh. Mr. Wilcox, about the Porphyrion–“she began and went
    scarlet all over her face.

    “It’s all right,” called Margaret, catching them up.
    “Dempster’s Bank’s better.”

    “But I think you told us the Porphyrion was bad, and would smash
    before Christmas.”

    “Did I? It was still outside the Tariff Ring, and had to take rotten
    policies. Lately it came in–safe as houses now.”

    “In other words, Mr. Bast need never have left it.”

    “No, the fellow needn’t.”

    “–and needn’t have started life elsewhere at a greatly reduced salary.”

    “He only says ‘reduced,'” corrected Margaret, seeing trouble

    “With a man so poor, every reduction must be great. I consider it a
    deplorable misfortune.”

    Mr. Wilcox, intent on his business with Mrs. Munt, was going steadily on,
    but the last remark made him say: “What? What’s that? Do you mean that I’m

    “You’re ridiculous, Helen.”

    “You seem to think–” He looked at his watch. “Let me
    explain the point to you. It is like this. You seem to assume, when a business
    concern is conducting a delicate negotiation, it ought to keep the public
    informed stage by stage. The Porphyrion, according to you, was bound to say, ‘I
    am trying all I can to get into the Tariff Ring. I am not sure that I shall
    succeed, but it is the only thing that will save me from insolvency, and I am
    trying.’ My dear Helen–”

    “Is that your point? A man who had little money has less–that’s

    “I am grieved for your clerk. But it is all in the days work. It’s
    part of the battle of life.”

    “A man who had little money–, “she repeated, “has less,
    owing to us. Under these circumstances I consider ‘the battle of life’ a happy

    “Oh come, come!” he protested pleasantly. ‘you’re not to blame.
    No one’s to blame.”

    “Is no one to blame for anything?”

    “I wouldn’t say that, but you’re taking it far too seriously. Who is
    this fellow?”

    “We have told you about the fellow twice already,” said Helen.
    “You have even met the fellow. He is very poor and his wife is an
    extravagant imbecile. He is capable of better things. We–we, the upper
    classes–thought we would help him from the height of our superior
    knowledge–and here’s the result!”

    He raised his finger. “Now, a word of advice.”

    “I require no more advice.”

    “A word of advice. Don’t take up that sentimental attitude over the
    poor. See that she doesn’t, Margaret. The poor are poor, and one’s sorry for
    them, but there it is. As civilisation moves forward, the shoe is bound to
    pinch in places, and it’s absurd to pretend that any one is responsible
    personally. Neither you, nor I, nor my informant, nor the man who informed him,
    nor the directors of the Porphyrion, are to blame for this clerk’s loss of
    salary. It’s just the shoe pinching–no one can help it; and it might easily
    have been worse.”

    Helen quivered with indignation.

    “By all means subscribe to charities–subscribe to them largely–
    but don’t get carried away by absurd schemes of Social Reform. I see a good
    deal behind the scenes, and you can take it from me that there is no Social
    Question–except for a few journalists who try to get a living out of the
    phrase. There are just rich and poor, as there always have been and always will
    be. Point me out a time when men have been equal—“

    Anglo-American as a civilizations keeps longing for a return to Social Darwinism.

    Mitt Romney’s presidential campaign running mate, Paul Ryan’s embrace of Ayn Rand philosophy is a current recrudescence of this. Henry Wilcox triumphs with his Gatsbyesque “vast carelessness” and the Plumb Plan goes down.

    Richard Melson

    Richard Melson

  • Cambridge Forecast


    This very fertile ROS show raises an undiscussed issue: the relation now between theories and economic processes.

    One dimension of all the financialization and the transformations that it entails,
    is the phenomenon of theories about finance becoming engines or motors driving
    economies from within. The “bible” of this hidden dimension is Donald Mackenzie’s
    MIT Press book, “An Engine, not a Camera.”

    Here’s a basic précis:

    Author: Donald Mackenzie

    “In An Engine, Not a Camera, Donald MacKenzie argues that the
    emergence of modern economic theories of finance affected financial markets in
    fundamental ways. These new, Nobel Prize-winning theories, based on elegant
    mathematical models of markets, were not simply external analyses but intrinsic
    parts of economic processes. Paraphrasing Milton Friedman, MacKenzie says that
    economic models are an engine of inquiry rather than a camera to reproduce
    empirical facts. More than that, the emergence of an authoritative theory of
    financial markets altered those markets fundamentally. For example, in 1970,
    there was almost no trading in financial derivatives such as
    “futures.” By June of 2004, derivatives contracts totaling $273
    trillion were outstanding worldwide. MacKenzie suggests that this growth could
    never have happened without the development of theories that gave derivatives
    legitimacy and explained their complexities. MacKenzie examines the role played
    by finance theory in the two most serious crises to hit the world’s financial
    markets in recent years: the stock market crash of 1987 and the market turmoil
    that engulfed the hedge fund Long-Term Capital Management in 1998. He also
    looks at finance theory that is somewhat beyond the mainstream—chaos theorist
    Benoit Mandelbrot’s model of “wild” randomness. MacKenzie’s
    pioneering work in the social studies of finance will interest anyone who wants
    to understand how America’s financial markets have grown into their current

    Donald MacKenzie is Professor of Sociology (Personal Chair)
    at the University of Edinburgh. His books include Inventing Accuracy (1990),
    Knowing Machines (1996), and Mechanizing Proof (2001), all
    published by the MIT Press. Portions of An Engine, not a Camera won the
    Viviana A. Zelizer Prize in economic sociology from the American Sociological


    It’s important to understand this financial “theorization” of the economy which is explained in this book.

    Richard Melson

  • Potter

    Alex Gourevitch makes the most sense to me as does the late Tony Judt in his book “Ill Fares the Land”. The “I” word comes in about halfway in this discussion. We slip slid into this mode of gross inequality. The country moved to the Right.

    I would argue that the focus, even the seeming intense focus, on money if we are talking about the average person, not one in the financial biz, is not new in this time of inequality. My parents, children of immigrants who went through the depression in the last century, were focussed on money,not having enough of it, making it, having it to hold ( as Chris suggests)…maybe as evidence of stature or class. I don;t think money means the same today.

    I have to add that the money industry, the financial industry, takes in a lot of workers that are not grossly overpaid, people that want to be home at 5 ( or at least by 7) with their children, and who are managing to pay the mortgage yes,, saving for college education for their kids, and having vacations. They might even vote for the values of the New Deal. They are not the fraction of a fraction obscenely wealthy. The grossly overpaid I think you can find in at least several other industries as well.

    As always, Thank you!

  • I listen to the money-casts with great interest. Not for substance, but style in terms of POV.
    All productions have a POV that falls into a range or degree of subjectivity from fly on–the-wall to Robert Kramer. Michael Lewis’s work tends towards a gross subjectivity, beyond a Werner Herzog documentary for example.

    Markets have always been rigged. Look at the DJIA graph over its history. The graph tells us that the equity markets are rigged to create wealth – it goes up and down, but has always trended up. So when we say rigged, we merely mean trees don’t grow to the sky.

    What Lewis fails to tells us is the truth about HFT. The reason is found in the essence of trading: the returns of a pattern once identified, tend to diminish. A new pattern is found and the process begins again. The churn is ever upward in the cycle of wealth creation.

    “For the first time since its inception, high-frequency trading, the bogey machine of the markets, is in retreat. According to estimates from Rosenblatt Securities, as much as two-thirds of all stock trades in the U.S. from 2008 to 2011 were executed by high-frequency firms; today it’s about half. In 2009, high-frequency traders moved about 3.25 billion shares a day. In 2012, it was 1.6 billion a day. Speed traders aren’t just trading fewer shares, they’re making less money on each trade. Average profits have fallen from about a tenth of a penny per share to a twentieth of a penny.”

    June 06, 2013

    Alvy at 9: The universe is expanding.
    Doctor: The universe is expanding?
    Alvy at 9: Well, the universe is everything, and if it’s expanding, someday it will break apart and that would be the end of everything!
    Alvy’s Mom: What is that your business? He stopped doing his homework!
    Alvy at 9: What’s the point?
    Alvy’s Mom: What has the universe got to do with it? You’re here in Brooklyn! Brooklyn is not expanding!
    Doctor: It won’t be expanding for billions of years yet, Alvy. And we’ve gotta try to enjoy ourselves while we’re here!

  • Cambridge Forecast


    Kevin Phillips, the astute Republican analyst, has a book called “Bad Money” where he theorizes and describes the corrosive effects of an economy dominated by unhealthy levels of casino capitalism.

    When we speak of the Second Gilded Age and think back to the first Gilded Age in the nineteenth century, we think of a system where the ratio of skullduggery to production is dangerously out of whack.

    In search of perspective, we wonder: is this an American phenomenon or can we widen the angle and paint this story on a wider historical canvas?“

    Here’s one such story: the nineteen century novels of Balzac and Emile Zola are in essence, the story of “bad money” wrapping itself around France. This financialization story culminates in Zola’s novel, “Money” (“L’Argent). Consider the following:

    L’Argent” Emile Zola

    “L’Argent (“Money”) is the eighteenth novel in the Rougon-Macquart series by Émile
    Zola. It was serialized in the periodical Gil Blas beginning in November 1890
    before being published in novel form by Charpentier et Fasquelle in March 1891.

    The novel focuses on the financial world of the Second French Empire as embodied in the Paris Bourse and exemplified by the fictional character of Aristide Saccard. Zola’s intent
    was to show the terrible effects of speculation and fraudulent company promotion, the culpable negligence of company directors, and the impotency of contemporary financial laws.”

    “The novel takes place in 1864-1869, beginning a few months after the death of Saccard’s second wife Renée (see La curée). Saccard is bankrupt and an outcast among the Bourse financiers.
    Searching for a way to reestablish himself, Saccard is struck by plans
    developed by his upstairs neighbor, the engineer Georges Hamelin, who dreams of
    restoring Christianity to the Middle East through great public works: rail lines linking important cities, improved roads and transportation, renovated eastern Mediterranean
    ports, and fleets of modern ships to move goods around the world.

    Saccard decides to institute a financial establishment to fund these projects. He is motivated primarily by the potential to make incredible amounts of money and reestablish himself on the
    Bourse. In addition, Saccard has an intense rivalry with his brother Eugène
    Rougon, a powerful Cabinet minister who refuses to help him after his
    bankruptcy and who is promoting a more liberal, less Catholic agenda for the Empire. Furthermore, Saccard, an intense anti-Semite, sees the enterprise as a strike against the
    Jewish bankers who dominate the Bourse. From the beginning, Saccard’s Banque Universelle
    (Universal Bank) stands on shaky ground. In order to manipulate the price of
    the stock, Saccard and his confreres on the syndicate he has set up to
    jumpstart the enterprise buy their own stock and hide the proceeds of this
    illegal practice in a dummy account fronted by a straw man.

    While Hamelin travels to Constantinople to lay the groundwork for their enterprise, the Banque Universelle goes from strength to strength. Stock prices soar, going from 500 francs a share to more than 3,000 francs in three years. Furthermore, Saccard buys several newspapers
    which serve to maintain the illusion of legitimacy, promote the Banque, excite
    the public, and attack Rougon.

    The novel follows the fortunes of about 20 characters, cutting across all social strata, showing the effects of stock market speculation on rich and poor. The financial events of the novel are
    played against Saccard’s personal life. Hamelin lives with his sister Caroline,
    who, against her better judgment, invests in the Banque Universelle and later
    becomes Saccard’s mistress. Caroline learns that Saccard fathered a son,
    Victor, during his first days in Paris.
    She rescues Victor from his life of abject poverty, placing him in a charitable
    institution. But Victor is completely unredeemable, given over to greed,
    laziness, and thievery. After he attacks one of the women at the institution,
    he disappears into the streets, never to be seen again.

    Eventually, the Banque Universelle cannot sustain itself. Saccard’s principal rival on the Bourse, the Jewish financier Gundermann, learns about Saccard’s financial trickery and attacks, losing stock upon the market, devaluing its price, and forcing Saccard to buy millions of
    shares to keep the price up. At the final collapse, the Banque holds one-fourth
    of its own shares worth 200 million francs. The fall of the Banque is felt
    across the entire financial world. Indeed, all of France feels the force of its
    collapse. The effects on the characters of L’argent are disastrous,
    including complete ruin, suicide, and exile, though some of Saccard’s syndicate
    members escape and Gundermann experiences a windfall. Saccard and Hamelin are
    sentenced to five years in prison. Through the intervention of Saccard’s
    brother Eugène Rougon, who doesn’t want a brother in jail, their sentences are
    commuted and they are forced to leave France. Saccard goes to Belgium, and the
    novel ends with Caroline preparing to follow her brother to Rome.”


    Related Zola novels like “Pot Bouille” are largely about rent price gyrations due to Baron Haussmann’s renovation of Paris and the attendant real estate manias, scoops,, fraud, fixing.
    “La Curee” is about insider knowledge and real estate windfalls and killings.

    Honore de Balzac’s novels, which come before (Balzac died in 1850, Zola in 1902) are centrally about provincial “arrivistes” looking for “room at the top” via crime or machinations in a society made increasing “opaque” via financialization and the attendant schemes.

    We could perhaps say that such financialization worldwide represents a breakdown of governance and what Prof. George Stigler of Chicago Economics Department used to call “regulatory capture”.

    This adds a dimension to the world described by Michael Lewis and the various ROS interviews with him.

    Richard Melson

  • Cambridge Forecast

    “Why Does Financial Sector Growth Crowd Out Real Economic Growth”?

    Michael Lewis (various ROS shows) and the other panelists describe a world of financialization running amuck. Until recently, it has been hard to find an analytical dissection and
    evaluation of the actual distortionary effect, if any, of such unproductive finance on the rest of the economic system.

    A new paper put out by the Bank for International Settlements in Basle goes deeply and rigorously into this question and concludes:


    “In this paper, we study the real effects of financial sector growth and come to two important conclusions:
    First, the growth of the financial system is a drag on productivity growth.
    That is, higher growth in the financial sector reduces real growth.

    In other words, financial booms are not in general, growth enhancing, likely because the
    financial sector competes with the rest of the economy for resources. Second,
    using sectoral data, we examine the distributional nature of this effect and
    find that credit booms harm what we normally think of as the engines for
    growth—those that are more R&D-intensive.

    This evidence, together with recent experience during the financial crisis, leads us to conclude there is a pressing need to reassess the relationship of finance and real growth in modern
    economic systems.”
    Bank for International Settlements,

    “Why Does Financial Sector Growth Crowd Out Real Economic Growth”?
    By Stephen Cecchetti and Enisse Kharroubi
    Monetary and Economic Department, BIS February 2015

    This BIS paper which you may read on the web, will show you how cancerous unregulated financialization blocks and distorts the rest of the economy and severely hampers growth at the system level. This then systematizes the Michael Lewis points.

    Richard Melson