Looking Forward to Retirement…of Words
October 27, 2013 · by EverBank WM Team
In 2010, Harvard University partnered with search engine giant Google on a quest to quantify the number of words spoken and written in the English language. The project analyzed over 5 million digitized books published between the years 1800 and 2000, and found that the actual number of words in the English language now stands at 1,022,000 words, and is expanding at a rate of 8,500 new words each year.1
Of the many words added in any given year, I would submit that the likes of Whitman, Fitzgerald or Steinbeck would be horrified at the quality of most words being added to our collective language each year. Just imagine these great American writers employing some of the newest quarterly additions to the American lexicon2 into their art:
- selfie (n): a photograph that one has taken of oneself with a smartphone or webcam for social media
- phablet (n): a cross between a smart phone and tablet
- babymoon (n): a relaxing or romantic holiday taken before the birth of a child
- twerk (v): dance to popular music in a provocative manner
Yes, you read that last one correctly. ‘Twerk’ has now been officially added to the Oxford English Dictionary’s on-line edition. I suppose when NBC weatherman Al Roker starts ‘twerking’ on early morning network television, the term has unfortunately passed the point of no return. Our only hope now may be that many of these words are quickly extricated to join past archaic colloquialisms like groovy, boogie, chillax, illin’, gnarly, and peeps. May they all rest in peace.
The Lexicon of Monetary Policy
Our financial media has appropriated its own set of inventive vocabulary for the national debate on economic policy, and it appears that this lexicon is candidly wearing thin for many operating and investing within the financial industry. Personally, I would be happy to see our industry retire many of these hackneyed terms and phrases. Our markets now appear to place greater emphasis on these terms for making investment decisions versus employing traditional currency, commodity, bond, and equity fundamentals. So in this light, I have developed my own personal list of tired financial terms that I would propose to abolish from our collective lexis.
Sequestration: Welcome back, Class of 2012! Didn’t we retire sequestration along with its cousin, fiscal cliff, at the end of last year? Apparently not, since the ink was not yet dried on the most recent Continuing Appropriations Act of 2014 that temporarily raised the debt ceiling until February 2014 and provided a continuing resolution to fund the government through January 2014,3 and the political discussion once again returned to our old friend, budget sequestration.
You may recall that the sequestration crisis reached a pinnacle in March when $55 billion in cash expenditures were cut from defense and non-defense expenditures,4 and yet the sun did rise the next day. Yet sequestration was not just a one-year fix. The Budget Control Act of 2011 stipulated that an additional $21 billion in cash expenditures would occur for fiscal year 2014, almost exclusively in defense spending, with an eventual projected 10-year aggregate reduction of $1.2 trillion in spending authority.5 Rest assured that as the current continuing resolution approaches expiration in January 2014, we should expect to be inundated with sequestration chatter, once again.
Quantitative Easing: The financial crisis of 2008 prompted the U.S. Federal Reserve to resort to the extraordinary and unconventional monetary strategy of purchasing bonds from commercial banks and private institutions in order to increase the monetary base and provide liquidity to the system. Since then, quantitative easing has developed into an enduring strategy for the Fed’s monetary policy, and remains the subject of speculation as to whether the current $85 billion in monthly quantitative purchases may be singularly responsible for supporting anemic U.S. economic growth.
Unfortunately, challengers to these initiatives are few and far between; lower interest rates provide cover for politicians looking to raise debt limits; equity investors have enjoyed asset appreciation; and reduced mortgage rates have provided support to U.S. housing prices. However, even QE’s pioneer, the Bank of Japan, warns that the longer central banks interfere in private markets, the greater chance that market distortions will occur in these markets.6
Taper: Quantitative easing is the Yin to the taper’s Yang, so you really can’t eliminate QE from our vocabulary without addressing the taper, as well. Don’t get me wrong; I am not proposing an eradication of the taper strategy, but rather, the endless play on words using the term ‘taper’. We have had Septaper, Octaper, Taper Tandrum, Token Taper, and Taper Tomorrow, just to name a few. And I expect the iterations will continue.
Naturally, tapering in this context is the reduction in the rate of bond purchasing through the Federal Reserve’s quantitative stimulus measures. The notion of tapering first captured the financial community’s interest following the Federal Open Market Committee’s May 1, 2013 Monetary Policy Release stating, “The Committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation…”.7
Since then, it is likely that more collective creativity has been expended on crafting charming phrases using the term ‘taper’ than the Federal Reserve has devoted to genuinely designing a tapering strategy, although in the Fed’s defense, the tapering dialogue appears to have been more market directed than from any official modification in monetary policy. Why not just simply use an old standby like ‘moderate’ to describe Fed monetary activities? I guess Decemoderate is not nearly as clever or catchy.
Debt Ceiling: The U.S. debt ceiling or debt limit, by all accounts, is an inconsistency to a rational capital budgeting process. Rather than defining a spending limit in advance of the annual budgetary process, the U.S. Congress first approves a budget for planned expenditures throughout the year, and then looks for the funding to pay for any deficits through increased indebtedness. For an individual, this would be similar to signing a contract to purchase a home prior to applying for mortgage financing from a lender.
The absurdity of the current policy is likely why the U.S. and Denmark are the only democratized countries that have sanctioned debt limits, although Denmark’s debt limit is based on a percentage of the country’s GDP and is currently three-times the level of outstanding gross debt.8 Of course, the normal reaction is that by removing debt limits, the U.S. Federal debt level would undoubtedly explode. But isn’t that already happening? It would seem more logical to include any debt funding requirements within the budgetary debate, thereby forcing political accountability for any deficits incurred during the budget proceedings and not at some later time on the precipice of a government shutdown or liability default. And importantly, we would presumably be spared from debt ceiling discourse in the future.
Accepting the Evolution of Language
Frankly, I am under no preconceptions that these suggestions will travel any further than our Daily Pfennig® community, but it is certainly cathartic to share these tongue-in-cheek observations with our readers.
And sometimes, the evolution of language can produce wonderfully descriptive expressions. The BBC’s political satire The Thick of It has provided one of the more timely and fitting additions to our lexicon. Derived from the Latin prefix omni- meaning ‘all’ and shambles meaning ‘a disorderly situation’, the British have cleverly furnished the word ‘omnishambles’, a noun describing “a situation that has been comprehensively mismanaged, characterized by a string of blunders and miscalculations.”9 I can already hear the creative wheels turning.
I do not believe that the preceding list is by any means exhaustive, and welcome our readers to share any other frustrations or irritations you may have with the evolution of our cultural lexicon.
Until then, your friends at EverBank World Markets will remain committed to examining sequestration, following quantitative easing and tapering developments, and analyzing ongoing debt ceiling debates. Just don’t expect any twerking.
Until the next Pfennig…
Assistant Vice President
EverBank World Markets, a division of EverBank
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