Whenever talk turns to money matters, it’s never long before the financial jargon starts flying – and some of it, as you’ll no doubt have experienced numerous times before, can be downright baffling if you’re not up to speed with all the relevant shorthand.
There are, of course, numerous guides and glossaries available, most of which will at least give you a working definition of some of the more impenetrable financial phrases commonly thrown around. Economic columnist Jason Zweig’s 2015 book, The Devil’s Financial Dictionary, is often cited as the go-to resource for a fully comprehensive rundown of all the most baffling Wall Street waffle.
But where do these terms actually come from in the first place, and do their origins give us any additional understanding of what exactly they’re supposed to convey? Happily, the answer is very often yes. As Zweig observes in the above title, the word ‘crash’, for example – which was utterly inescapable as the buzz-phrase of the 2008 stock market plunge – is in fact ‘an onomatopoeic, or imitative, word that mimics the sound of something shattering, crash dates back in English to about 1400’, although he goes on to add that ‘crash wasn’t a familiar financial term [until] as late as 1817.’
Like ‘crash’, many similar sorts of phrases have in fact outgrown the specialised economic realm altogether, and become common everyday terms used in reference to all sorts of scenarios besides the strictly financial. ‘Bubble’, ‘crunch’, ‘halo effect’, ‘gazumping’ – they’re all heard today in a great many different settings alongside more familiar classics like ‘breadwinner’, ‘nest egg’ and ‘gravy train’, so it’s certainly worth taking a quick look at what some of these exotic descriptors were originally coined to describe.
The catastrophic US market crash of 1869 – otherwise known as the Fisk-Gould scandal – was the first time the phrase ‘Black Friday’ was really used in anger. Back then, it referred to the utter economic chaos that resulted from two speculators suddenly forcing the price of gold up and then down again, in a disastrous (although ultimately unpunished, at least in legal terms) attempt to manipulate the market in their personal favour. Nowadays, somewhat bizarrely, it more commonly denotes the biggest sales day of the year; an intensive 24-hour blast of reduced in-store prices on the day after Thanksgiving. In many ways, our modern ‘Black Friday’ is only marginally less chaotic than the 1869 fiasco – but in this context, the ‘black’ is actually a reference to being in a state of profit, as in ‘in the black’ (as opposed to ‘in the red’).
The word now commonly used to mean a deal-maker or middleman actually derives from the French brochier, a verb that in the 14th century generally meant ‘to broach/tap’ in reference to a barrel of wine. So essentially, it was a French synonym for a barkeep – and from those highly specific origins, it gradually came to mean anyone who bought a given quantity of something for the express purpose of selling it on again later at a personal profit. Understandably, for a long time afterwards, it was only ever used as a disdainful reference, although clearly its associations are rather more honourable today. Just ask your mortgage dealer.
This term is predominantly used to imply that a less profitable branch of an operation is being maintained purely because it benefits from an association with another (often unrelated) service or product. For example, a store may choose to keep stocking a largely unprofitable line of goods, simply because having them there gives that store a very slight edge in terms of potential customer numbers – and thus potential buyers for its more successful lines – over a store that doesn’t stock the underperforming item. Alternatively, a seller might offer free shipping above a certain order threshold, incurring a loss themselves in the hopes of enticing us to spend more overall. Then again, customers can be entirely responsible for perpetuating the effect themselves, buying inferior products from a trusted brand simply because they associate the company with another, far superior offering. (It also happens fairly regularly in HR: we’ve all seen individuals controversially promoted to management positions as a result of performing well in a task or area that involves no direct line management skills.) All of these are examples of the ‘halo effect’, where light from a given source is reflected – often undeservedly or illogically – into other areas.
Cookie jar accounting
The practice of stashing away profits during growth periods that can later be ‘dipped into’ – a repository of goodies, much like a cookie jar – during less successful spells. It’s ultimately a way of businesses pulling the wool over the eyes of shareholders during times of reduced profitability, almost universally viewed as a highly ethically dubious practice (and indeed a downright illegal one in some financial jurisdictions).
Way back in the day, it was widely believed – based on anecdotal or observational evidence in the rustic farming community – that prepopulating a laying hen’s nest with an artificial egg would somehow stimulate the bird into more frequent dropping of the genuine article. To have a ‘nest egg’ eventually became shorthand for a small investment or deposit that would hopefully multiply in time to become a bigger and more profitable sum. This is just one of a great many financial idioms that originate from farming or that concern livestock, as we’ll see below…
Bringing home the bacon
A term of disputed origin, although undeniably one that has obvious farming or homesteading allusions. Some believe that ‘to bring home the bacon’ refers to the common medieval practice of offering live or butchered pigs as prizes at all sorts of community events, fairs and contests – which makes sense, because the precise reason so many financial terms reference livestock is that it vastly predates money as a traded commodity of real value. Then again, it has also been noted that ‘bacon’ was once widely used as slang for the human body, leading to the alternative theory that the phrase meaning ‘to provide for the family’ was an allusion to physical labour.
The reason we refer to a credit crunch (besides simple alliteration) is that it implies things being squeezed from both sides – not only is money being lost by the lenders themselves, but it becomes much harder for anybody else to borrow anything. The most common cause is lenders being overly profligate with high risk, low interest loans which begin to default in alarming numbers, usually after initial low interest rates are hiked midway through the plan. If it happens on a dramatic enough scale – hello, 2008! – the knock-on effects for the wider economy can be pretty disastrous.
‘Riding a gravy train’ means coasting along with access to easy money – back in the early 20th century, ‘gravy’ used to be a common slang word for ill-gotten or effortlessly amassed (read: scammed) cash. If you’re making a lot of money very quickly by doing relatively little, chances are someone will accuse you of having bought a ticket for the gravy train.
Paying through the nose
Some of these terms are deemed to have impressively ancient origins, and none more so than ‘paying through the nose’, which many attribute to the Danish Viking raids on Ireland some 1200 years hence. Gruesomely enough, it’s thought to allude to the nefarious Viking practice of imposing outrageously high taxes on the citizens of any land they successfully conquered, and then slitting open debtors’ nostrils as agonizing punishment for late or refused payment. No wonder the Danes eventually apologised…
Cardboard box index
The so-called ‘cardboard box index’ is a shorthand way of quickly assessing the overall economic health of a particular industry or geographical region: rather than wrestling with complex import and export tallies, analysts semi-jokingly claim you can simply look at the rate of cardboard manufacturing in the area as a (very) rough guide to how much stock is being shipped out. We wouldn’t recommend you use this as any sort of basis for investment, but it’s a tongue-in-cheek measurement that has at least some basis in loosely appropriated economic theory.