Borrow and Leverage - The Language of Money

Listen to the way rich people and poor people describe the same thing and you will start to understand some of the divides in this country. The financial apocalypse has brought different ways of speaking to the forefront of our media and our attention.

There are many examples of linguistic difference between rich and poor. For example consider the way we use the words “leverage” and “borrow.” Let’s go the dictionary first to read the definitions.

  • Borrow: to take or obtain with the promise to return the same or an equivalent: Our neighbor borrowed my lawn mower.
  • Leverage: the use of a small initial investment, credit, or borrowed funds to gain a very high return in relation to one’s investment, to control a much larger investment, or to reduce one’s own liability for any loss.

To find out how the word is used I looked up both using ProQuest Newstand. I limited the results to the Star Tribune newspaper over the last 30 days.

I got 9 results for leverage. Here are two examples related to money.

  1. “In an interview Monday, Cooper said the demands of TARP began to conflict with the government’s own policies. For instance, the federal government was pressuring banks to use the funds as leverage to make more loans and to buy other banks. But such moves would reduce a bank’s tangible common equity, which has become a major focus of bank regulators and is considered a key measure of bank health.” – Star Tribune March 3, p. D1
  2. “Investment banks “raced like lemmings over the cliff by abandoning the usual principles of sound risk management both by increasing their leverage dramatically after 2004 and abandoning diversification in pursuit of obsessive focus on high-profit securitizations.” – Star Tribune, March 17 p. D1

    Notice the actors in these reports are banks, not people. Banks leverage, people don’t.

    Next I looked up borrow in the same paper and same time frame. Again there were 9 results. Here are three money related examples.

  3. “We help (customers) get on a plan for their financial success in order to buy (insurance and investments) through Thrivent in the future,” she said. Harvey’s top idea for employed folks without emergency savings: Open up a line of credit just in case. “It’s always easier to borrow money when you don’t need it. When you’re unemployed, there’s not a loan out there for you,” she said. – Star Tribune, March 15, pD3

  4. Toby Madden, a regional economist with the Federal Reserve Bank in Minneapolis, said the seeds of the rising default rate were sown earlier in the decade when credit eased so people could borrow more. – Star Tribune, March 8, p D1

  5. Last week, Gov. Tim Pawlenty tossed another $27 million on the table in his bid to boost K-12 spending about 2 percent in 2010-11, even in the face of a steep, recession-driven revenue slide. He’s willing to gamble with the state’s credit rating and borrow against future state revenues to do it. He said he’s also willing to up his K-12 ante another 2.8 percent in 2012-13, while freezing every other item in the state budget at his recommended 2010 level. – Star Tribune, Mach 22, p OP-1

Individuals and governments borrow, not banks.

Leverage connotes power and movement. The dictionary defines leverage as “power or ability to act or to influence people, events, decisions, etc.” before it mentions money. Borrowing is a sign of weakness, a lack that needs to be filled, which creates an obligation to repay. Borrowers repay their loans. What do leveragers do?

People and governments borrow, which puts all of us at risk. Think about the national debt discussion. I haven’t heard anyone tell us that we need to leverage our wonder-working American economy in order to save our asses from disaster. Instead the fiscal scolds tell us not to “borrow from our kids.” Strange that these people didn’t seem to have any complaints about leveraging the financial power of Wall Street.

Wall Street gets the linguistic benefit while people and government get the linguistic punishment. Haven’t we heard this tune before?

Todd Suomela
Associate Director for Digital Pedagogy & Scholarship Department

My interests include digital scholarship, citizen science, leadership, and communications.