“A derivative my dear is an invention by greedy men and women to try to make lots of money for themselves while producing no real value for anyone.” “I don’t think that will end to well, do you Mommy?” “No it will have a very bad ending my dear, you are so right because you have common sense.”
The largest financial time bomb in history is ticking. Created by our friends on Wall Street, derivatives are now estimated at over $700 trillion, and some estimates put it as high as $1.5 quadrillion. 2008 has taught us that this is the biggest speculative financial bubble in world history and the entire global financial system itself is now at risk.
Derivatives are the largest and most speculative schemes creating hundreds of billions in profits into the big banks and brokerage firms. According to estimates published in the McAlvany Intelligence Advisor October 2015, the total United States bank exposure to derivatives is over $280 trillion and rising quickly.
A more technical definition is that derivatives are securities with a price that is dependent upon or derived from one or more underlying assets. A financial instrument whose value is based on the performance of underlying assets such as stocks, bonds currency exchange rates, real estate. The main categories of derivatives are futures, options and swaps. Derivatives are financial instruments whose value is derived from the value of an underlying asset (such as gold, wheat or other commodities) or other financial instruments including bonds, or market benchmarks such as interest rates.
“Wow that sounds so smart and impressive Mommy” is it really? “No my dear it’s just complex gibberish to keep us ignorant as the greedy corporations, financial centers and governments create huge profits at the risk of collapsing it all upon everyone including themselves”.
We will explore in the next post here at JohnMichaelChambers.com, the top five banks and their derivatives exposure and the potential imminent nightmare that will make the crash of 1929 and the crash of 2008 look likes child’s play.