Ellen Brown: The Looming Quadrillion Dollar Derivatives Tsunami | Hacker News Reader

Ellen Brown: The Looming Quadrillion Dollar Derivatives Tsunami

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Glad I'll be around to see the next once-in-a-century financial disaster unfold.

I never could understand how derivatives are not more tightly regulated.

The stock market brings a benefit to society in a way that companies, who are producing and researching good and services, can get investment to expand and produce more and better.

Derivatives, the way I understand them (might be wrong), do not seem to support this as they are nothing more than artificial instruments (bets) over those stocks and indexes. Part of if is fictitious (value that isn't there) but part of it is real money that could be invested elsewhere to help companies and society.

Of course they have their fair use, like hedge for risk, but my bet is the biggest usage is for speculation.

Derivatives can be used to manage risk in the production of goods. For instance I’ve invested money land rental, seeds and tractors. I hope to get the money back over the next ten years from selling wheat. But there is a risk that the price of fertilisers goes up too much over this period, risking that I don’t make my money back. So I could buy a derivative on the price of fertiliser so that if fertiliser goes up I don’t make money on the wheat, but I do on the fertiliser. And if the fertiliser goes down, I make money on the wheat.

But this is not to say that I disagree about regulation. It would be nice if we could limit the depth of the transitive tree of contracts. But I doubt that is feasible.

Well its more like that you have to let the speculators in because they provide so much liquidity

isn't all investment speculation?

The S&P will go up! prove it. you can't you can only use historical, psychology or other factors to make a guess.

Even natural laws are based on historical accounts and repeated successful prediction.

Also, F*ck Gold.

If you really want a reserve currency then you need to have it based on Guns, Ammo, Drinkable Water and Rations.

I'll do you one better in the category of apocalyptic reserve currencies: Alcohol

And throwing snakes; not a reserve currency but apparently a useful talent.

Great article that makes the sensible recommendation of public banking.

Would such a number cause inflation? After all, derivatives are highly liquid, and would add to the overall number of liquidity in circulation.

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