{"id":1132,"date":"2011-10-27T14:01:52","date_gmt":"2011-10-27T18:01:52","guid":{"rendered":"http:\/\/www.silver-investor.com\/blog\/?p=1132"},"modified":"2018-06-10T10:57:39","modified_gmt":"2018-06-10T10:57:39","slug":"derivatives-are-odds-are-stacked-against-us","status":"publish","type":"post","link":"https:\/\/www.themorganreport.com\/blog\/derivatives-are-odds-are-stacked-against-us\/","title":{"rendered":"Derivatives: Are Odds are Stacked Against Us ?"},"content":{"rendered":"

For many, the world of finance is a complicated system better left to the experts.\u00a0 But, what the average American doesn\u2019t realize is, that if left to the\u00a0 \u201cexperts,\u201d the world of finance could come crashing down.\u00a0 What will be the cause of this potential imploding of the global financial infrastructure?\u00a0 The answer is simple: derivatives.\u00a0 You may be asking yourself what derivatives are and how they could possibly have such a grand impact on our world.\u00a0
\nThe Definition of a Derivative<\/strong>
\nIn the simplest of terms, a derivative is a contract that is established between two parties that ultimately determines what the payment agreement will be between the them.\u00a0 But, since this definition still leaves things in general terms, it is easier to understand derivatives by looking at what they do rather than by what they are.\u00a0 Derivatives impact how financial institutions calculate the potential payout of an investment.\u00a0
\nThe Greater Impact of Derivatives<\/strong>
\nWhen derivatives were first used, they were there as a protection, as a way to avoid risk.\u00a0 But, in recent years, they have become based on speculation so much that derivatives are no longer realistic.\u00a0 This means, the payoff of investments is over calculated to the extent that there would not be enough money in the world to cover them all if they were all to be cashed in all at once. So, if the world\u2019s financial market were a casino, and all of the investors were the players, if they all won at the same time, it would end up breaking the house.\u00a0\u00a0
\nRight now, the top U.S. banks have a strong grip on the financial outcome of our nation.\u00a0 In 2002, just over half of all banking assets in our country were managed by the top 10 U.S. banking institutions.\u00a0 Just short of ten years later, that number has jumped to over 75 percent.\u00a0 This rapid control the U.S. banks are gaining over the nations funds should be of concern since many of these top banks have a high exposure to derivatives.\u00a0 And, essentially, if over speculating derivatives were to cause just a few of these banks to fall, then a good portion of our overall banking assets would fall with them.\u00a0 And, this would cause a global financial crisis since there is no government that would be capable of bailing out these banks if that were to happen.\u00a0
\nSeveral years ago my speaking presentation started off with a short film clip about the size and potential destructive force of the derivatives issue. One of the first places that I played this video was in London and a few snickers went off in the background. The “comments” were especially directed at the idea of bank failures and that the entire system was so fragile and interconnected.
\nWell, a year later I was back in London and Black Rock had failed and the British were rather nervous to put it is polite terms. Not to gloat, but only to reinforce the problem some brief comments were made and we showed the film clip again.\u00a0 It was received much differently the second time, nothing like a dose of reality for bankers, brokers and fund managers to perceive things differently.
\nThe\u00a0Solution<\/strong>
\nAt this point in the cycle of a currency crisis it is primarily on an individual basis that a solution exists, meaning that monetary assets outside the mainstream must be owned. Obviously for those familiar with this issue know precious metals offer the only viable way to hold and save real wealth outside the bond and equity markets. Longer term it is more difficult to state how the system will “right” itself because for the first time this currency crisis is truly global and we are all interconnected.
\nDavid Morgan<\/p>\n","protected":false},"excerpt":{"rendered":"

For many, the world of finance is a complicated system better left to the experts.\u00a0 But, what the average American doesn\u2019t realize is, that if left to the\u00a0 \u201cexperts,\u201d the world of finance could come crashing down.\u00a0 What will be the cause of this potential imploding of the global financial infrastructure?\u00a0 The answer is simple:More<\/a><\/span><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[121,89],"tags":[],"yoast_head":"\nDerivatives: Are Odds are Stacked Against Us ?<\/title>\n<meta name=\"description\" content=\"Derivatives: Are Odds are Stacked Against Us ?\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.themorganreport.com\/blog\/derivatives-are-odds-are-stacked-against-us\/\" \/>\n<meta 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