In the United States, there are five “too big to fail” banks that each have more than $30 trillion in derivatives contracts. When combining all of the biggest banks, there is just under one-quarter of a quadrillion dollars of exposure to derivatives contracts in the U.S. alone.
As we reported earlier this year (SEE: Collapse of $1.2 quadrillion global derivatives market will lead to dollar collapse), there is a high chance that the global $1.2 quadrillion derivatives market could collapse in the near future, and this would pose doom for the U.S. dollar. Derivatives, as many remember, played a big part in the economic collapse from a few years ago.
Unsure what a derivative is? It’s a security with a price that is dependent upon or derived from one or more underlying assets. Investopedia continues:
“The derivative itself is a contract between two or more parties based upon the asset or assets. Its value is determined by fluctuations in the underlying asset. The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes.”
Even Warren Buffett is petrified of derivatives as he referred to them as “financial weapons of mass destruction” in a letter to Berkshire Hathaway shareholders.
Last year, the Office of the Comptroller of the Currency (OCC) published a detailed list (SEE: Global derivatives market reaches $710 trillion) of how the top 25 banks in the U.S. have been exposed to close to a quarter of quadrillion dollars of derivatives, but four banks control a substantial majority of it (in order of derivative exposure):
JPMorgan Chase
Total Assets: $1,945,467,000,000
Total Exposure to Derivatives: $70,088,625,000,000
Citibank
Total Assets: $1,346,747,000,000
Total Exposure to Derivatives: $62,247,698,000,000
Goldman Sachs
Total Assets: $105,616,000,000
Total Exposure to Derivatives: $48,611,684,000,000
Bank Of America
Total Assets: $1,433,716,000,000
Total Exposure to Derivatives: $38,850,900,000,000
Michael Snyder of Economic Collapse eloquently pens:
“As the “real economy” crumbles, major hedge funds continue to drop like flies, and we head into a new recession, there seems to very little alarm among the general population about what is happening…
“The mainstream media is assuring us that everything is under control, and they are running front page headlines such as this one during the holiday season: “Kylie Jenner shows off her red-hot, new tattoo“.
“But underneath the surface, trouble is brewing.
“A new financial crisis has already begun, and it is going to intensify as we head into 2016.
“And as this new crisis unfolds, one word that you are going to want to listen for is “derivatives”, because they are going to play a major role in the “financial Armageddon” that is rapidly approaching.”
As the U.S. heads into a recession in 2016 or 2017, derivatives will play a major part in the demise of the U.S. economy.
Most telling of all is the typical consumer-duping derivatives definition that for whatever reason avoids the real explanation about the creative leveraging specifics regarding the fuller economic profit shielding shenanigans involved. Where if stated more plainly would itself cripple the credibility of the fancy politicized jargon about derivatives that the unsuspecting General public is unaware of as yet- for a little while…