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Banks and Derivatives

Banks and Derivatives

In finance, "a derivative is a contract that derives its value from the performance of an underlying entity. This underlying entity can be an asset, index, or interest rate."

Basically it is a risk investment just as stocks or Bonds are but unlike stocks or bonds most derivatives are traded over-the-counter (IE. off-exchange) a few can be found at exchanges such as the Bombay Stock Exchange. But they are not normally available to the average consumer as an instrument of speculation.

So what's the big deal? Well the top 10 banks in the USA have a combined net worth of less than 13 trillion dollars yet hold combined derivatives in excess of 250 TRILLION dollars! yes you read that correctly... ASSETS of 13 trillion and derivative risk of 250 trillion.

Imagine going to the bank and saying "Hey Mr banker I have 13 thousand to offer as collateral and I would like you to give me a QUARTER OF A MILLION to go to Vegas and gamble" I suspect that a ambulance would need to be dispatched with haste to treat the banker for uncontrollable laughter.

Your banks, which the government had to bail out in 2008 (yes those "to big to fail banks"), are now nearing a size that is almost 50% bigger than they were when they needed to be bailed out after the housing market crash.

Let me put this into a perspective you may be able to identify with... The whole worlds net output in goods and services for ALL countries globally is LESS than 250 Trillion dollars! That is all physical items produced globally and every service that is sold around the world. Yet our banks hold more risk in Derivatives alone!

Neither I nor you need to be geniuses or hold degrees in finance to know that it does not make sense to go out on such a financial ledge. couple that with the stock market risks (equities and shares) or debt risks (bonds and mortgages) and you will know that there is no way for the banks to survive the inevitable bursting of this bubble.

If you have money in the bank... its gone. Sure the FDIC insures your acct up to $60,000 but please explain to me how the government (who is already 20 TRILLION dollars in debt) is going to cover account holders losses?

How are you going to get paid when the banks are gone?

How are you going to pay your bills or debts when the financial institutions vanish?

How are you going to access your 401K which was heavily invested in the stock markets which will also collapse when the banks crash?

The answer is that unless you are ready for it you will have nothing to save you from disaster. Everything you have worked for and scrimped and saved over the last several decades will be gone.

There are solutions... stock up on things that will not perish and can be traded. Or go with a more compact for of barter or trading material... something like GOLD.

Gold can be acquired in small increments. Quantities as small as 1 gram that are affordable to all (about $73, these days, for a Kinebar certified gram of gold)

Let me help you to get started today... Contact me, Udo Hoffmann, at or (715)426-0518 for a quality assessment, detailed information and instruction on how I can help you to get started today.

This article was published on 12.02.2017 by Udo Hoffmann
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