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Derivatives and Hyperinflation; by Dennis Mason

LaRouche: It’s The Derivatives, Stupid! Derivatives: The Hyperinflationary Bomb Crushing The International Financial System October 9, 2008 (LPAC)–Lyndon LaRouche today mocked Treasury Secretary Hank Paulson’s bailout scheme, warning that Paulson and all the other central bankers have been lying through their teeth about their ever-changing so-called bailout swindles. The real problem, that none of them wish to talk about, is the mass of derivatives obligations, that are in the quadrillions of dollars. LaRouche called the derivatives bubble the hyperinflationary bomb, crushing the international financial system, warning, Until you just shut down the whole derivatives trade–wipe these gambling obligations off the books of the financial system–you are just kidding yourself. LaRouche declared, It is time to break the silence on derivatives. The true, hyperinflationary factor in the situation is the unregulated, insanely leveraged derivatives trade. This is what is killing us. This is the great crime of Alan Greenspan. According to the most recent data, released June 30, 2008 by the Office of the Comptroller of the Currency, the three largest American bank holding companies, JP Morgan Chase, Bank of America and Citicorp, had current outstanding derivatives contracts, totaling $179.4 trillion dollars. The three banks combined have total assets of just under $5.6 trillion! As of Dec. 31, 2007, according to the Bank for International Settlements, the total over-the-counter

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25 Responses to "Derivatives and Hyperinflation; by Dennis Mason"

  1. Zamolxx says:
    Esoteric economics means believing that stocks create wealth, believing that money has intrinsic value, believing in scalar linear mathematics instead of physics, believing in the so called invisible hand instead of generational development. Thorstein Veblen was right, the conflict in modern society is no longer capital vs labor, but rather business vs industry. The post industrial economy is one of the biggest swdindles ever produced.
  2. KoalaBearWarrior says:
    @Zamolxx Dude you did not just hear a word I said. Also… have you ever heard of credit unions? What is parasitical? Capitalism? Capitalism is why you are using this damn website!
  3. Zamolxx says:
    Commercial banks unlike investment banks, really do need deposists in order to operate. We should eliminate this architecture of giant banks and return the old ones, of small banks, credit cooperatives, regional banks, local banks. Even LaRouche’s associated have said that the future’s market (foodstuffs) is at least based on something physical, but everything else is just parasitical. It’s high time the world gave up esoteric economics and returned to the principles of physical economy.
  4. Zamolxx says:
    Only depository institutions must be protected, but you can’t do that if depository institutions are doing investment banking. They are increasing the risk because they know that if their bets go bad, they can invoke.. “Well you know if you leave us on our own, then the people won’t be happy because of their deposits”. As long as risk can be traded and uber profited upon the markets will behave more insane and honest enterprises be left to dry because all the funding goes to the speculators.
  5. Zamolxx says:
    You would do well to know the lenght of your nose. As long as commercial banking is tied to investment banking the so called to big to fail banks will blackmail every government into saving them. Because if they are left to fall as they should, then the people will also lose their deposits. That fictitious amount if honored is the amount that the physical economy needs to pay. Why should it pay for it? Derivatives like CDS and CDO have nothing to do with production.
  6. KoalaBearWarrior says:
    @Zamolxx You are missing the point. That is just a fictitious amount, called a notional amount. Both parties to the contract, agree upon a number which they both made up. The problem is, not derivitives, it is the issue of overleveraging and expecting someone to bail you out. Also, you are wrong. Depository institutions are not affected. Your money is safe. That is what FDIC insurance is for. You would do well to educate yourself …
  7. Zamolxx says:
    In the 1800s they didn’t total more than the world’s GDP! The private sector can gamble all it wants, just keep depository institutions and public finance out of it.
  8. KoalaBearWarrior says:
    @Zamolxx Derivatives have been in use since the 1800′s…. they were used primarily by farmers to hedge the risk of selling their crop at a low price.
  9. Zamolxx says:
    The world lived very well before derivatives! Glass-Steagall must be reinstated! Financial derivatives only for the private sector, keep them out of depository institutions and public finance.
  10. KoalaBearWarrior says:
    lol larouche is an idiot. He doesn’t understand derivatives. They are used for hedging in addition to speculation. Farmers use derivatives to protect against a fall in the value of their crops. I guess they should be outlawed too :D
  11. realhardmoney says:
    buy gold and silver…..hold it…
  12. TheBlitz1 says:
    please keep this video up for as long as possible
  13. alphacodexx says:
    @Drexel2008 can you elaborate please…how is new debt settling old debt exactly?
  14. mlndstream says:
    It doesn’t seem like a zero sum game to me, as how can someone pay out on their side of a contract that was written up during a time when money was plentiful, and then deflation slashes the money supply making the money that a contract should have been settled with unavailable causing a default on the contract.China only a few months ago told Chinese businesses they didn’t have to honor certain derivatives contracts to US institutions if they lost on the contracts as they were fraudulent
  15. mlndstream says:
    After a short read on wikipedia I think you are right,OTC derivatives which had the total outstanding notional amount of $684 trillion (as of June 2008),have counterparty risk,in that one party to the contract may not pay out on their side of the contract for some reason.Possibly because they were depending on someone else paying out on their side of some other contract etc?I could be wrong but it sounds like dominoes all lined up to fall,particularly if the money supply seriously contracted?
  16. mlndstream says:
    not that he was told that carbon would be a world currency in the future, but I’m just putting bits of puzzle together from many different sources,and the pieces seem to suggest this picture could take form in the future.Lindsey Williams says he was a first hand witness to big banks like the IMF(from memory?)being the intermediaries between the oil producing countries and oil refiners, and deliberately setting future prices of oil at will, which he has proven actually happened in the market
  17. mlndstream says:
    Lindsey Williams, who has an alleged ‘elite/insider’ contact who is/was a CEO high up in the oil industry,was told that oil is the real world currency,it’s the most marketable commodity, and absolutely everyone wants it for something like to make fuels, plastics, paint etc..the uses are endless, and the portability issue would be solved with a ‘reserve note’ system similar to the way gold was circulated as money when notes represented a portion of gold in the treasury.Interesting idea at least
  18. mlndstream says:
    I’ve heard rumors that their are plans for any new world currency to be backed by carbon, I assume in the sense of fossil fuels backing the currency, except of course people can go to a bank and claim their oil or gas etc..but the notes should represent a portion of the total in some way. It makes sense that something like this would come about if/when the fiat system collapses, while the powers that be still find a way to defraud the system that everyone else accepts as being honest
  19. Zamolxx says:
    Derivatives loot the physical economy, they are just fraudulous claims of illegitimate debt. The amount of monetary aggregates is skyrocketing, way surpasing the financial aggregates. Monetary aggregates mean, the buying, changing and selling of money with money. Money which produces just money is a crime.
  20. Zamolxx says:
    Money is just a means to facilitate trade, it has no intrinsic value. The physical economy must dictate the currency not the other way around. You can use the gold reference, or other chemical element. A fixed international exchange rate system ensures fixed interest rates, that allows for the development of this ravaged and looted physical economy of the world.
  21. Finnbar01 says:
    Max Keiser watch?v=RTYizzdHAXM

    $600 trillion in derivatives.

  22. magnito6696 says:
    there are two parties to a derivatives contract and if all contract where settled then the net balance would be zero.
  23. mlndstream says:
    If many of the derivatives cancel each other out, then could that mean deflation as all the credit on either side of the equation disappears when they cancel each other out and then there would effectively be less credit in the system and credit is part of the money supply? and under what circumstances if any could you see the derivatives that are never exercised deleverage or possibly be exercised at once?
  24. mlndstream says:
    When Lyndon LaRouche calls for a new ‘Bretton Woods’ does he mean another deliberate dollar devaluation like at the end of the Great Depression when they reduced the degree to which the USD was backed by gold to only 75% so they could inflate the currency by an extra 25% which was banknotes not backed by any gold?
  25. tcampbellla says:
    I don’t think I am more intelligent than Greenspan, but I know I am more honest and I could do a better job than he since he was just a puppet of the Big Bankers. I would operate on “the greatest good for the greatest number, no0t just the Elite few(the Fed) who were, and are working to bankrupt the country and doing a great job of that! I must admit though, he successor is doing a much worse job than he.

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