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5 U.S. Banks Each Have More Than 40 Trillion Dollars In Exposure To Derivatives

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Roulette Wheel - Public DomainWhen is the U.S. banking system going to crash?  I can sum it up in three words.  Watch the derivatives.  It used to be only four, but now there are five “too big to fail” banks in the United States that each have more than 40 trillion dollars in exposure to derivatives.  Today, the U.S. national debt is sitting at a grand total of about 17.7 trillion dollars, so when we are talking about 40 trillion dollars we are talking about an amount of money that is almost unimaginable.  And unlike stocks and bonds, these derivatives do not represent “investments” in anything.  They can be incredibly complex, but essentially they are just paper wagers about what will happen in the future.  The truth is that derivatives trading is not too different from betting on baseball or football games.  Trading in derivatives is basically just a form of legalized gambling, and the “too big to fail” banks have transformed Wall Street into the largest casino in the history of the planet.  When this derivatives bubble bursts (and as surely as I am writing this it will), the pain that it will cause the global economy will be greater than words can describe.

If derivatives trading is so risky, then why do our big banks do it?

The answer to that question comes down to just one thing.


The “too big to fail” banks run up enormous profits from their derivatives trading.  According to the New York Times, U.S. banks “have nearly $280 trillion of derivatives on their books” even though the financial crisis of 2008 demonstrated how dangerous they could be…

American banks have nearly $280 trillion of derivatives on their books, and they earn some of their biggest profits from trading in them. But the 2008 crisis revealed how flaws in the market had allowed for dangerous buildups of risk at large Wall Street firms and worsened the run on the banking system.

The big banks have sophisticated computer models which are supposed to keep the system stable and help them manage these risks.

But all computer models are based on assumptions.

And all of those assumptions were originally made by flesh and blood people.

When a “black swan event” comes along such as a war, a major pandemic, an apocalyptic natural disaster or a collapse of a very large financial institution, these models can often break down very rapidly.

For example, the following is a brief excerpt from a Forbes article that describes what happened to the derivatives market when Lehman Brothers collapsed back in 2008…

Fast forward to the financial meltdown of 2008 and what do we see? America again was celebrating. The economy was booming. Everyone seemed to be getting wealthier, even though the warning signs were everywhere: too much borrowing, foolish investments, greedy banks, regulators asleep at the wheel, politicians eager to promote home-ownership for those who couldn’t afford it, and distinguished analysts openly predicting this could only end badly. And then, when Lehman Bros fell, the financial system froze and world economy almost collapsed. Why?

The root cause wasn’t just the reckless lending and the excessive risk taking. The problem at the core was a lack of transparency. After Lehman’s collapse, no one could understand any particular bank’s risks from derivative trading and so no bank wanted to lend to or trade with any other bank. Because all the big banks’ had been involved to an unknown degree in risky derivative trading, no one could tell whether any particular financial institution might suddenly implode.

After the last financial crisis, we were promised that this would be fixed.

But instead the problem has become much larger.

When the housing bubble burst back in 2007, the total notional value of derivatives contracts around the world had risen to about 500 trillion dollars.

According to the Bank for International Settlements, today the total notional value of derivatives contracts around the world has ballooned to a staggering 710 trillion dollars ($710,000,000,000,000).

And of course the heart of this derivatives bubble can be found on Wall Street.

What I am about to share with you is very troubling information.

I have shared similar numbers in the past, but for this article I went and got the very latest numbers from the OCC’s most recent quarterly report.  As I mentioned above, there are now five “too big to fail” banks that each have more than 40 trillion dollars in exposure to derivatives…

JPMorgan Chase

Total Assets: $2,476,986,000,000 (about 2.5 trillion dollars)

Total Exposure To Derivatives: $67,951,190,000,000 (more than 67 trillion dollars)


Total Assets: $1,894,736,000,000 (almost 1.9 trillion dollars)

Total Exposure To Derivatives: $59,944,502,000,000 (nearly 60 trillion dollars)

Goldman Sachs

Total Assets: $915,705,000,000 (less than a trillion dollars)

Total Exposure To Derivatives: $54,564,516,000,000 (more than 54 trillion dollars)

Bank Of America

Total Assets: $2,152,533,000,000 (a bit more than 2.1 trillion dollars)

Total Exposure To Derivatives: $54,457,605,000,000 (more than 54 trillion dollars)

Morgan Stanley

Total Assets: $831,381,000,000 (less than a trillion dollars)

Total Exposure To Derivatives: $44,946,153,000,000 (more than 44 trillion dollars)

And it isn’t just U.S. banks that are engaged in this type of behavior.

As Zero Hedge recently detailed, German banking giant Deutsche Bank has more exposure to derivatives than any of the American banks listed above…

Deutsche has a total derivative exposure that amounts to €55 trillion or just about $75 trillion. That’s a trillion with a T, and is about 100 times greater than the €522 billion in deposits the bank has. It is also 5x greater than the GDP of Europe and more or less the same as the GDP of… the world.

For those looking forward to the day when these mammoth banks will collapse, you need to keep in mind that when they do go down the entire system is going to utterly fall apart.

At this point our economic system is so completely dependent on these banks that there is no way that it can function without them.

It is like a patient with an extremely advanced case of cancer.

Doctors can try to kill the cancer, but it is almost inevitable that the patient will die in the process.

The same thing could be said about our relationship with the “too big to fail” banks.  If they fail, so do the rest of us.

We were told that something would be done about the “too big to fail” problem after the last crisis, but it never happened.

In fact, as I have written about previously, the “too big to fail” banks have collectively gotten 37 percent larger since the last recession.

At this point, the five largest banks in the country account for 42 percent of all loans in the United States, and the six largest banks control 67 percent of all banking assets.

If those banks were to disappear tomorrow, we would not have much of an economy left.

But as you have just read about in this article, they are being more reckless than ever before.

We are steamrolling toward the greatest financial disaster in world history, and nobody is doing much of anything to stop it.

Things could have turned out very differently, but now we will reap the consequences for the very foolish decisions that we have made.

  • joe

    Wow, god help us

    • Richard

      Little god – Means No Help.

  • jo6pac

    Nothing to worry about, us on Main Street all become serfs and the .0001% will be needing an Army to protect them. Pitchforks anyone?

  • K

    Excellent article, pretty well sums it all up. But I think most of us knew nothing would change. When every politician in D.C. is for sale, it can not change. The current society in America proves beyond any doubt, Ignorance is bliss.

    • Richard

      Ignorance is Bliss – For the American people now. When the dam bursts on the Derivative Bubble – Life in America will Be changed forever. There will be No going back.

      • grumpyhillbilly

        You’d be surprised how many people feel the country is toast. Most are over fifty, and rather glad of that. All feel for the young. Now in full disclosure, none are urban professionals. The yuppies I know are still living high as a kite. Literally high. There is something serious wrong with those types, but I’m digressing.

        • geronamo

          i agree, & as hank said ” a country boy can survive” even if we’re pushin 60

        • eparkerii

          My father is 88, a WWII veteran and was part of the Occupying Forces of Japan. He was highly successful in his chosen field for 40+ years and during that time knew everyone from paupers to a sitting President. He’s been around more blocks than most people know exist and has a body of accumulated knowledge that is hard to imagine. In short, he knows what is going on in this world and he told me a year ago that he didn’t see any way the US would ever return from the abyss it’s currently in. Spine chilling to say the least.

          • XSANDIEGOCA

            What other wisdom does your Father have to pass on? Please share. That generation saw it all.

          • Econocobas

            Well you can say that they saw it coming but in all honesty this all occurred under their watch. The problems we face today didn’t pop up in the last 10 years. These are decades in the making, really a century in the making. The time to actually put a stop to this and avoid a terrible reset was 50-100 years ago. Obviously the more time that goes by the worse this reset will be. Also there is no guarantee that what comes out of the chaos will be better than what we have now. History in this regards is not on our side, most revolutions are preceded by a more populist and oppressive regime. that’s why we need to educate folks to the real cause of our problems and it is much, much deeper than Obama and Bush.

          • XSANDIEGOCA

            Totally agree. 1913 was really the year of destiny. Income Tax, Federal Reserve and Direct Election of Senators. This was followed up by the War to End all Wars. It has downhill ever since. Woody WIlson was the One IMHO!

          • Jeff

            I also would like to hear more of this man’s thoughts. I totaly agree with him and am surprised that we have avoided the abyss till now. But, the bankers were not quite done raping the middle class in 2008…… They saw more $$$$$ to be pillaged from us so that when the abyss smacks us in the face we will mostly be too poor to do much about anything except struggle to put food on the table and find a place to pitch a tent. This is all about the 1% raping us further before they throw us over the cliff.

          • eparkerii

            Here’s what Dad believes in:

            1. Being prepared for at least 6 months of self-sufficency – water, food, medicine, etc. Pretty tough to prepare for longer than that.

            2. Having some cash on hand and some silver coins (they’ll eventually try to confiscate the gold, silver might go untouched). If you buy silver coins, pay the premium for uncirculated. That way, there will never be a question about silver content due to wear.

            3. Even more important than cash and silver is making sure your ‘personal infrastructure’ is in place. When hyperinflation finally hits, what will really matter is do you have the things you need to live. Not just the perishables mentioned above, but the tools of life- dishes, pots and pans, silverware, water filters, radios, batteries, flashlights, furnace filters, spare tires and batteries for your car… the list could go on forever, but you get the idea. Look around and think, what would I need to be OK, then make sure you have it. A very tough list to come up with, but anything beats nothing. Money won’t be any good for quite awhile but things will be gold.

            4. By far the most important thing is community. Keep your friends close. We all have different skills and knowledge sets, and by working together everyone will be 10 times better off than if they’re alone. If one neighbor has a tractor, another a plot of land and another has put away some seeds, combine the three and you have a garden that could make the difference.

            5. Dad has never been big on cities. He figures that if you’re out in the country your odds go way up.

            BTW, Dad easily remembers listening to FDR’s ‘fireside chats’ on the family radio, say’s FDR was way overrated. Also says that WWII was the last war the US fought to win. Another BTW, he knew most of the Mecury 7 astronauts, said they were a fun bunch of guys. Obviously I’m pretty proud just to be his son.

          • Richard

            I wish to God he’d said the most important thing: GET OUT OF THE UNITED STATES

          • Rob W

            Yeah, ’cause there are so many countries where a foreigner will be better off when tshtf. If you aren’t already there and have a strong community built around you, it’s too late.

          • seth datta

            its getting to the point. Pro tip – no joos allowed

          • jakartaman

            I am an old timer that has been around a few blocks also. Listen to your Dad he is absolutely right.

      • ezazz123

        The upcoming derivatives weapons of mass destruction will be horrifying and completely change everything as we know as business as usual.

        We are too late to make any meaningful changes to the toxic financial system. The insidious nature of our growth at all cost business model is leading us to ruin and we have to be resilient to survive in the up coming post financial apocalyptic world.

        The end.

    • Phil from Germany

      Last month here in Germany I got talking to two married couples, late 50s . Well educated, from the east, both said to be in business of some sort. They didnt see much of any problem, except Obama care. When I tried to steer the conversation to the forthcoming disaster, no it wont be as bad as that. They marvelled at my 150m² Veggie garden, but found it amusing when I told them why. Hope there are not many more like that in the US

      • piccadillybabe

        People who grow vegetables in their backyards in the US are considered “extremists.” Helicopters fly overhead to see whatcha got down there. Sadly, there are many more people like those people you met from the US. They are called “sheeple” here. Low interest rates keep these people spending like tomorrow will never come.

        • Phil from Germany

          I did get a strong impression that their belief in the $ was unshakeable. It seemed rude to persue a topic that they had no interest in, so we talked about vegetables .

      • K

        Sadly Phil, you just described 80% of the American population.

        • laura m.

          K: I’d say it may be closer to 97% of stuck in stupid Americans who are addicted to electronics, reality shows and dumb phones.

          • Thin the herd

            True story, sad but true.

            I tried to share this stuff with my kids, who are all in late 20 & 30s. They think I’m crazy… Can’t seem to get thru to them.

            I look at some older folks who are retired here in the area, they just don’t see it coming either. So tragic, so many will suffer, as they placed their trust in the gooberment and it’s stooges…

    • Richard

      Yes, K, excellent article indeed. Michael has admirably restrained his prose and (almost) eliminated all the over-the-top stuff. (Still a few too many rhetorical questions but I guess we can overlook those 🙂 The message is clear: you HAVE to gather up your things and leave the United States. I did so five years ago and I thank my lucky stars that I had the foresight to do so and I couldn’t be happier. DO IT, FOLKS AND DO IT SOON. (And please, none of this nonsense about how if things are that bad in the U.S. they must be worse everywhere else. IT’S NOT TRUE.)

      • Wally

        Hi Robert. Just curious where you went. I’ve been thinking the same but I’m not quite there yet.

  • Darth Maul

    The only things that ars collapsing right now are Gold and Silver prices.

    From precious metal straight to scrap that nobody wants.

    Buffett told us to buy stocks back in 2009. He was right.

    • Guest

      Gold and silver have inherent value and have been used as money for thousands of years. They are finite resources. Furthermore, they have no counterparty risk. Unlike stocks and all other paper assets, gold and silver will always have value.

  • grumpyhillbilly

    As much as I’m loathing the collapse, it has to happen. The scarey thing is the educated idiots that will lead us into the abyss will naturally be expected to lead us out. As if they could. The professional class have failed this country.

    • DMyers

      Well, as a member of the “professional class” I suppose I should take offense. How can I take offense to something I agree with?

      There is a lot of qualifying and parsing out from the generalization made. I’m not going to go into any more detail than you did, but there are details and complications galore.

      Even if the professional class is a parasitical menace in the greater part, there are elements thereof that keep health, liberty, and justice alive, a little bit at a time.

    • Richard

      No way Out – No way Back.

    • seth datta

      professional class = luciferian joos.

  • djc

    I’ve said it before and I’ll say it again, the Presidents who allowed the laws to be changed so this could happen should be very concerned about prosecution when the collapse comes. Spending the rest of your life in a 6′ by 10′ cell will not be a happy ending.

    • Guest

      That will never happen. Who has been prosecuted for the last financial crisis? J

      • Firstgarden

        Methinks it’s hard to prosecute those who have the goods on you too.

  • El Pollo de Oro

    The fate of The Banana Republic of America was sealed with the bailouts of the monsterbanks in 2008. Instead of being forced to clean up their act, the monsterbanks were allowed to become even larger and more toxic. It’s only a matter of time until Banksters of America, Hells Fargo or JPMonster Chase goes into cardiac arrest again, only this time, it will be much worse than in 2008.

    “The financial system is so leveraged and so integrated. The pieces are in place for a global financial meltdown.”—Nomi Prins, author of “All the President’s Bankers” and “It Takes a Pillage”

    “The next decline we will see is going to be far worse than the last one. Each one is building in intensity.”—Martin Armstrong

    “Homeland Security is not for stopping al-Qaeda. It’s for veterans, for gun owners. It’s for domestic groups and civil unrest. That’s unconstitutional under posse comitatus.”—Alex Jones

    “When people get in cloistered conditions with poor ventilation, with poor nutrition, and with poor sanitation, disease explodes.”—The Patriot Nurse

    “The police are out of control. They’ve lost it. They’re killing old people, they’re killing dogs. This is fascism, the merger of state and corporate power. And I believe they’ll use a false flag to clamp down on our rights even more and keep us in place.”—Gerald Celente

    “The economy could experience a very severe shock, and unemployed rates could easily double. It could get a lot worse. How Congress would respond to a worsening situation like that, I don’t know. If they responded with more austerity, they could actually end up with riots and rebellion.”— Dr. Paul Craig Roberts

    What will happen when there is a bank holiday, a bail-in (a la Cyprus) and millions of Americans can’t get their money out of the bank or there is a major devaluation of the dollar? Expect all hell to break loose in the streets. Massive protests and widespread civil unrest + a militarized, trigger-happy police state = a recipe for a major bloodbath in the collapsing Banana Republic of America.

    • seth datta

      The Muslim bank Goldman Sachs is trying to destroy the world. The chosen people just can’t seem to stop wanting to destroy the world.

      Oh wait. It’s not the Muslims…

      • Your sarcastic remark really cuts through all the bs, diesn’t it?

        If one was to analyze the controlling interests and ownership in ALL these mega banks, one will find a single common thread: They are all Muslims or Arabs as Alex Jones once said about those who own and control Hollywood!?!

        • Richard

          Yes. It is those Vile Muslims who run the World.

          • europa3962

            You guys are being 2 cute by half. Come on, show some balls and just be honest with your anti-semitism

          • lasflklibsareshitay3oi2ij23i4

            ^jew hater of the year

          • seth datta

            i like how anti-joo comments are deleted, but you can say the vilest of things about muslims.

          • seth datta

            oh yeah, anti-semitism is an excuse used by joos and their propaganda machine to hide what they do.

          • seth datta

            i am semite btw

          • T.

            You can Still be Anti-Yourself according to modern day Judaism. That is – If You tell the Truth about these Scoundrels.

          • Tavish

            Jews create civilization. They don’t destroy it like Muslims. Over 95% of global terror is Islamic. Churches are being burned in Algeria, Egypt, and Nigeria, not Israel. Muslims are waging violent separatist,terrorist campaigns in India, China, Russia, Thailand, Philippines, Israel,etc. Muslims refuse to live with infidel/kafirs unless they are dominating, subjugating and destroying them. Notice 80% of all genocide against Christians is in Muslim countries? It is a capital offense to leave Islam in 7 countries and illegal to build a church, temple or synagogue in Saudi Arabia, Maldives, Afghanistan,etc. Houston? We have a problem..

          • ejhr

            The US military industrial complex must be rubbing their hands with glee over all that. Making a motsa!

      • John Pallyswine

        GS is really a British controlled bank. Long lists of British elites as members. Big office in London. Gordon Brown sold 40% of the gold belonging to the BoE to rescue Jews?? Are u nuts? No just an AngryAnglo.

        • Richard

          Please Do Not bother sleepy Americans with the Truth.

      • El Pollo de Oro

        Seth: If you listen to Gerald Celente, you’ll know exactly where I’m going with this.

        When all else fails and the abysmal economic conditions keep getting worse, the scum politicians……….take you to war.

      • Richard

        The Muslim enemy we now have – Is a Creation by the Boys who run Goldman et al. Hint: The Boys are Not Muslim.

    • Steverino

      Steal money. Steal money. Steal money. Steal money. Steal money Ad nauseum.

  • John E

    No Worries. The big Kahuna is leading the Western powers into a world war, the likes of which will make WWII pale in comparison. After all the destruction of infrastructure, genocide, and smoke clears the survivors will live in a reset economy with no debts, and a New World Order.

    Additionally, since Sharia law will be the law of all the lands, we can look forward to distinguishing bankers and politicians from the peasants, by their amputated hands and missing tongues.

  • Mondobeyondo

    It’s not a good thing for these major banks to be so exposed to derivatives. But of course, greed trumps logic in so much of the financial sector. We should have learned from 2008. Greed in the housing sector (i.e. subprime mortgages and NINJA loans) led to banks in dire straits. If the derivatives market has a hiccup, or a cold, there will be Much Worse Trouble than in 2008.

    Gordon Gecko was NOT right. Greed is bad… very bad.

    • Richard

      But – Who dominates the GREED?

      • seth datta


    • time waster

      Mondobeyondo – ten sleep?

  • Michael, you hit the nail on the head. These derivatives are what will take everthing in the Western world down. The developing and emerging nations are lucky in the sense that they have less height to fall to the ground.

    Long Term Capital Management or LTCM almost collapsed the US in the 1980s and it was small fires compared to AIG in 2008.

    When, not if, the Big Derivative Crash happens, it will be the End of this Age of Greed. Proceeded by probably WW3.

  • not me

    No thanks! any bank who took a bail out, my money, I will not bank with.

  • Westcoastliberal

    Iceland said FU to the big banks and look where they are today. We should do the same this time. If the system cracks up and burns we’ll use Barter or Bitcoin. Did I say FU?

    • Annette Calkins

      What language do they speak in Iceland?

      • Richard


      • seth datta

        not jooish. Hence why they kicked out banksters.

    • dadada

      Best comment in this entire section.

  • Annette Calkins

    I just don’t “get it.” We have people placing bets, obviously a lot of them, cause that is what makes up the total of the derivatives. So, John goes to the bank and says that he bets that “this” is going to happen. How long is that bet good for? Why haven’t the banks already had to pay out? Are they winning the bets and that is why it has not crashed? If I want to bet that there will be a crash this next year, where do I go to place my bet? How much do I need to place a bet? Sorry, I am just to dense to understand why someone has not lost big, yet.

    • lordonlow

      you’re too small to enter derivatives, but you can do the equivalent in equities by shorting.

  • Community College

    Good explanation of derivatives – I did not completely understand them prior to the article.

    • Firstgarden

      You’re not alone. Very few people on the planet really do. They’re that complex.

      • lordonlow

        no they aren’t; they’re a bet, plain and simple. by contrast, poker is FAR more complex. don’t believe me? check out a hand analysis by daniel negreanu on youtube, or read sklansky’s “theory of poker.”

        • Firstgarden

          “Derivatives Are too Complicated
          Yes, some of them are. Think of the last time listed equity options were explained to you, even for something as simple as covered writing. Then you heard about puts and calls. Next comes bull spreads and bear spreads, thencalendar spreads and butterfly spreads, then strips, straps, straddles andstrangles. Have your eyes glazed over yet?”

          – Investopedia USA Division of IAC

          “Most financial derivatives traded today are the “plain vanilla” variety–the simplest form of a financial instrument. But variants on the basic structures have given way to more sophisticated and complex financial derivatives that are much more difficult to measure, manage, and understand. For those instruments, the measurement and control of risks can be far more complicated, creating the increased possibility of unforeseen losses.”

          – Thomas F. Siems – senior economist and policy adviser at the Federal Reserve Bank of Dallas.

          • lordonlow

            of COURSE this is the take from THE FED lol!!! listen to this week’s “This American Life” about former Fed insider Carmen Segarra if you don’t want to believe how wacked out they are. And, in case you think she’s inherently biased (probably, but with justification) she has TAPE of the Fed nutsacks – and it is unbelievable…

            also, don’t confuse “complicated” with “convoluted” – huge difference, in fact. derivatives are just convoluted and you have to unwind them. but complicated? no.

            the hadron collider and particle physics – THAT’s complicated.

          • Firstgarden

            Understanding a woman – THAT’s complicated.

        • Community College

          I don’t play poker or other gambling games. I don’t know all the details, but I do know the casinos make money because the gamblers lose.

    • K2

      Thats a good explaination of derivatives?

  • TheSkeptic

    A derivative is a bet…plain and simple. There are “quants” who work on wall street that calculate the odds of success. Armed with this knowledge, the brokers who sell the derivative based product act like a Wall Street bookie. They collect a fee, and hope the bet does not go against them. They also like to wager against their clients…you know, the suckers they sell these things to.

    • lordonlow

      very good explanation. the one HUGE difference between what the house on wall street does vs. the house in vegas, is that vegas is WAY more honest, as if they were ever caught betting against customers, they be strung up on a lamp pole!!!


    Black Swan Event? How about Black Swans Events!! When it goes, it is going to go quick. No internet. No banking. One channel on the TV and Marshal Law. Civil Insurrection on a scale not seen since the Civil War. It will take very little to set the forest ablaze. Speaking of which, we have a massive fire up in Lake Tahoe. It was started by one firebug. Metaphorically speaking, our financial system is the forest and all we need is one rogue trader to burn it down.

  • randyfreedom

    Well done Michael. And of course this is all systemic so once the derivatives go most other paper assets will go down with the ship too. Since we know this will happen one day the best thing to do is 1-prepare 2-profit from it if possible 3-have backup plans in case it gets so bad that you need to leave the country.

  • Selaretus

    There is nothing….real wealth….for anyone to lose. It never existed, except on paper. It was conjured from nothing and it will all return to nothing. It’s all a giant Ponzi: you buy something hoping some clueless dolt will pay you more than you bought it for; so you can ‘make a profit.’ It is a sickness, not a financial system and certainly not an ‘economy.’

    • Handog

      In the movie Wolf of Wall Street the main character, when hie ethics are questioned he replies “I didn’t screw him over, I’ll take better care of his money.” Or something like that. Anyway, that is what this country has become.

  • Firstgarden

    This is why AIG was bailed out in such a big hurry. At the time, we were hearing figures like 60 trillion. Behind this was a greedfest of unbelievable proportions. What’s coming will blow a lot of minds. The masses sense something, but prefer to hide their heads in the next box office hit, or myriads of other diversions. They haven’t been watching, talking about it, preparing, or at least bracing themselves, like we are. Fear, mass hysteria, and a huge sense of betrayal will overtake them. Couple this with ebola and society will go absolutely berserk.

    It is not far-fetched to envision martial law. Such a wild scenario would provide a perfect pretext for a main core roundup. They will justify just about anything in the name of “keeping order.” Dissenting voices will be silenced as a new social police state emerges. Constitutional changes will occur under the guise of “an evolving document”, and the NRA (and God knows what else) will be outlawed and dismantled.

    Of course, these are all predictions based on the straightlining of current developments. But, one thing can be predicted with absolute certainty…

    It won’t be dull.

    • Gay Veteran

      “…Militia groups / Freedom Fighters, like those in Montana, will be squashed like Bambi meets Godzilla…..”

      the U.S. military couldn’t defeat goat herders in Afghanistan

      • Firstgarden

        Afghanistan? Could it be they’d be too busy picking poppies?

        • Gay Veteran

          U.S. troops?
          because we couldn’t defeat the goat herders

  • Leigh

    Economy by definition is the wealth and resources of a country or region, especially in terms of the production and consumption of goods and services. To say that this collapse will destroy the economy is not completely accurate…I think you mean ‘destroy the wall street false ‘economy’. By your explanation, in derivatives markets, nothing is produced or consumed, so it is really not an economy at all, rather a crooked scheme for making money. The production and consumptions of goods and services will continue on a local or regional basis for as long as human beings walk the earth. The adjustment might be difficult for some, but people are resilient and adaptable and will adjust to a new normal, that is based on a more local economy than this global fiasco that we have now.

    • K2

      Nobody said production of goods wont continue after a collapse.

  • lasflklibsareshitay3oi2ij23i4

    when it all hits the fan, I will Mr. bate all day long

  • FortuneSeek3rz

    It’s already hit the fan people, and the worst is in our rear view mirror. The US dollar is strengthening if you haven’t noticed. The dollar is just too powerful. This economy is crash proof as the recent successions of QE has shown us.

    • lasflklibsareshitay3oi2ij23i4


      • FortuneSeek3rz

        I wish I could take a handful of today’s Gen X’ers and millenials back to 1850 and let you pansies push a plow for a couple of hours. You’d know what an economic crash is. Now go check your FB page you dolt.

        • Handog

          You must be 190 years old to have experienced that. My understanding is that Oxen pulled the plow.

          I’d gladly trade today’s modern conveniences for the freedom they had back then.

    • Guest

      Dollar is not strong. Deflation is occurring in some markets because people are spending less and hence the no/low interest along with your QE. Our healthcare is not cheap for the working crowd and free for many of the poor and disabled. Food bill is dramatically increasing unless you have food stamps. Cost of education at major institutions is absurd. They only way most people afford anything is the debt that they take on which will be there down fall when they can’t make the payment.

      • FortuneSeek3rz

        The dollar is strong. The $DXY is over 85 now. It dipped below 80 during the financial crises of 2008.

    • lordonlow

      talk about kool aid drinking, this is chugging from the factory.

  • oblivia

    Paul bets me $100 that the sun will rise tomorrow. Peter bets me $100 that it will not.

    My “total exposure” to tomorrow’s sunrise is $200. My risk is $0.

  • lordonlow

    zirp + psycho fed money printing out of thin air = meltdown. why? LOOK AROUND: BUBBLES, BUBBLES, EVERYWHERE: equities, credit cards, housing, student loans, unfunded liabilities, fed debt, states debt, muni debt…

    as if that wasn’t all hilarious enough, car loans are now entering sub-prime, and for SEVEN YEARS.

    we can zirp and print all we want, but there is something big fancy economists and academics never mention: the laws of the universe, the key one being: “for every action…”

    last i checked, even fooling suckers for years will not change the laws of the universe. this is why em08 (economic meltdown of 2008) will FINALLY rear its ugly head in full, simply because we never handled it to begin with when we had a chance.

    and we failed to learn from history: what did mark “deep throat” felt warn us with? “follow the money.”

    after obama won, i looked up his largest contributors, and of the top 20, the largest industry representation was, you guessed it, banks. 25%. (you may be surprised who was second, but a clue is in ferguson’s primer doc on em08, “inside job” when he discusses the role of academics….)

    • seth datta

      and which race is predominantly orchestrating bubbles, going by the names of goldman-sachs etc..

  • NY Geezer

    Why does everyone blindly accept the assertion that if the big banks fail the entire system goes down? Is it really true? If the FDIC stepped in, paid off insured bank deposits, took over the banking functions without the trading and gambling functions and ran them as plain vanilla banks under trustees, would our “entire” system really fall?
    Of course some governments, corporations and funds will suffer large losses and some oligarchs and ultra rich will lose lot of money, but that is not equivalent to the failure of the “entire” system.
    The $280+ trillion in derivative debt is so enormous that it can never become a public debt and I doubt that anyone is even contemplating that. At most the powers that be are probably considering bailing out the ultra rich for a tiny fraction of that amount, as they did in 2008. Of course, in order to set the stage for bailing them out the public has to be convinced that it is necessary in order to save the “entire” system.

    • Firstgarden

      “If the FDIC stepped in, paid off insured bank deposits..”

      NY Geezer, it’s a good question you ask.

      As I understand it, the FDIC cannot possibly cover all banks’ deposits. Those assets are vested out, and way over-inflated via a system known as fractional scaling. As I recall, the banks’ “assets” are based on the *returns* of those vested deposits, in an ideal scenario,

      (Someone please correct me if I’m wrong.)

      Whatever the case, the FDIC does not have the wherewithal to insure these deposits. They would catch the first bank or two that falls; or more likely, offer pennies on the dollar for each insured account.

      • lordonlow

        it’s “fractional reserve banking” and you’ve got it right in terms of the particulars. this is why “confidence” is so essential – because once EVERYONE wants to pull their money out of the banks (run it) the truth rears its ugly head.

        think of “It’s a Wonderful Life” where George explains why he can’t give everyone their money.

        the other point i’d make is that notice the root of “con” as in “con game” or he “conned them good”: “confidence.”

        • Firstgarden

          Thanks for clarifying.

          • lordonlow

            np! the fact that you even know about fractional reserve banking means you’re kight years ahead of most. notice: they don’t teach you this in econ classes, but instead fill young, impressionable kids minds with a bunch of theory that bears little in the way of understanding the real world.

          • Firstgarden

            Thanks for the kind words. I found out about fractional reserve banking in the mid 90s. The late Larry Burkett spoke of it in his book, “The Coming Economic Earthquake.”

  • aedelaossa

    America’s days are numbered!

  • Here’s the solution: the next crisis, let the banks collapse, but then replace the money, not the banks, with endogenous Sovereign Money – United States Notes – produced not by the Fed, but by the Treasury, the way President Lincoln’s Treasurer did it in 1862-1863 when the banks wanted 24-36% interest. Our constitution has a coinage clause to enable that, and SCOTUS upheld it in Julliard v. Greenman in 1874.
    The Framers allowed Congress to “coin Money” (and no, it doesn’t mean ACTUAL coins – see Nattleson’s paper on the Coinage Clause). It said nothing about banks. They weren’t considered important enough then, and they aren’t now. We need money, the banks will follow, as they should.

  • Firstgarden

    “Never in the history of economics has a nation as wealthy and as influential as ours attempted to live so far beyond its means, while simultaneously doing everything possible to strangle the economy.”

    – Larry Burkett, author and radio personality, financial counselor

  • David McElroy

    Why not pass a law stating that all derivatives are illegal and not to be honored with payments? Simply declare them to be injurious to national security and stop the banksters’ theft by speculation! Their “casino” practices are wrecking America with nothing but greedy wagers and should not stand to extract the wealth of working Americans! Kill the derivatives!

    • Firstgarden

      Good idea. Unfortunately, the golden rule prevails. Those with the gold rule.

    • lordonlow

      blame the republicans AND the democrats. and i can name names: phil gramm (repub) and bill clinton (dem).

      gramm, probably on sandy weill’s buyout list, put his own name to the legislation that would obliterate a half century old law: glass-steagall. his proposal? the gramm leach bliley act. clinton signed it into law.

      but that was just the beginning. gramm then set his sights on derivatives. with the commodities futures modernization act, derivatives would remain unregulated in a dark market. clinton signed that into law as well.

      in both cases, republicans and democrats laid the groundwork for em08. that’s why i don’t trust either party.

    • DaveZiffer

      Without proper use of derivatives, probably most of the world’s production would not happen and you’d be starving in a mud hut or more likely dead. Look up “futures contract” and start educating yourself.

  • Andy

    This whole collapse thing sure is insidious…

  • Orange Jean

    One interesting thing I noticed yesterday when I was at my grocery store… I noticed a couple of prepper magazines right out front (I’ve seen hunting magazines before but these go beyond that)… add that to a bunch of farming magazines (not surprising for this area, since I live in a place with a lot of farms). Makes me wonder if prepping has suddenly gone mainstream.

  • FortuneSeek3rz

    It makes for an interesting headline but the reality is that the dollar is not going to collapse because the leaders of the world don’t want it to. We’ve been talking about the derivative bubble bursting, but again, the reality is that it probably never will. And if it does, there will be measures taken to shore up the banks. Just like was done in the crash of 2008.

  • Thomas Dinan

    I’m not sure if greed is the only explanation. With interest rates near zero it must be hard to attract deposits. Then the only way to stay in business is to gamble with borrowed money.

  • Colin L.

    There’s a cosy relationship between the regulators and Wall Street, wherein Wall Street is the criminal syndicate and the regulators are the cleaners.

    When there is another financial collapse, I predict that Wall Street will emerge unscathed, with Main Street devastated.

  • Daniel Romischer

    don’t get how derivatives bring all this supposed to bring all this doom. Read the article twice still don’t get it.

    if the bank has a 40 Trillion dollar exposed in derivatives, the bank doesn’t owe 40 trillion but whatever the negative market change is of those 40 Trillion. I am sure they are hedging their bets with derivatives going up and down and in different markets. the 40 T as a whole would never be affected unless the whole market collapses.

    Basically the guy is saying if the market goes down, people / banks will loose money. irrelevant if it is via derivatives, stocks, credit, etc.

    Another crash certainly will come again, he is right about that. as it always does. We have seen all types of crashes already. Greed is always part of the market no matter what vehicle. Human nature.

    Oh big wise prophet of finance, please teach us!

  • Andrew_S

    Sadly the faithful will still hold out for government Manna with a reported 47% of population reliant on some type of assistance program. We also have a reported medical assistance program that requires at least 27% of the population to take a daily dose of some neuro suppressor to take the edge off of reality. Yet far worse than all this are the emergency programs and various federal fix it laws, that ultimately are just plugging gaping holes with pretty looking band aids, mission statements and a complete entourage of ne’er do wells who have the right stuff to espouse BS, in a politically correct way. What is even more scarier and not scrutinized by any of the reports are all the diverse or diversionary programs that cost mucho Quatloo’s. Along with those are NGO’s and political commissions who employ extremely large numbers of paper pushing publically educated drones who live on federal coolaid and gravy, albiet we shall call it business. So even at a guestimate we have more people living off of our magnanimous government than serve as its collection base. By all calculations if an assignment of a communistic economy was a metric, this nation would be classed as 70% communism. However we do have nice PC words to call it something else.

    Of course these were all avoidable, but we throw in dire predictions of climate change and the certainty that losing the Arctic regions stabilizing force on the tectonic plates we have much more to fear than just losing the ability to conduct day to day transactions for services, or large monetary losses of personal assets.

    I am endeared by the poster eparkerii who has outlined a method of a securing basic necessities. It is still not enough, as many specialized forces are already well organized to take or commandeer those resources, and whatever else they want. The only way to ascertain regional stability is to learn how to assay geology maps and find those areas that are less affected by the for warned equivalent to the biblical book of revelations. Securing bartering skills and nutritional resources is highly recommended, as well as a safety by the tool of distance.

    In such a catastrophic collapse of an economy as depicted, the state will always do what the state does, if I recall the emperor Nero’s story and his so called madness in burning Rome. It would be nice if there was a kindred thinker or anyone who cared to read between the lines, the economy and stories of the time. I believe Nero didn’t just burn Rome, he simply erased liabilities by burning out ‘the gluttonous citizens’ who weighed so heavily on the states coffers. Roman Citizens were just as entitled in their thinking as US citizens, if not worse. For their votes for entitlements there was an unwritten agreement with great festivities. Read it, slaves, meat on the table with all manner of goodies and benefits and no reason to work.

    We see it here, everyday and we are powerless against the mob that needs its entitlements, so nothing will change until it is too late. Today mother nature also has a vote, I think I know who I vote for, she always knows best and has a lot of time to play the game, we do not. After all another rather good philosopher had a saying which was, ‘what does it profit a man to gain everything, if he loses his soul.’, and we have a lot of these profit makers, accompanied by the largest band of human parasites ever to have institutionalized themselves on planet Earth, hence the debts to support their habits.

  • Guest

    Didnt Karl Marx predict this a century and a half ago? He said that in the terminal phases of Capitalism, speculation and not production will dominate. Theultra wealthy will be oiccupied by what he called “creating fictictious value” or “creating fictitious capital”. Isnt this situation a perfect example of this? Marx said Capitalism is inevitably doomed by its inherent contradictions. We see this happening right now. The collpase of Capitalism is not the end of the world. It is the end of Capitalism. Goodbye Capitalism, hello world Socialism.
    Or does anyone actually believe it is possible, in light of wjhat this article shows, to rescue capitalism? Please let me know if you can figure out how.

  • ejhr

    Jim Rickards says the notional value of the banking derivatives market is over $710 trillion. So who knows best? It’s unrepayable, so will be wiped in a debt jubilee at some point.
    After all most of these are just from trading between the banks themselves, so the ordinary Joes may escape it.

  • Revolt to save America

    I REALLY appreciate and respect all of your view points, I’d like some of you to friend me on FB because I need more INFORMED, SMART friends, please do. Cheryl Schankerman Erhart, we may differ a bit but the overtone is the same, we are headed in a bad direction and it is when , not IF. big love to all of you, hope to see you in FB where it’s easier to share beliefs. THANK YOU,

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