Beware: A Dangerous Article

Caution: This article contains information which banks and big corporations don’t want you to know.

Few people realize that the entire world economy is being held up by a huge Ponzi scheme – derivative trading and hedge funds made possible by congressmen, governments, and political parties being paid off by investors, banks, and big money to do nothing about it.

What is derivative trading, and how will it eventually bring the world to its knees?

Let’s say that you think Greece is going to go bankrupt. If you are wealthy, you can now walk into a bank and bet that Greece in fact is going to default. You plunk down fifty thousand a month as an ongoing bet. If Greece defaults, you get a million! Good deal.

If Greece doesn’t default, and it looks as if the country will survive, you simply stop paying the premium ($50,000/month) and the bank makes a tidy profit on what you paid in so far.

And of course your bet that Greece will default hastens Greece’s decline, because your bet will be reflected in the ever escalating interest rates that they are forced to pay on their bonds, which breaks the country. So you self-fulfill the prophecy. Very clever!

But don’t worry about Greece, you can bet on anything – Joe the plumber down the street, or GMC. It’s wide open.

And it’s all unregulated! Nobody knows what is going on -not regulatory agencies, not governments - nobody! Insurance companies, and even Las Vegas have regulations! But derivative trading has none. Any attempt to regulate either derivative trading or *high frequency computer stock buying and selling (which comprises 80% of market movement now) has been defeated by lobbyists who look out for the financial interests only.

*High frequency trading relies on computer technology to exploit temporary price disparities and short-term market trends for profit. Whether the stock goes up, down, or sideways makes no difference any more. High powered computers can now buy and sell 10,000 stocks a second, taking advantage of miniscule ups and downs of a stock and profiting pretty much without risk. These small profits when multiplied by the tremendous volume of trades per minute makes the bank with the fastest computer the winner. At one time people actually looked at a company’s earnings, assets, etc., but no more. That kind of thinking is obsolete. Stock trading has become simply a video game and stock brokers merely gamers.

Systemic Risk

So how will this gambling eventually affect your world? Because derivative trading is not regulated, the banks are not required to have a backup of funds available to pay off derivative traders in case of a crash. The banks assume that all derivatives will not be subject to payoff at the same time (Ponzi scheme) so if they have a trillion dollars out in derivatives, they assume only a fraction of that trillion will be refunded at any one given time.

Today in the world, it is estimated that the amount of money floating around in unregulated derivatives between banks, financial firms and traders, is huge! The total present estimate for dirivitives is a staggering 70 TRILLION!

To get your head around this number, the entire United States national debt is about 14 trillion. Hard to believe but true. When the bottom falls out of this mother of bubbles, when all the cards are called in, then what happens? This is called systemic risk, because the banksters take the entire system down with them.

Down we go

In other words, the whole world - all the financial institutions, banks and maybe even governments go down together because this entire scheme is way too big to fail. But fail it will. And this will be the beginning of a U. S. and European depression lasting decades.

How does this happen? Suppose for instance a rumor spreads that all the banks are going broke, and are going broke soon! Even though it is a rumor, if the public believes it, they will all rush the banks and withdraw their money. And even though they are not certain what’s going on, they will withdraw their money just in case.

This of course would actually cause all the banks to fail even if they weren’t in fact failing. In other words, this Ponzi scheme, where only a small fraction of the banks total liabilities are held as cash, would insure that the customer’s withdrawals would not be satisfied. Then the banks would fail and the government (you and I) would have to bail them out again.

The idea is that if banks were legislated to hold a large percentage of their deposits as cash to back up their liabilities, the economy could not go forward fast enough. Which means that the entire economy is based on credit and is therefore fundamentally a false economy. Right now, large banks depend upon dirivitive trading for up to 50% of their profits. Take that away and they would fail. Are we in trouble of not?

Sooner or later this house of cards must fall, as banks, investors and corporations become greedier and greedier for huge profits to satisfy their shareholders and gamble unabashedly on derivatives, hedge funds and many other ingenious gambling schemes and instruments disguised as investments, never expecting the other shoe to drop. (And of course they make these things so complicated that even congress cannot figure them out fast enough).

The credit crunch just a preview of things to come

The first shoe dropped when Bear Stearns and Merrill Lynch were telling customers to invest in a subprime mortgage market they knew was failing, while secretly (Shadow Banking) betting against that market’s survival with derivative trading, hedge funds, and you name it. Of course, we all know what happened: We, the people, had to make up for their cleverness and gambling proclivity.

Now fast forward about five years and we have a situation where what these lending institutions tried to pull off in 2007 and 2008 is considered small potatoes. The amount of money circulating in present Wall Street gambling casinos, which were once legitimate financial institutions, is heady to think about. But even more unbelievable is the amount of bets that this money covers.

The amount of money circulating, as huge as it is, represents only a small, tiny fraction of the money that won’t be and never was there when the bets are called in. That means when the downturn begins, which it will, the amount of money lost will be absolutely staggering.

The end is near!

All the governments and all the king’s men will never be able to put Humpty Dumpty Hedge Funds back together again. The world will be broke.

Broke: Everybody including the rich and the poor. No Wall Street, no jobs, no social security checks, all bank doors locked, gold confiscated as it was in the 30s (governments hate gold – it is a reminder of their failed monetary policies), martial law, inflation rampant – in other words, back to square one.

I would only suggest that you get ready for this in whatever way you can. Keep some money or gold where you can get your hands on it so you can take care of your family for a few months until things start to stabilize again in a new direction.

It has to happen. How can more and more people make millions, billions and trillions by just clicking mouses? It can’t sustain itself. It has to collapse.

And when it does, it will happen overnight.

E. Raymond Rock (anagarika eddie) is a meditation teacher at the DhammaRocksprings Theravada Buddhist Meditation Retreat Center: dhammarocksprings.org and author of “A Year to Enlightenment: http://www.amazon.com/Year-Enlightenment-Steps-Enriching-Living/dp/1564148912 His 33 years of meditation experience has taken him across four continents including two stopovers in Thailand where he practiced in the remote northeast forests as an ordained Theravada Buddhist monk.

He lived at Wat Pah Nanachat under Ajahn Chah, at Wat Pah Baan Taad under Ajahn Maha Boowa, and at Wat Pah Daan Wi Weg under Ajahn Tui. He had been a postulant at Shasta Abbey, a Zen Buddhist monastery in northern California under Roshi Kennett; and a Theravada Buddhist anagarika at both Amaravati Monastery in the UK and Bodhinyanarama Monastery in New Zealand, both under Ajahn Sumedho. The author has meditated with the Korean Master Sueng Sahn Sunim; with Bhante Gunaratana at the Bhavana Society in West Virginia; and with the Tibetan Master Trungpa Rinpoche in Boulder, Colorado. He has also practiced at the Insight Meditation Society in Barre, Massachusetts, and the Zen Center in San Francisco.

Article submitted Friday, August 12, 2011 & read 997 times.

Leave your comments through Kerplop:

» left by carol fernandez from United Kingdom (1 year 279 days ago.)

I and others are aware of what is happening and we term it the New World Order and it is huge, involving the banks, oil, drug companies.... all the powerful people of what is an Anglo US Cabal . It needs to and will come down soon; we will re build a system that is just, loving and acutally serves humanity.

Carol
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» left by e (1 year 276 days ago.)

Thanks Carol. It will happen after the big depression which is the logical outcome of this house of cards that has been constructed by living on credit above ones means because that is all the working people have - credit. Good wages and benefits are gone, they have gone the way of tax breaks for the wealthy who have used those tax breaks to gamble with on Wall Street instead of reinvesting in America. THis has been going on for 30 years since the grand enemy of the working man - Reagan - was in office and stole the entire social security fund in order to grant his wealthy friends enormous tax breaks. In America, many Benzes, few affordable health care clinics. The priorities are all slanted toward the wealthy. Trickle down economics is such a cruel hoax but swallowed wholly by ignorant Americans all wrapped up in their flags, guns and bibles. They can blame only themselves for paying more attention to pop culture than the realities of life, and therefore believing the lies of the Republicants in the form of bumper stickers - the only things that catch the tiny attention span of most Americans.

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» left by Dave from Magnolia, Tx (1 year 278 days ago.)

Evolution can be a bitch, can it not?
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» left by e (1 year 276 days ago.)

Hi Dave - out of chaos comes order, . . . but then again - there is entropy.

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