Ellen Brown, the author of THE WEB OF DEBT (a good book by the way) has been on my radar screen for a number of years as a source of up to date financial information. Although we have not much contact in recent years, I'm apparently still on her email list for I received the following a day or two ago. I do not always agree with her assessments because her political views seem to lean too far to the left; yet there's something common sensical about her monetary acumen (sorry if I confused you but I couldn't think of another word at the moment). But there's one thing for certain in her opening line, "...the world is absorbed in the U.S. election drama,..." and that absorption has taken away the ability of the American voter to even bother to read what I'm saying here or what Ellen Brown is telling us below. But I will repeat what I said in the title, "When you see the pebbles moving on their own, a landslide is imminent." Careful where you invest your money the derivatives time bomb is about to go off. - Storm'n Norm'n
How Unelected Regulators Unleashed the Derivatives Monster – and How It Might Be Tamed
“It was not the highly visible acts of Congress but the seemingly mundane and often nontransparent actions of regulatory agencies that empowered the great transformation of the U.S. commercial banks from traditionally conservative deposit-taking and lending businesses into providers of wholesale financial risk management and intermediation services.”
— Professor Saule Omarova, “The Quiet Metamorphosis, How Derivatives Changed the Business of Banking” University of Miami Law Review, 2009
While the world is absorbed in the U.S. election drama, the derivatives time bomb continues to tick menacingly backstage. No one knows the actual size of the derivatives market, since a major portion of it is traded over-the-counter, hidden in off-balance-sheet special purpose vehicles. However, when Warren Buffet famously labeled derivatives “financial weapons of mass destruction” in 2002, its “notional value” was estimated at $56 trillion. Twenty years later, the Bank for International Settlements estimated that value at $610 trillion. And financial commentators have put it as high as $2.3 quadrillion or even $3.7 quadrillion, far exceeding global GDP, which was about $100 trillion in 2022. A quadrillion is 1,000 trillion.
Most of this casino is run through the same banks that hold our deposits for safekeeping. Derivatives are sold as “insurance” against risk, but they actually add a heavy layer of risk because the market is so interconnected that any failure can have a domino effect. ….
Banks are not just middlemen in the derivatives market. They are active players taking speculative positions. In this century, writes Professor Omarova, the largest U.S. commercial banks have emerged “as a new breed of financial super-intermediary—a wholesale dealer in financial risk, conducting a wide variety of capital markets and derivatives activities, trading physical commodities, and even marketing electricity.” She notes that the Federal Reserve has allowed several financial holding companies to purchase and sell physical commodities (including oil, natural gas, agricultural products and electricity) in the spot market to hedge their commodity derivative activities, and to take or make delivery of those commodities to settle the transactions.
It was not Congress that authorized that expansive definition of permitted banking activities. It was the Office of the Comptroller of the Currency (OCC), part of the “administrative deep state,” that permanent body of unelected regulators who carry on while politicians come and go.
Read the full article here.
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