Late 90s fight to regulate derivatives (clip from BBC's "The Love of Money: The Age of Risk")

[Nintendomanwill]

Why do you think banks offered CDSs and other derivatives? It was because they knew they needed shoring up for some of their investments. Banks don't invest precisely, they throw all their crap at the wall because it comes from inflation so they basically engineer the very booms in which they invest. Naturally this causes underproduction in other sectors and unless they deleverage before serious sectoral overproduction the whole ecosystem of lenders and debtors in that sector, they go bust.