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 and exchange-traded derivatives totaled more than $675 trillion. However, these authoritative figures are, according to Executive Intelligence Review analyst John Hoefle, grossly understated. The true figures, Hoefle estimated, are well-above a quadrillion dollars.

LaRouche concluded: Unless and until you deal with this derivatives bubble, which cannot and should not be bailed out, you are just kidding yourself. It is time for Hank Paulson to swallow the only real medicine: bankruptcy reorganization of the entire, dollar-based financial system. And the first step in any such bankruptcy reorganization would be the cancellation of these quadrillions of dollars in pure gambling obligations. Without such action, this planet is doomed to a horrible dark age, just like the dark age of the 14th century, that followed the collapse of the Lombard banking system.

Category:

News & Politics

Tags:

• Lyndon
• LaRouche
• congress
• bretton
• woods
• new
• deal
• ft
• faz
• rt
• HBPA
• homeowners
• bankruptcy
• reorganization
• protection
• act
• derivatives
• market
• economy
• fungus
• hyperinflation
• jp
• morgan
• chase
• citycorp
• bank
• of
• america
• trillion
• quadrillion
• dollars
• GDP
• account
• fraud
• world
• truth
• alan
• greenspan
• stock
• crash
• 1923
• 1929
• 1987
• michael
• milken
• cokehead
• jail
• bubble
• blow
• recovery
• hitler
• fascism
• firewall
• ww1
• germany
• versailles
• debt
• money
• BIS
• methods
• hell
• rennaissance
• india
• china
• russia
• usa
• system
• hank
• paulson
• EIR
• cnn
• bbc

[Zamolxx]

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.

[KoalaBearWarrior]

@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!

[Zamolxx]

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.

[Zamolxx]

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.

[Zamolxx]

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.

[KoalaBearWarrior]

@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 ...

[Zamolxx]

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.

[KoalaBearWarrior]

@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.

[Zamolxx]

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.

[KoalaBearWarrior]

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