The public is exposed to a monolithic vulnerability concentrated in the derivatives complex. This is an
urgent matter. Triggers which could collapse this include large-scale insolvencies due to the sharp escalation of interest rates, or an event as sudden as the closing of the Strait of Hormuz.
Essentially all securities “owned” by the public in custodial accounts, pension plans and investment
funds are now encumbered as collateral underpinning the derivatives complex, which is so large— an
order of magnitude greater than the entire global economy—that there is not enough of anything in the
world to back it. The illusion of collateral backing is facilitated by a daisy chain of hypothecation and
re-hypothecation in which the same underlying client collateral is re-used many times over by a series of
secured creditors.

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Iron Will

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