This is how much money exists in the entire world, in one chart (Money and ...?)

marketwatch.com ^ | Dec 18, 2015 2:31 p.m. ET | Sue Chang

[Ernest_at_the_Beach]

There is $1.2 quadrillion invested in derivatives alone.

By

SueChang

Markets reporter

Ever wonder how much money there is in the world?

The answer is complicated, which you might expect, but not because of the difficulty of tallying up all the rather large numbers. Rather, it’s more about which parameters are used to define “money.”

[Red Badger]

There is $1.2 quadrillion invested in derivatives alone.

A House of Paper with a foundation built on mud..........................

[ctdonath2]

From geek comic strip XKCD:

[Zeneta]

Sadly, very few people even know what a “Derivative” is.

[1rudeboy]

I have little faith that this author does, frankly.

[Ernest_at_the_Beach]

So why is the political elite so concerned about climate change ?

Seems like so much money outside of Government coined money should be a bigger concern....

[M Kehoe]

Hi, I’ll play.

If each country, legal entity, authority that prints or mints “money,” accounted for it, the “value,” could be approximated.

Otherwise, it’s mental masturbation.

What do I win?

5.56mm

[El Laton Caliente]

I’ve read about half a dozen pieces trying to explain what a derivative is... so far I’ve come to the conclusion it is a piece of paper with printing on it that some people erroneously think is worth something...

[who_would_fardels_bear]

I thought the purpose of derivatives were as hedges against the fall of more tangible assets such as stocks, bonds, and real estate.

If derivatives were actually being used just to minimize the risk associated with other assets, then that would seem to mean that the total amount of money invested in derivatives would be the same order of magnitude as the assets they are derived from.

Obviously the derivatives market is being gamed and turned into a betting parlor thus completely eliminating its value in minimizing risk.

[1rudeboy]

Think of it this way: if I buy a $2(?) Powerball ticket for tomorrow's drawing paying-out $202 million, it should go on my books as a $2 transaction, not the other way around.

Moreover, the 100 million $2 tickets out there are "worth" $202 million, not "worth" 100 million times $202 million.

[fhayek]

If you buy into the stock market, there is a limit on the number of shares of stock available. Same with gold, real estate, even bonds. But with derivatives, there is no limit. Any number of people can buy contracts betting on the price of this future or that option. On top of this there are derivative contract which bet on the future price of other derivatives. It is more complicated that any human con understand, so a lot of it happens in computers.

But what if the SHTF, and there is some form of collapse. Derivatives are contracts that need to squared up. What would happen if a mere 1% of the total cannot meet their obligations? 1% of $1.2 quadrillion is $12 trillion, which is roughly three quarters of the U.S. GDP. Who bails that out? To big to fail, becomes too big to bail out. The resulting carnage would make 2008 look like free slurpee day at 7-11.

[Toddsterpatriot]

There is $1.2 quadrillion invested in derivatives alone.

That's funny. That's like saying my $10 bet on the next Bear's game means I invested $4 billion.

[lucky american]

For fifty years the government has been steering us into virtual currency. Zeros on a computer screen. The changeover is almost complete.
Imagine a government with unlimited amounts of virtual zeros.
I’m saying don’t worry about the debt. It’ll never be paid off and the political elitists don’t intend to pay it off. Just add more zeros.
Think of it, we’ve been herded into using debit/credit cards. Cash is rarely used anymore. You’re paid with zeros, and you spend zeros. The masses are happy the way things are and the physical aspects of holding cash are deemed as a fault instead of a positive.

There isn’t enough physical cash to spread around and people don’t care so don’t worry. Your masters have those pesky details all taken care of.

[Zeneta]

A derivative at its base.

Just like it sounds.

It is an instrument (a contract if you will) thats value is based or “Derived” from something else. That instrument can be traded with others.

Basically it’s a bet, and there’s a huge appetite for creating and making bets.

I could create a contract on when Trump or Rick Santorum will bow out of the Presidential race. That contract has a value, and the value changes based on events and therefore, there is money to be made and lost along the way. There are people that will trade these contracts.

When we talk about financial markets there are thousands of ways to chop up the data/numbers and create contracts that are “derived” from what is called the “Cash Market” or real price.

It’s insanity.

And at the same time, there are hundreds and hundreds of Billions of Dollars making these bets.

[VanShuyten]

From the article:

“For purists, who believe money refers only to currencies such as bank notes, coins, and money deposited in savings or checking accounts, the total is somewhere around $80.9 trillion.

But for those preferring a broader interpretation, including digital currency bitcoin, above-ground gold supply, and funds invested in various financial products like derivatives, the amount is in the quadrillions.”

She confuses purchases of investments with money. I spent money for my silver. I have to sell that silver to get money. I think she’s talking about the present value of everything. I could get more or less money for my silver than I paid. Those investing in derivatives could do the same - all the way down to zero, in fact.

Odd that a financial writer would make that error.

[Ernest_at_the_Beach]

Links:

Here's What $1.2 Quadrillion Looks Like - Money Morning

[free_life]

D

[amorphous]

[Toddsterpatriot]

Derivatives are contracts that need to squared up. What would happen if a mere 1% of the total cannot meet their obligations?

Some people who thought they were getting $12 trillion wouldn't and other people who thought they were going to have to pay out $12 trillion, wouldn't.

[bert]

actually, a derivative is a paper representing entries on an electronic ledger representing entries on portions of uncountable electronic ledgers that in effect are tied to someone’s agreement to pay someone something at an appointed date and time and exists as an electronic entry