Thank you again for your writing to me on this subject. In your example of the $100 million notional value resulting in payment of $275,000. Now if that $100 million is $100 Billion the payment is arithmetic....that is to say $275,000,000....Yes,NO? If that $275,000,000 is payment for $100 billion then if the $100,000,000 was actually $10 trillion, then the payout would be raised by a factor of 100 or $27,500,000,000.....yes,NO??? Now if it was raised in this case to $44 trillion that number is approximately 4 times the $10 trillion dollar notional value or approximately $110,000,000,000....Yes/No???? I think I did the relational arithmatic correctly....and if that is how it works then the counterpart, in a worse case scenario would have to come up with about $110 billion dollars.....That would be a lot of money for JPMorgan or Bank of America to produce. That is the point I am trying to make should the system collapse. Am I misrepresenting the outfall of a worsecase situation or am I still off course?
Allow me to jump in. Actually, $25,000
Now if it was raised in this case to $44 trillion that number is approximately 4 times the $10 trillion dollar notional value or approximately $110,000,000,000....Yes/No????
You did the math correctly, after your initial error. It would actually be $10 billion. Now you have to understand that the banks involved have positions on both sides of that trade. In some they'd receive the $25,000 from the original example, in some they'd pay the $25,000. The net payments are much, much (much, much, much, much etc)less than $10,000,000,000 per month.
Am I misrepresenting the outfall of a worsecase situation or am I still off course?
Still a bit off course.