8. Why has the Derivatives Market exploded to $2.4 Quadrillion ?

in #money6 years ago (edited)

Wikipedia:
"The derivatives market is the financial market for derivatives, financial instruments like futures contracts or options, which are derived from other forms of assets.
The market can be divided into two, that for exchange-traded derivatives and that for over-the-counter derivatives. The legal nature of these products is very different, as well as the way they are traded, though many market participants are active in both."
In the 1970's Derivative Markets consisted of commodities contracts traded in the Chicago Mercantile Exchange with a market size of $2 Trillion. Flash forward 48 years and the Derivatives market is now 1000 times larger at $ 2.4 Quadrillion. The scope and complexity of Derivatives has spread into all market asset classes and grew exponentially with the Global Debt of 275 Trillion. The Central Banks, BIS, and US Treasury use derivatives as a tool to control the Markets.
If I can control 18,000 pounds of coffee beans with a single derivative contract at a marginal cost of $2400. Then imagine how many pounds of coffee I could control with a billion or a Trillion dollars. It was the leveraging power of derivatives that fascinated me over 20 years ago, which became my epiphany of how these derivatives can be used to control markets for criminal and political purposes.

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