The Derivatives Disaster

• Plutocrats push world to financial precipice yet again.

By Ronald L. Ray —

Money should be a medium of exchange only. The ancient Greeks understood this, as did the Christian world until the 16th century when usurers finally convinced pastors and potentates in the “Age of Exploration” that a “small amount” of interest on a loan was reasonable to offset risk of loss. But the trickle became a torrent and then a flood, as money became an “investment,” instead of merely the means of transacting business more efficiently.

Now, in the 21st century, the tidal wave of debt created by unscrupulous plutocrats for personal enrichment and the enslavement of the masses threatens to crush the world. Ironically, it may be today’s Greeks who become the catalyst of destruction when the current derivatives bubble bursts.

Derivatives are financial instruments that combine all the worst features of high-interest usury with the safety and security of Russian roulette. Their most common use is to conceal bad banking practices while making gobs of profits for the Big Boys. Since not even the creators fully understand them, it is a given that investors also cannot, adding a sinister aspect of deliberately unethical investment sales.

Derivatives are, however, successful at separating fools from their money—always the top goal of international financiers. They don’t just want a lot. They want it all. And when their own initiatives fail, the plutocratic poobahs resort to time-tested extortion methods against governments in order to obtain a direct transfer of immense wealth from taxpayers to tycoons.

Recently, blogger Michael Snyder sounded the warning claxon about the inevitable, and likely impending, collapse of a monstrous, hyperinflated derivatives bubble, which will make the banking collapse of 2008 look like a ride on the merry-go-round.

Based on Bank of International Settlements statistics, the largest percentage of total derivatives contracts worldwide is interest rate derivatives. These “investments”—really just bets on potential interest rate changes—alone total $505 trillion, a sum more than 25 times the size of the equally unfathomable $18 trillion United States national debt. Yet they are not even the total of all derivatives. As Snyder rightly notes, “When this derivatives bubble finally bursts, there won’t be enough money in the entire world to bail everyone out.”


Enter Greece, stage left, where the Coalition of the Radical Left, known by its acronym SYRIZA, government, after promising change, has thrown the country back into the clutches of the central bankers. The country stands before an almost certain default on massive loans from the European Union (primarily Germany) and the International Monetary Fund. Interior Minister Nikos Voutsis stated candidly: “The money [for repayment] won’t be given. . . . It isn’t there to be given.” Both sides are struggling to conclude a debt restructuring and possible new loans in order to keep the charade going.

But if a new deal does not materialize this month—a deal which would in any event only further impoverish the Greek people—Snyder says the yields on Greek bonds will “soar into the stratosphere as panicked investors flee for the exits.” Of course, the dirty secret is that most of those investors are the same banks that lend money to the Greek government, trying to make a profit at both ends. And even if restructuring does occur, it only delays the inevitable.

A Greek default would likewise have the consequence of ruining confidence in those countries, especially of Europe, which are propping up the Hellenes. This “domino effect” is the short fuse to a derivatives implosion, and Greece is the lit match. The trouble is that Spain, Portugal, Ireland and Italy also hold lit matches.

Such a massive financial collapse would have international bankers panicked into trying to cover their bad financial bets—but not with their own money, of course. They would threaten “dire consequences,” in order to get government bailouts. But since governments are also crying poor mouth, the usurers have obtained the passage of laws, like those in Germany and the U.S., which permit the banks to seize directly the assets of their depositors and investors: an unconscionable organized crime.

The result? The nearly total impoverishment of the average citizen and collapse of the world economy.

Banksters have prepared already for the event, signaling publicly their “worry” about the situation they deliberately created. Calls have been made again recently for a “cashless society,” in which the financial pharaohs finally would have total control over people’s lives through absolute control of the means of commerce.

There is a simple solution, however: Deprive the banksters of their ability to invent money out of thin air and then charge interest on it—that is, end all usury and repudiate all debts to central bankers. Sovereign governments alone should issue money interest-free as a medium of exchange in those amounts necessary to support the economy. Claims that this is inflationary are false when compared to the unending debt spiral caused by central banking.

The tiny nation of Iceland already is considering seriously such a rational alternative. The U.S. and the rest of the world should follow suit.

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Ronald L. Ray is a freelance author and an assistant editor of THE BARNES REVIEW. He is a descendant of several patriots of the American War for Independence.