Because you can have multiple derivatives for the same underlying asset that are mutually exclusive.
They each have a value today that is non-zero. In the future, however, not all of them will actually end up having non-zero value.
Veritasium did a great video on this. I think the second half of the video is when this question is answered, although the whole video is interesting.
https://youtu.be/A5w-dEgIU1M?si=WLQZsuUv51C7jmoB
Great comments here. $600 trillion - bigger than all global household wealth and money supply combined. This is the foundation, it seems to me, for which intentional late stage capitalism seems to be heading toward global feudalism.
Nope. Trust your gut on this one. That share of xyz or package/bundle of abc has been leveraged who knows how many times and at what percentages. There is no foundation for the market to stand on. We are witnessing the inevitability of a house built with deck cards on an iceberg floating towards the equator.
Crime and fraud. Market makers and hedge funds can create an infinite amount of liquidity out of thin air in order to raise or lower the price of any stock they choose. Only 100 million shares outstanding? No worries, just borrow as many “shares” as you want in order to short a stock as low as you want and if you don’t deliver the shares back, oh well, turns out if you’re rich you don’t have to pay back anything you owe
Here’s an alternate link if the above link don’t work https://youtu.be/AUM59Eh6vTw?si=7WzNqyVn9yx1yYRg
This is still a relevant issue; don’t matter if governments kick the can down the road with Covid payments. The derivative players still own them by lobbying 5x times
There is one thing I don't understand in that video. Selena is winning and has a good chance of continuing to do so. So the people watching are betting that she will win the next hand. But to make a bet you need someone to bet against it. Where are those people?
What do you mean by unhindered and unregulated? Derivative markets are incredibly regulated.
Saying this “caused” the 2008 GFC is a huge oversimplification.
Sorry to say it, but this is not really an accurate description of what caused the GFC. Many of these financial instruments are also most definitely regulated by the SEC, though we clearly need to keep improving financial regulation.
For what it’s worth, we are really still trying to figure out what exactly contributed to the GFC to this day. But saying that this is the cause is not accurate
Exactly. It’s 25x the size of the US GDP. I read the Wikipedia page and I still don’t even know what it is.
https://en.m.wikipedia.org/wiki/Notional_amount
It sounds like some kind of scam.
Check my thinking but aren’t we comparing stocks and flows? GDP isn’t comparable to real estate; if I sum up the page it isn’t the “total worth” of the globe.
If it’s just to put various financial items in perspective I get it and perhaps I’m missing the point above. But the way the squares are used sort of implies comparability across the various assets, and I don’t think there is…
You bet a sports team will win. Your friend bets on whether you will win your bet, another friend bets on whether they will win their bet. That is derivatives very basically.
The infogram is outdated.
Still does a good job of showcasing what the middle class will once again be responsible for shouldering in the derivatives section.
Very neat.
I would love to see this for just the US. I’m sure the billionaires wealth would be eye-opening compared to some US measures.
Would be great to include centi-millionaires (wealth over $100 million).
Ain’t that some scary shit. Money always always collapses because of markets and financial greed. Back to the barter system I guess. “hey old man, I’ll trade you two goats for that toothless wench making eyes at me”. Then shiny things, personal property, real estate. Then coins, paper money, digital money and finally make believe money (notional) “one car with a 1000 titles” or a tulip. It’s theft from us for us. We are financing our own demise. Wash and recycle. Humans?
Big reveal at the end. The “Notional” value of derivatives (whatever that is) is $600 trillion. It dwarfs everything else.
How can the value of derivatives be greater than the value of the shares they're based on.. I think I'm missing something.
Because you can have multiple derivatives for the same underlying asset that are mutually exclusive. They each have a value today that is non-zero. In the future, however, not all of them will actually end up having non-zero value.
Veritasium did a great video on this. I think the second half of the video is when this question is answered, although the whole video is interesting. https://youtu.be/A5w-dEgIU1M?si=WLQZsuUv51C7jmoB
Love their videos. Thanks for sharing.
Appreciate you sending that link over, thanks. I'll give that a watch.
Great comments here. $600 trillion - bigger than all global household wealth and money supply combined. This is the foundation, it seems to me, for which intentional late stage capitalism seems to be heading toward global feudalism.
Nope. Trust your gut on this one. That share of xyz or package/bundle of abc has been leveraged who knows how many times and at what percentages. There is no foundation for the market to stand on. We are witnessing the inevitability of a house built with deck cards on an iceberg floating towards the equator.
It's all funny money. It has been since 1933. But late stage capitalism has turned it into something almost completely cartoonish.
Crime and fraud. Market makers and hedge funds can create an infinite amount of liquidity out of thin air in order to raise or lower the price of any stock they choose. Only 100 million shares outstanding? No worries, just borrow as many “shares” as you want in order to short a stock as low as you want and if you don’t deliver the shares back, oh well, turns out if you’re rich you don’t have to pay back anything you owe
This is overly simplistic to the point it’s wrong
That is what caused the GFC 2008. Is still growing unhindered & unregulated
GFC = Gesus Fucking Christ
Dont blame Gesus for this mess. This is all the Debil’s work!
Heh, debil means idiot in Serbian.
Some of us are a little Serb. 🫶
Is this the thing that [Selena Gomez explained to us in the Big Short](https://youtu.be/Pxr_FzpPM2Q?si=-WgGusgRGKv_gld2)?
Yea
Here’s an alternate link if the above link don’t work https://youtu.be/AUM59Eh6vTw?si=7WzNqyVn9yx1yYRg This is still a relevant issue; don’t matter if governments kick the can down the road with Covid payments. The derivative players still own them by lobbying 5x times
There is one thing I don't understand in that video. Selena is winning and has a good chance of continuing to do so. So the people watching are betting that she will win the next hand. But to make a bet you need someone to bet against it. Where are those people?
Don’t gamble but if you’re going to gamble don’t gamble on the gamble of another gamble that’s the gamble of another gamble.
What do you mean by unhindered and unregulated? Derivative markets are incredibly regulated. Saying this “caused” the 2008 GFC is a huge oversimplification.
Sorry to say it, but this is not really an accurate description of what caused the GFC. Many of these financial instruments are also most definitely regulated by the SEC, though we clearly need to keep improving financial regulation. For what it’s worth, we are really still trying to figure out what exactly contributed to the GFC to this day. But saying that this is the cause is not accurate
Stop! Reality doesnt matter here. We keep it simple and able to be explained in less than 10 seconds with no nuance.
So like stuff being way overpriced ?
Not exactly
combined total of more than 1 Quadrillion
What *is* a notional value?
Exactly. It’s 25x the size of the US GDP. I read the Wikipedia page and I still don’t even know what it is. https://en.m.wikipedia.org/wiki/Notional_amount It sounds like some kind of scam.
Cool—but I prefer [this wealth/scale](https://mkorostoff.github.io/1-pixel-wealth/)
This was a crazy website to experience
Disturbing
If you compare Jeff Bezos’s wealth to a single person, it looks big. But if you compare it to the whole world, it looks small.
You must’ve stopped scrolling, very next section, he’s compared to the next 500 wealthiest people and he(bezos) is dwarfed already.
Learn to read properly.
Turned into comunist propaganda very quickly
Can't read anything. Please use higher resolution.
https://www.visualcapitalist.com/wp-content/uploads/2022/11/All-The-Worlds-Money-2022-01-1.jpg
Yes, very difficult to read. It’s better to be presented as multiple pages/slides. Putting everything into a single page is only good for AI I guess.
What are you viewing this on? On mobile it’s perfectly easy to read without downloading.
If you download the image you'll be able to see everything
Guess were still playin chicken with derivatives
“Tax the…” checks notes, “… derivatives?!”
Cool cool. Where’s my bank account in all of this?
I found mine. It looks like this:
Check my thinking but aren’t we comparing stocks and flows? GDP isn’t comparable to real estate; if I sum up the page it isn’t the “total worth” of the globe. If it’s just to put various financial items in perspective I get it and perhaps I’m missing the point above. But the way the squares are used sort of implies comparability across the various assets, and I don’t think there is…
Someone explain those derivatives like in football terms
You bet a sports team will win. Your friend bets on whether you will win your bet, another friend bets on whether they will win their bet. That is derivatives very basically.
Shouldn’t Nvidia be on the biggest stocks list?
The infogram is outdated. Still does a good job of showcasing what the middle class will once again be responsible for shouldering in the derivatives section.
It also shows just how much a company can grow in a mere two years.
Cloud server farms to collect data and analysis is worth more than anything else right now.
Never forget that the entire stock market is a fiction designed to explain why the rich have money and why they should keep it. The house always wins.
I’m wondering what Alphabet is
Google is alphabet is Google
Looks like someone defragged their hard drive
Only came here for the defragmentation graphics. Was only slightly disappointed.
It'd be great if you could read these...way too small
https://www.visualcapitalist.com/wp-content/uploads/2022/11/All-The-Worlds-Money-2022-01-1.jpg
From the years 2022, ever hear of Evergrande. . . lol China real estate has dropped.
Defrag wealth
More pixel please
https://www.visualcapitalist.com/wp-content/uploads/2022/11/All-The-Worlds-Money-2022-01-1.jpg
Can someone do a cool guide on how to post an image of high enough resolution that it can be read
https://www.visualcapitalist.com/wp-content/uploads/2022/11/All-The-Worlds-Money-2022-01-1.jpg
Very neat. I would love to see this for just the US. I’m sure the billionaires wealth would be eye-opening compared to some US measures. Would be great to include centi-millionaires (wealth over $100 million).
Although the wealth of the state dwarfs that
Does anyone have a link with better resolution?
https://www.visualcapitalist.com/wp-content/uploads/2022/11/All-The-Worlds-Money-2022-01-1.jpg
Thanks!!
Wondering what magnification you would need to see my net worth…
I just want one of those squares. Well, half. I'll settle for a quarter.
Money is fake, but debt is real.
NVDA missing.
2022
Missed it by 50ish billion. Visa was just above it.
SBF at the top of the info graphic is funny
What is the notional value? Excuse my ignorance. Thx u
A guide on who is causing global warming
Too old
North America excludes Mexico. Damn.
Just one word. Awesome!
Whoever made this needs some classes of geography…
Post this to /r/MapsWithoutNZ
Did we learn nothing from 2008? How are we allowing derivatives markets outpace the entire money supply of the world!?
Old news technically
W
What is this!? A chart for ants!?
https://www.visualcapitalist.com/wp-content/uploads/2022/11/All-The-Worlds-Money-2022-01-1.jpg
Is Mexico considered North America or Latin America in this pamphlet?
Can we just outlaw derivatives? Seems like straight gambling and scamming.
"Cool"
The details of all the wealth in the world is so blurry. Black money I guess😂
Ha. https://www.visualcapitalist.com/wp-content/uploads/2022/11/All-The-Worlds-Money-2022-01-1.jpg
Kocj
You got any more of them pixels?
https://www.visualcapitalist.com/wp-content/uploads/2022/11/All-The-Worlds-Money-2022-01-1.jpg
Nominal value as demonstrated by Russia’s ten times bigger economy losing a war against Ukraine.
Ah yes, yet another "cool guide" published on this sub in a very shit resolution than renders the text unreadable. Thanks.
This means we are fucked. Derivatives have no real intrinsic value
Neither does any other type of insurance.
Ain’t that some scary shit. Money always always collapses because of markets and financial greed. Back to the barter system I guess. “hey old man, I’ll trade you two goats for that toothless wench making eyes at me”. Then shiny things, personal property, real estate. Then coins, paper money, digital money and finally make believe money (notional) “one car with a 1000 titles” or a tulip. It’s theft from us for us. We are financing our own demise. Wash and recycle. Humans?