The Global Financial Pyramid Scheme By The Numbers

Tyler Durden's picture




 

Via Michael Snyder of The Economic Collapse blog,

Why is the global economy in so much trouble?  How can so many people be so absolutely certain that the world financial system is going to crash?  Well, the truth is that when you take a look at the cold, hard numbers it is not difficult to see why the global financial pyramid scheme is destined to fail.  In the United States today, there is approximately 56 trillion dollars of total debt in our financial system, but there is only about 9 trillion dollars in our bank accounts.  So you could take every single penny out of the banks, multiply it by six, and you still would not have enough money to pay off all of our debts.

Overall, there is about 190 trillion dollars of total debt on the planet.  But global GDP is only about 70 trillion dollars.  And the total notional value of all derivatives around the globe is somewhere between 600 trillion and 1500 trillion dollars.  So we have a gigantic problem on our hands.  The global financial system is a very shaky house of cards that has been constructed on a foundation of debt, leverage and incredibly risky derivatives.  We are living in the greatest financial bubble in world history, and it isn't going to take much to topple the entire thing.  And when it falls, it is going to be the largest financial disaster in the history of the planet.

The global financial system is more interconnected today than ever before, and a crisis at one major bank or in one area of the world can spread at lightning speed.  As I wrote about yesterday, the entire European banking system is leveraged 26 to 1 at this point.  A decline in asset values of just 4 percent would totally wipe out the equity of many of those banks, and once a financial panic begins we could potentially see major financial institutions start to go down like dominoes.

We got a small taste of what that is like back in 2008, and it is inevitable that it will happen again.

Anyone that would tell you that the current global financial system is sustainable does not know what they are talking about.  Just look at the numbers that I have posted below.

The following is the global financial pyramid scheme by the numbers...

-$9,283,000,000,000 - The total amount of all bank deposits in the United States.  The FDIC has just 25 billion dollars in the deposit insurance fund that is supposed to "guarantee" those deposits.  In other words, the ratio of total bank deposits to insurance fund money is more than 371 to 1.

-$10,012,800,000,000 - The total amount of mortgage debt in the United States.  As you can see, you could take every penny out of every bank account in America and it still would not cover it.

-$10,409,500,000,000 - The M2 money supply in the United States.  This is probably the most commonly used measure of the total amount of money in the U.S. economy.

-$15,094,000,000,000 - U.S. GDP.  It is a measure of all economic activity in the United States for a single year.

-$16,749,269,587,407.53 - The size of the U.S. national debt.  It has grown by more than 10 trillion dollars over the past ten years.

-$32,000,000,000,000 - The total amount of money that the global elite have stashed in offshore banks (that we know about).

-$50,230,844,000,000 - The total amount of government debt in the world.

-$56,280,790,000,000 - The total amount of debt (government, corporate, consumer, etc.) in the U.S. financial system.

-$61,000,000,000,000 - The combined total assets of the 50 largest banks in the world.

-$70,000,000,000,000 - The approximate size of total world GDP.

-$190,000,000,000,000 - The approximate size of the total amount of debt in the entire world.  It has nearly doubled in size over the past decade.

-$212,525,587,000,000 - According to the U.S. government, this is the notional value of the derivatives that are being held by the top 25 banks in the United States.  But those banks only have total assets of about 8.9 trillion dollars combined.  In other words, the exposure of our largest banks to derivatives outweighs their total assets by a ratio of about 24 to 1.

-$600,000,000,000,000 to $1,500,000,000,000,000 - The estimates of the total notional value of all global derivatives generally fall within this range.  At the high end of the range, the ratio of derivatives to global GDP is more than 21 to 1.

Are you starting to get the picture?

Every single day, the total amount of debt will continue to grow faster than the total amount of money until the day that this bubble bursts.

What we witnessed back in 2008 was just a little "hiccup" in the system.  It caused the worst economic downturn since the Great Depression, but global financial authorities were able to get things stabilized.

Next time it won't be so easy.

The next wave of the economic collapse is quickly approaching.  A full-blown economic depression has already started in southern Europe.  Unemployment is at record highs and economic activity is contracting rapidly.

The major offshore banking centers in Cyprus are on the verge of collapsing.  It was just announced that they will now be closed until Tuesday, but nobody really knows for sure when they will be allowed to reopen.  And there is already talk that when they do reopen that there will be strict limits on how much money people can take out.

And now the IMF is warning that the three biggest banks in Slovenia are failing and that a billion euros will be needed to bail them out.

The dominoes are starting to tumble, and the United States won't be immune.  In fact, the greatest financial problems that the United States has ever seen are on the horizon.

But you can just have faith that Ben Bernanke, Barack Obama and the U.S. Congress know exactly what they are doing and will be able to save us from the coming financial collapse if you want.

The mainstream media will provide you with all of the positive economic news that you could possibly want.  They are giddy about the fact that the Dow keeps hitting all-time highs and they would have us all believe that we are in the midst of a robust economic recovery.  You can listen to them if you want to.

But when you are tempted to believe that everything is going to be "okay" somehow, just go back and look at the numbers there were posted above one more time.

There is no way that the global financial pyramid scheme is going to be able to hold up for too much longer.  At some point it is going to totally collapse.  When that happens, will you be ready?

 

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Thu, 03/21/2013 - 17:24 | 3359325 idea_hamster
idea_hamster's picture

$26,000+ per oz -- the "real" price of gold, per GATA....

Thu, 03/21/2013 - 17:48 | 3359448 blu
blu's picture

You better hope not. If it ever gets to that price and that fact becomes general public knowledge then armed gangs (and bankers) will be openly patrolling the streets cutting peoples' hands off for their wedding rings and their heads off to get at the gold fillings in their teeth. The only defense will be to not wear any jewelry, have all your teeth pulled out so you can wear dentures and you put them in only at table to eat.

You think I'm kidding. I am 100% not kidding.

Thu, 03/21/2013 - 18:06 | 3359519 blindman
blindman's picture

but if they are shot on site after a moment they
will cease to exist.
no?

Thu, 03/21/2013 - 18:29 | 3359602 blu
blu's picture

If you mean in the video game version of life --  then yeah sure. Go nutz.

Thu, 03/21/2013 - 18:35 | 3359629 blindman
blindman's picture

roaming hordes of criminal elements were accepted
as the norm when? it doesn't happen that way.
if they are not the government or soon to be government
they are disbanded or destroyed on site.
go nutz? done. occupation scenarios aside.

Thu, 03/21/2013 - 18:46 | 3359675 Buck Johnson
Buck Johnson's picture

Actually your right and wrong.  Yes roving bands will be disbanded or killed on site, but it will be larger and well organized roving bands that will be the winner and still do the exact same thing to get gold.  It will be warped version of mad max but financially and the us will be a country of 1,000 leaders controlling areas like their own fiefdoms. 

Thu, 03/21/2013 - 19:13 | 3359777 Bastiat
Bastiat's picture

Easy solution on the gold crowns -- go to the dentist and have them replaced with ceramic covered gold crowns, then sell the gold. 

Thu, 03/21/2013 - 19:21 | 3359810 MrX
MrX's picture

Marijuana is the currency of the future

Thu, 03/21/2013 - 21:18 | 3360094 Supernova Born
Supernova Born's picture

Jim Grant on CNBC today: This Bernanke "experiment" will end in "immense inflation".

(I'm surprised it hasn't been linked here yet...I thought it was his most powerful appearance ever)

Thu, 03/21/2013 - 21:25 | 3360114 HulkHogan
HulkHogan's picture

pothead

Thu, 03/21/2013 - 21:32 | 3360148 Supernova Born
Supernova Born's picture

And the "currency of the future" is soon to be the jurisdiction of the BATFE[M].

The ATF is primarily about tax collection and control of currency alternatives. Potheads will be financing a further expansion of the BATFE[M].

Thu, 03/21/2013 - 19:33 | 3359841 Hi Ho Silver
Hi Ho Silver's picture

I guess you haven't been to Mexico in the past 10 years. Or Guatemala. Or

Thu, 03/21/2013 - 20:44 | 3359999 blindman
blindman's picture

nor Honduras, Columbia or Nicaragua. etc...
do they have precious metal based monetary systems?
and if they did would it make a difference to the
behavior you see or anticipate in those locations?
the future and truth are not bound by fear alone or
at all, my guess.

Thu, 03/21/2013 - 21:17 | 3360098 new game
new game's picture

a study of the animal world will give one insight.

start with the wolf...

small groups of like minded people with the utmost ability to kill without conscience.

all the do gooders will hesitate and be done in first

next will be the talkers

then the know it alls

then the game is on

there will be plenty to go around at this point, but humans are never satisfied with enuf.

the greedy fucks will expose themselves needlessly and be taken for their easy bounty...

and so goes the great reset.

Thu, 03/21/2013 - 19:10 | 3359770 Croesus
Croesus's picture

@ Blu:

You might enjoy reading this one:

http://www.grandpappy.info/honehour.htm

 

Thu, 03/21/2013 - 20:37 | 3359983 The Navigator
The Navigator's picture

Thanks Crosesus - great link that points out that a total meltdown CAN happen in 1 hour... where banks and ATMs stop working without notice (a la Cyprus) and after that, it goes downhill really fast.

The good thing about owning/holding physical metals, it makes you think just a little bit ahead, like 'OK, now where can I put it where it's safe' and 'how do I protect it'.

And then you start thinking of expanding your pantry, medical supplies, water supplies etc

Even if the melddown doesn't happen in 1 hour, Cyprus should be ringing all kinds of warning bells for those with ears - we've had ample warning here at ZH University.

Thu, 03/21/2013 - 21:12 | 3360084 ChrisFromMorningside
ChrisFromMorningside's picture

The fundamental problem is that the "economists" who centrally plan our economy don't understand that there is a disjunct between the financial economy of equity, securities, and synthetic credit and the real economy of energy, food, raw materials and physical labor. They think the financial economy is reality. If we can get the DJIA up to a certain level, or if we can produce X amount of credit, or recapitalize banks to Y level ... then everything will be fine. Meanwhile, the real economy is contracting and stagnating. See: food riots in the Third World, our degraded environment, tens of millions of people leaving the labor force in the developed economies, annualized decline rates in energy production, etc. We're not going anywhere until the people in charge can actually see and acknowledge reality, instead of sticking to the delusional pathology that the heavily-manipulated, filtered quantitative statistics on your Bloomberg terminal actually say anything about our material economy. 

Fri, 03/22/2013 - 00:25 | 3360742 Liberty2012
Liberty2012's picture

Thank you Croesus - excellent website - and very plausible scenario. I don't think it has to be that way though. Two reasons: 1. Current control people develop new controls while keeping basics like debit cards in place, and 2. People develop their own payment system.

One, or a ccombination of both, of those things are more likely to happen than the total collapse of society.

Thu, 03/21/2013 - 21:06 | 3360068 Jackagain
Jackagain's picture

I think maybe he's talking about the US government....Presidential Executive Order 6102 part II.

Fri, 03/22/2013 - 00:23 | 3360740 curbyourrisk
curbyourrisk's picture

Blu...  you can forget all that happening.  Long before it reaches tha tprice, the .gov will simply confiscate what they can and make it illegal to own/sell/trade the rest.

Fri, 03/22/2013 - 00:28 | 3360743 RafterManFMJ
RafterManFMJ's picture

-"You better hope not. If it ever gets to that price and that fact becomes general public knowledge then armed gangs (and bankers) will be openly patrolling the streets cutting peoples' hands off for their wedding rings and their heads off to get at the gold fillings in their teeth. The only defense will be to not wear any jewelry, have all your teeth pulled out so you can wear dentures and you put them in only at table to eat.

You think I'm kidding. I am 100% not kidding."

 

 

Great, and I just bought the Mr. T starter set.  I guess I can only wear it in the safe room.

Thu, 03/21/2013 - 18:43 | 3359663 Buck Johnson
Buck Johnson's picture

I know, once the manipulation is off and the economy starts to unwind it will shoot up to that amount. 

Thu, 03/21/2013 - 17:24 | 3359334 LawsofPhysics
LawsofPhysics's picture

"$70,000,000,000,000 - The approximate size of total world GDP." --  Which begs the question, precisely who is the world selling to and what are they offering us of real value in exchange?

Thu, 03/21/2013 - 17:29 | 3359362 tickhound
tickhound's picture

"Can someone please tell me who we owe all this fucking money too?"

Beppe Grillo

Thu, 03/21/2013 - 17:33 | 3359381 LawsofPhysics
LawsofPhysics's picture

If it is a few people, let them be known, if it is us.  Well then, shit, we're rich!!  Crisis averted.

Thu, 03/21/2013 - 17:46 | 3359443 francis_sawyer
francis_sawyer's picture

joobux... get 'em while they're hot... [might need them to cook some soup]...

Thu, 03/21/2013 - 19:34 | 3359846 MSimon
MSimon's picture

It is the Pagans you have too worry about. You are fixated on the front men.

Thu, 03/21/2013 - 17:32 | 3359375 localsavage
localsavage's picture

They offer us the illusion of wealth.  I just hope that the anger is focused on the Rothchilds Banksters. when the shit hits the fan.

Thu, 03/21/2013 - 18:59 | 3359727 Darth Rayne
Darth Rayne's picture

The world was a very different place when the first Mr Rothschild started his financial empire. A few families of aristocrats ruled the world. It is quite concievable that Mr Rothschild plan was and is to get the entire planet of people to wake up to the fact that this is our planet and not all owned by a small group of aristocrats.

The Rothschild devised 'money' system we use today is designed to explode in a dramatic manner such that the explosion actually awakens mankind into a new era of consciousness.

The Rothschild plan could be to destroy the Vatican and the western Governments 'hold' over the planet. The price the Rothschilds will pay is heavy. They lose everything. Perhaps they believe the human race is worth it.

Personally, I believe that 'money' cannot be a store of value and a currency. The Rothschilds know this. Currency needs a certain velocity to have value. It needs to change hands. A store of value needs to lie very still.

Unfortunately, the Rothschild plan came about in 2007 and we did not wake up. Six years later and only a few are awake and conscious. I fear for the human race, luckily the Rothschilds are patient.

Cyprus is a joke. The media is not giving us the full story, apart from ZH. When the people do wake up and make demands the Government will learn who is the dog and who is the master. As will the banks. I won't hold my breath.

 

Thu, 03/21/2013 - 19:28 | 3359832 Peace is the x-axis
Peace is the x-axis's picture

"'money' cannot be a store of value and a currency." - Well said.

 

The People's NWO - Every Man His Own Central Banker

Thu, 03/21/2013 - 21:09 | 3360073 Jackagain
Jackagain's picture

Oh...then.."Money is like fertilizer....you got to spread it around a little bit." ~Curley Howard

Thu, 03/21/2013 - 17:35 | 3359391 Harbanger
Harbanger's picture

It's mostly the West, not the entire World.  At 10-20% of GDP, the BRIC's debt is still very managable.

Thu, 03/21/2013 - 17:24 | 3359339 Encroaching Darkness
Encroaching Darkness's picture

Lies, all the way down....

There is no way to pay this off, no way to "restructure" it into acceptability; I hope your plans for the Crunch are sufficient and in place, for it's a-comin'....

Eventually, deceit catches up with the deceiver. I take no pleasure in this, for it's going to catch up with the rest of us too.

 

Thu, 03/21/2013 - 17:26 | 3359347 SDRII
SDRII's picture

Q the Hendry vis witrh Sachs

http://www.youtube.com/watch?v=3oZtPK6hqLU

Thu, 03/21/2013 - 19:16 | 3359791 GS-DickinDaMuppets
GS-DickinDaMuppets's picture

SDRII - what a great video!  Thanks, I had not seen it before. That was back in 2010 and the Economics Professor says "Greece will be able to service it's debts on a "normal" basis within the next three years..." !  Who pays these idiots to spout this crap and gives them lifetime tenure while they fuck up the minds of our young people!

These are the bastards that are running our banks and schools and government???  Please, GMAFB

Doing God's work...GS-DickinDaMuppets

Thu, 03/21/2013 - 17:26 | 3359349 toys for tits
toys for tits's picture

Douchebag Ackman is more worried about the pyramid scheme of Herbalife than the global-shit-in-your-pants one.

Thu, 03/21/2013 - 17:27 | 3359352 natronic
natronic's picture

I'm trying to get ready about to place another Apmex order today.

Thu, 03/21/2013 - 17:34 | 3359384 Seasmoke
Seasmoke's picture

i have alot of past orders smooth with Apmex, but at this time, i am afraid to place another order with THEM OR ANYBODY....my gut says, its too late

Thu, 03/21/2013 - 23:45 | 3360667 willwork4food
willwork4food's picture

That's kind of funny you said that. I placed two orders with two companies a few weeks ago. One has taken the funds out and is suppose to deliver, the other...don't know wtf is going on.

But I always pay with a CC, so if I get fucked..then they have to prove delivery.

Thu, 03/21/2013 - 21:03 | 3360060 Jackagain
Jackagain's picture

Placed mine on Monday....200 Eagles.

Thu, 03/21/2013 - 23:47 | 3360678 willwork4food
willwork4food's picture

Thx. You're my first stop when TSHTF. Keep a beer chilled for me, will ya?

Thu, 03/21/2013 - 23:34 | 3360647 WillyGroper
WillyGroper's picture

How's this for irony------they're located in an old FederalReserve building. 

Thu, 03/21/2013 - 17:28 | 3359356 quietdude
quietdude's picture

Got wheat, rice, beans, sugar, coffee, liquor, etc etc ?

Thu, 03/21/2013 - 17:49 | 3359358 Seasmoke
Thu, 03/21/2013 - 17:29 | 3359361 JustObserving
JustObserving's picture

You missed one:

$123,206,000,000,000 are the current US unfunded liabilities and growing at $6,924,000,000,000 a year.

Thu, 03/21/2013 - 17:31 | 3359367 ebworthen
ebworthen's picture

"...the exposure of our largest banks to derivatives outweighs their total assets by a ratio of about 24 to 1."

Yet Bernanke will exclaim they are solvent and strong; while condoning ECB theft of depositor money and not saying he won't do the same to U.S. Depositor money.

Thu, 03/21/2013 - 19:03 | 3359745 Darth Rayne
Darth Rayne's picture

One of the big four UK banks is leveraged at 415 to 1. Too big to fail or too big to live?

Thu, 03/21/2013 - 17:32 | 3359371 flexforthecamera
flexforthecamera's picture

 let's get physical

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