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12 Numbers About The Global Financial Ponzi Scheme That Everyone Should Know

Tyler Durden's picture




 

Submitted by Michael Snyder of The Economic Collapse blog,

The numbers that you are about to see are likely to shock you.  They prove that the global financial Ponzi scheme is far more extensive than most people would ever dare to imagine.  As you will see below, the total amount of debt in the world is now more than three times greater than global GDP.  In other words, you could take every single good and service produced on the entire planet this year, next year and the year after that and it still would not be enough to pay off all the debt.  But even that number pales in comparison to the exposure that big global banks have to derivatives contracts.  It is hard to put into words how reckless they have been.  At the low end of the estimates, the total exposure that global banks have to derivatives contracts is 710 trillion dollars.

That is an amount of money that is almost unimaginable.  And the reality of the matter is that there is really not all that much actual "money" in circulation today.  In fact, as you will read about below, there is only a little bit more than a trillion dollars of U.S. currency that you can actually hold in your hands in existence.  If we all went out and tried to close our bank accounts and investment portfolios all at once, that would create a major league crisis.  The truth is that our financial system is little more than a giant pyramid scheme that is based on debt and paper promises.  It is literally a miracle that it has survived for so long without collapsing already.

When Americans think about the financial crisis that we are facing, the largest number that they usually can think of is the size of the U.S. national debt.  And at over 17 trillion dollars, it truly is massive.  But it is actually the 2nd-smallest number on the list below.  The following are 12 numbers about the global financial Ponzi scheme that should be burned into your brain...

-$1,280,000,000,000 - Most people are really surprised when they hear this number.  Right now, there is only 1.28 trillion dollars worth of U.S. currency floating around out there.

-$17,555,165,805,212.27 - This is 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 - This is the total amount of money that the global elite have stashed in offshore banks (that we know about).

-$48,611,684,000,000 - This is the total exposure that Goldman Sachs has to derivatives contracts.

-$59,398,590,000,000 - This is the total amount of debt (government, corporate, consumer, etc.) in the U.S. financial system.  40 years ago, this number was just a little bit above 2 trillion dollars.

-$70,088,625,000,000 - This is the total exposure that JPMorgan Chase has to derivatives contracts.

-$71,830,000,000,000 - This is the approximate size of the GDP of the entire world.

-$75,000,000,000,000 - This is approximately the total exposure that German banking giant Deutsche Bank has to derivatives contracts.

-$100,000,000,000,000 - This is the total amount of government debt in the entire world.  This amount has grown by $30 trillion just since mid-2007.

-$223,300,000,000,000 - This is the approximate size of the total amount of debt in the entire world.

-$236,637,271,000,000 - According to the U.S. government, this is the total exposure that the top 25 banks in the United States have to derivatives contracts.  But those banks only have total assets of about 9.4 trillion dollars combined.  In other words, the exposure of our largest banks to derivatives outweighs their total assets by a ratio of about 25 to 1.

-$710,000,000,000,000 to $1,500,000,000,000,000 - The estimates of the total notional value of all global derivatives contracts generally fall within this range.  At the high end of the range, the ratio of derivatives exposure to global GDP is about 21 to 1.

Most people tend to assume that the "authorities" have fixed whatever caused the financial world to almost end back in 2008, but that is not the case at all.

In fact, the total amount of government debt around the globe has grown by about 40 percent since then, and the "too big to fail banks" have collectively gotten 37 percent larger since then.

Our "authorities" didn't fix anything.  All they did was reinflate the bubble and kick the can down the road for a little while.

I don't know how anyone can take an honest look at the numbers and not come to the conclusion that this is completely and totally unsustainable.

How much debt can the global financial system take before it utterly collapses?

How recklessly can the big banks behave before the house of cards that they have constructed implodes underneath them?

For the moment, everything seems fine.  Stock markets around the world have been setting record highs and credit is flowing like wine.

But at some point a day of reckoning is coming, and when it arrives it is going to be the most painful financial crisis the world has ever seen.

If you plan on getting ready before it strikes, now is the time to do so.

 

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Thu, 06/12/2014 - 20:03 | 4850858 pauhana
pauhana's picture

Bend over and kiss your sorry ass goodbye!

Thu, 06/12/2014 - 20:12 | 4850879 jbvtme
jbvtme's picture

my social security check is low four figures

Thu, 06/12/2014 - 20:37 | 4850930 ZerOhead
ZerOhead's picture

Don't worry.... soon it will be up there in the 6 or 7 figures range.

Of course you will be unable to afford to eat anything other than cat food with anything less than 8 figures...

Thu, 06/12/2014 - 20:53 | 4850989 soylentgreenispeople
soylentgreenispeople's picture

Soylent Green is people.

Fri, 06/13/2014 - 00:35 | 4851578 prains
prains's picture

.....rehyperd'cated people

Fri, 06/13/2014 - 04:16 | 4851818 Boris Alatovkrap
Boris Alatovkrap's picture

Boris is struggle counting of zeros and decimals. Loving petro dollar!

Fri, 06/13/2014 - 07:29 | 4851948 Keyser
Keyser's picture

Soon Boris will need wheelbarrow to carry USD dollars for buying borsht and wodka... 

 

Thu, 06/12/2014 - 20:25 | 4850912 Tall Tom
Tall Tom's picture

Twenty Five to One leverage...That means that even a minor move in Interest Rates can wipe out a Large Bank's assets in a moment and cause widespread insolvency and defaults which...will collapse other Large Financial Institutions.

 

It is good that the Financial Wizards have all of this under control...

 

Just where would we be without them???

 

Mental Note...Do not mention China's Shadow Banking System and the Rehypothecation of the Aluminum and Copper that were collateral for the US Treasury Interest Rate Swaps...

 

 

Thu, 06/12/2014 - 20:58 | 4851008 fonzannoon
fonzannoon's picture

The 10yr went from 1.5% to 3% over a 6 month period last year and no one got wiped out...except for the emerging markets....but who needs em.

Thu, 06/12/2014 - 22:38 | 4851285 Frilton Miedman
Frilton Miedman's picture

 

 

 

The majority of existing mortgages are fixed, the large falloff in MBA mortgage applications has a lot to do with refi saturation, most homeowners have taken advantage of these rates.

Thu, 06/12/2014 - 22:46 | 4851314 Raynja
Raynja's picture

net its only a nickel sonny

Thu, 06/12/2014 - 21:22 | 4851100 beaker
beaker's picture

While reading this page, my anti-malware software picked up that a virus was trying to download off of this page. 

TYLER - DO YOU CHECK THESE FUCKING ADVERTISING SCRIPTS YOU PUT ON YOUR SITE??????????

Fri, 06/13/2014 - 00:51 | 4851599 OldPhart
OldPhart's picture

Similar, advised me that it blocked a pop-up.

Fri, 06/13/2014 - 04:15 | 4851817 StychoKiller
StychoKiller's picture

Betcha running Windoze on yer PC!

Fri, 06/13/2014 - 06:47 | 4851897 Curiously_Crazy
Curiously_Crazy's picture

Was thinking the same thing. Amazing how a computer several years old running Linux will do the equivelant of windoze with aero effects (and more) just as fast as an upper level new PC running that shitbox of an OS. Granted the efficiency of the coding has a lot to do with it, but so does not having to run anti malware/virus/crapware in the background all the time.

It's also amazing the amount of people on here that speak of 'freedom' and want removal of big gov etc that still use proprietary, tracked, software (and that applies to the Mac lovers as well)

Thu, 06/12/2014 - 23:08 | 4851381 spekulatn
spekulatn's picture

Nuthin butt a fukn buzz kill.

Thu, 06/12/2014 - 20:08 | 4850871 p00k1e
p00k1e's picture

We can get to a quadrillion easy. 

Thu, 06/12/2014 - 20:10 | 4850876 steelhead23
steelhead23's picture

So, after the next credit crunch decapitalizes the banks, the Fed will rush in and stuff a bunch more zeroes behind the banks' account balances - problem solved.  As long as OPEC is willing to take our funny money for their black gold, we're good to go.

Thankfully, the Fed can resolve this using electronic dollars, printing up 1.5 quadrillion dollars would deforest the planet!

Thu, 06/12/2014 - 20:55 | 4851000 Cetyc
Cetyc's picture

not to worry they've just found a brand new mega earth planet!

Fri, 06/13/2014 - 02:27 | 4851727 SeattleBruce
SeattleBruce's picture

Sounds like Krugman's Trillion dollar coins!  (and what about inflation?...)

Thu, 06/12/2014 - 20:11 | 4850877 Seasmoke
Seasmoke's picture

Well if we were 48 hours from total collapse in 2008......then it's guaranteed we will be 48 hours from total collapse soon again. 

Thu, 06/12/2014 - 20:24 | 4850909 p00k1e
p00k1e's picture

An outright collapse won’t happen.

Once the Romans ran out of numerals, they invented the over score.  We’ve got Intel and Moore's law. 

Thu, 06/12/2014 - 21:22 | 4851097 andrewp111
andrewp111's picture

The Powers That Be will enact a global Mark Of The Beast currency to make bank runs impossible and prevent total collapse. They will do it as an emergency measure when the system starts to implode..

Fri, 06/13/2014 - 02:30 | 4851730 SeattleBruce
SeattleBruce's picture

There's got to be some kind of plan in place, don't you think?  I'm not saying it's a good plan...perhaps involving the IMF, SDRs, etc...but I think it'll be a ROUGH landing as there are massive moving parts, and so many competing nations...(you mean the world has to cooperate on a scale never before seen to avoid the collapse...OR WAR...)

Thu, 06/12/2014 - 20:16 | 4850893 kchrisc
kchrisc's picture

So basically a giant upside down house-of-cards pyramid supported by a "printing" ponzi scheme.

Thu, 06/12/2014 - 20:24 | 4850910 nmewn
nmewn's picture

Yes.

And when the printing stops, the people will suffer. But fear not, the Keynesians will be along shortly to explain in very simple economic terms that if we halt it, we must hate crippled children, old people, fluffy kittens and are therefore sociopathic razzzists.

Its worked so far ;-)

Thu, 06/12/2014 - 20:32 | 4850925 sixsigma cygnus...
sixsigma cygnusatratus's picture

I've been saying for the last couple years that at some point, half the country will say "If you stop printing, we can't afford to eat," and the other half of the country will say "If you keep printing, we'll all be starving."

Thu, 06/12/2014 - 20:38 | 4850945 Miffed Microbio...
Miffed Microbiologist's picture

May be they will finally come up with the printing of food. Not that I would recommend eating it. Soylent green would be more nutritious.

Miffed;-)

Thu, 06/12/2014 - 20:45 | 4850960 nmewn
nmewn's picture

I think we're almost there sixsigma ;-)

Thu, 06/12/2014 - 20:18 | 4850896 Porous Horace
Porous Horace's picture

"...only 1.28 trillion dollars worth of U.S. currency floating around out there."

Only?

Only?

Only?

Thu, 06/12/2014 - 20:29 | 4850920 Amish Hacker
Amish Hacker's picture

Yup, "only," so it should be easy to declare all greenbacks null and void, and make the proles use plastic instead.

Thu, 06/12/2014 - 20:23 | 4850901 ebworthen
ebworthen's picture

Good thing central banks use public treasuries to prop banks that play craps with our progeny's future (NOT).

Would they gamble thus if they were not backstopped by central banks and governments?  (NO).

The bailouts of 2008-2009 only encouraged the addicts to shoot up more financial heroin.

End the bankster hegemony!

Stop the insanity!

End the FED!!!

Thu, 06/12/2014 - 20:57 | 4851004 BeetleBailey
BeetleBailey's picture

OR...

EXPAND THE FED....

PRINT EVERYONE MONEY!

EVERYONE MILLIONAIRES!

NO WORK....EVER!

FREE STUFF FOREVER....

SO THIS FUCKING SHIT SHOW CAN GOD DAMN CRASH ALREADY!!!!

Thu, 06/12/2014 - 21:33 | 4851128 juggalo1
juggalo1's picture

This is where you guys are so funny.  Why isn't it crashing?  When will it crash?  I thought after QE1 or 2 or 3 or x it would crash, but I was wrong again, and again, and again.

Thu, 06/12/2014 - 20:49 | 4850908 sixsigma cygnus...
sixsigma cygnusatratus's picture

If someone earned $500 Million per week, it would take a little over 40 years to get to $1.28 Trillion...let's just hike minimum wage to $10 Mil per hour!  Zimbabwe style.

Edit: ...a little over 49 years actually.  Here a $Billion, there a $Billion...who's really counting anymore?

Thu, 06/12/2014 - 21:00 | 4851015 DavidC
DavidC's picture

Or, to put it another way, if you'd spent one million dollars EVERY day since 0 A.D. you still wouldn't have spent ONE trillion dollars.

DavidC

Thu, 06/12/2014 - 20:26 | 4850913 Rican
Rican's picture

I'm no financial expert, but looks like everyone's bankrupt. 

Thu, 06/12/2014 - 20:32 | 4850923 Who was that ma...
Who was that masked man's picture

Gee, this looks bad.  I better go out and buy me another lottery ticket.

Thu, 06/12/2014 - 20:40 | 4850951 TheRideNeverEnds
TheRideNeverEnds's picture

Derivatives exposure is such an ambiguous term.  What is the actual notional risk on those things?

Fri, 06/13/2014 - 01:13 | 4851633 TomGa
TomGa's picture

Good point.  Isn't a lot of this exposure supposed to be offsetting?

Fri, 06/13/2014 - 02:39 | 4851738 SeattleBruce
SeattleBruce's picture

Rehypothecation means they're not offset.  The missing copper in China is cluing us off to just how bad the ponzi is...

Thu, 06/12/2014 - 20:43 | 4850956 ptoemmes
ptoemmes's picture

Can The Ponzi do a reverse split? Maybe a billion to 1.

Thu, 06/12/2014 - 20:50 | 4850983 Grouchy Marx
Grouchy Marx's picture

I don't fear the coming collapse. What I fear is the false reasons that will be given for why it happened, the gullibility of the uninformed masses, the demonization of innocent people and groups, and the system that will arise from the inevitable devastation to come. 

Fri, 06/13/2014 - 00:39 | 4851587 prains
prains's picture

welcome to ZombieCon......"How To Eat Your Face" will be discussed in Hall 6, be sure to browse the booths on your way to the lecture

Fri, 06/13/2014 - 03:09 | 4851767 kurt
kurt's picture

My biggest fear is the rapid fire decisions that will be made. For example, Bin Obama will be up telling us why it is important for us to accept a revaluation of the dollar 13 to 1, that is to the equivalent of the Mexican Peso. While at the same time we'll be told that the amount owed on our house will be 13 times higher, and that's rock solid because we have to honor our debts.

The banks will be pre-positioned, the govmint will be locked and loaded, the gun guys will be false flag demonized, we'll be terrorized into fearing our neighbor and our rights will be ABSOLUTELY stripped. The internet sweep now being compiled in UTAH by our friends at the NSA will simply put out the "detain" orders on YOU, and YOU, and YOU. Why? because you might be disruptive.

They'll have some new crooked finger Paulsen Goon there to tell you how grave and serious everything is... he of course will be tall, like Daddy. I vote for Tom Selleck dimples and all.

God damn it people do something before this charade of death and misery gets started!

Thu, 06/12/2014 - 20:52 | 4850986 swmnguy
swmnguy's picture

Maybe Mike should have used bullet-points rather than minus signs.  The point is the same either way, really.

Thu, 06/12/2014 - 20:54 | 4850996 Son of Loki
Son of Loki's picture
Older condos plagued by high maintenance costs

 

Practically speaking, condos will exist as a real-estate ownership option for as long as there are buyers willing to buy them — notwithstanding the inherent ownership related problems

 

Once the condo’s maintenance fees and realty taxes exceed the cost of comparative rentals, there will be no demand to buy it. Such condos will be reduced to rental inventory as buying into heavy maintenance units would make no sense.

 

http://www.marketwatch.com/story/older-condos-plagued-by-high-maintenanc...

 

This entire RE market would correct in a nasty downward plunge if not for the Scheme the Fed has going.

Thu, 06/12/2014 - 21:20 | 4851090 MuleRider
MuleRider's picture

Holy Googolplex, Batman!

Thu, 06/12/2014 - 22:13 | 4851221 Duc888
Duc888's picture

 

 

"At the low end of the estimates, the total exposure that global banks have to derivatives contracts is 710 trillion dollars."

 

The punch line is that the US taxpayers are the ultimate bag holders since apparently now the banks are all TBTF.

 

Hurry up boyz and gurlz, work, work, work, work, Produce, produce, produce, produce.

 

Meh, not me, I'm grinding to a halt. I 'd rather scrape by and do less work and pay much much less into this Ponzi.

Thu, 06/12/2014 - 22:16 | 4851224 elephant
elephant's picture

Please explain this to me: if the derivative contracts are triggered, who gets paid by the banks?  There will be some winners, right?

Thu, 06/12/2014 - 22:39 | 4851287 Cashcollateral
Cashcollateral's picture

Usually other banks. Financial institutions are the biggest holders of derivative contracts.

This is why using a notional number is scary-looking, but ultimately irrelevant in reality. The overwhelming majority of derivative contrats are bilateral, normally exchanging one set of payments for another. In an event of default, netting one payment against the other results in a loss that typically doesn't exceed 1% of the notional value. Even when Lehman went down, the actual money that changed hands was circa 1.6% of notional outstanding.

Then we come to the actual default probability on global derivative contracts. Even in the height of '09, the average rate of default was less than 4%. Most institutions settled their obligations calmly and went on their way.

So, applying real-world figures to the outstanding: USD 710tr notional of contracts outstanding. 1% exposure after netting gives 7.1tr. 5% rate of default gives USD 355bn in potential outstanding in a default event. While still a large number, hardly terrifying in context of the global finance industry (eg, JP Morgan alone has USD 2.5tr in assets).

Getting really sick of people making such a big fuss about derivatives. It's just grabbing at the biggest number you can find to try and scare people without putting anything into context.

Thu, 06/12/2014 - 23:29 | 4851443 Oldwood
Oldwood's picture

So if their return is that low, what justification is there in their purchase. Its like buying worthless life insurance. What good is it if ultimately it is worthless?

Fri, 06/13/2014 - 08:45 | 4852184 headhunt
headhunt's picture

Fees now - worry later

Fri, 06/13/2014 - 01:30 | 4851662 Tall Tom
Tall Tom's picture

Ok. Goldman Sachs holds $48 Trillion.

 

What is 1.6% of $48 Trillion??? How many assets, in DOLLARS,  does Golman Sachs hold on the books?

 

Now you admitted that the 1.6% took Lehman Bros. down. Have you ever considered a Cascading Effect of the Dominos falling? The fall of Lehman Bros. FROZE CREDIT MARKETS. The Banks could NOT TRUST EACH OTHER.

 

So it is okay in your mind for a REPLAY of 2008???

 

What do you fail to understand about the article?

 

THE PROBLEM IS NOT FIXED. THAT IS THE FUCKING POINT.

 

 

Thu, 06/12/2014 - 23:05 | 4851373 AdvancingTime
AdvancingTime's picture

 The more and more I study derivatives it now appears the main goal of QE may have been to hold up the underlying value of assets that feed into and support the massive derivative market more than help the economy. QE has up to now stopped an implosion of derivatives and the resulting contagion and shock that would have spread throughout the financial system. In postponing this collapse the Fed has created a whole slew of new problems. More on this subject in the article below. 

http://brucewilds.blogspot.com/2014/03/derivatives-house-of-cards.html

Thu, 06/12/2014 - 23:22 | 4851430 telefunken
telefunken's picture

Please excuse my english not good. I was watching tv when phone rang-"world economy is kill" no!

Fri, 06/13/2014 - 09:29 | 4852449 garcam123
garcam123's picture

Last Line of the article says "If you plan to get ready, now's the time to do it"

 

What the fuck does that mean?  I can't phsicall bend over far enough to kiss my own ass goodbye!

I'm just a retired slug tryin to live on the misrerable pittance that social security after all of my investments simply went to valueless in the 2001 dot com crash.

How the fuck am I going to prepare......Oh I know....take the hose and hook it up to the tailpipe then tape the other end through the window.......

Thanks for the warning.

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