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RE: All Of The World's Money And Markets In One Visualization

in #money7 years ago

If I am interpreting this data correctly (which I'm probably not) the numbers don't add up at all.
Event taking fiat currencies and balances in regular banks along with gold doesn't come close to the supposed value of artificial financial products.
If I'm not mistaken this graphs mean that there is supposedly more value stored in derivatives than in the actual currencies of all the countries in the world put togather.

On top of that, is scares to think about what exactly gives value to the stock market. Unless stocks are giving huge dividends, those seem to be extremely overpriced.

Somebody please correct me if I'm wrong

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Money isn't 'stored' in derivatives. The notional value of derivatives (what is displayed in the graph) is the potential value the derivatives could have, if the transactions they are hedging go bust.

The face value of derivatives is about $20T, which is the value 'stored', or expended for them, in the normal course of business - meaning the markets they are hedging don't go bust.

That's a very simplified explanation of derivatives, which is hampered by the very diverse nature of the instruments. I hope it helps you to understand how there can be such a huge 'notional' value of derivatives.