America
is a very complex place in which highly technical things affect the lives of
Americans. Many Americans could not begin to describe what derivatives are or what
financialization means -- even though these
very powerful economic forces affect almost every aspect of life today. All
we have to do is look around and it is obvious that people are plugged into the
Internet everywhere. How many of them understand how it works and who is in control
of the information flowing into their smartphones and computers. Forget trying
to explain what’s going on in the political, legal and medical domains of life.
Yet all of those things combined control our lives in many ways -- options to succeed that we have or barriers
that block us from success – and making the structural changes that must be
made to repair our nation.
Trying
to figure out how to overcome this information gap problem is a challenge that we
have been wrestling for a long time. We have tons of technical data that people
really need to know, but we know that when we try to share it in discussions
and meetings, we lose our audience in just a few minutes. Below is an example
of what we are talking about. Grasping the importance and meanings of three
figures are absolute requirements for just perceiving the existing state of the
economic environment and finding solutions to economic problems.
The
first figure comes from the Bank of
International Settlement’s Statistical
Release: OTC derivatives statistics at end-June 2014. I will highlight
certain terms and figures by underlining and bolding them.
OTC derivatives markets contracted
slightly in the first half of 2014. The notional
amount of outstanding contracts totaled $691 trillion at end-June 2014.[i] The
interest rate segment
accounts for the majority of OTC derivatives activity. For single currency interest rate derivatives at end-June 2014,
the notional amount of outstanding contracts totaled $563 trillion, which represented 81% of the global OTC derivatives
market.[ii]
$691,000,000,000,000.00
(trillions of
dollars)
Do
you have a clue as to what that figure means? None of do and that’s one reason
we are so easy to manipulate and control. The graphic below will make the
figure $1,000,000,000,000.00 more comprehensible. Just keep in mind that what
we are actually talking about is 691 time larger.
The
second figure is $17,418,900,000,000.00
-- the 2014 US GDP (Gross Domestic Product). GDP
refers to the market value of all
final goods and services produced within the United States of America in 2014.
It would take almost 40 years of work by Americans to produce final goods and
services, at the current rate, worth $691 trillion dollars.
Hang in there
and don’t doze off yet.
A
quick note with some facts you need to be aware of:
(1) The
OTC Derivatives Markets are unregulated and unreported.
(2) The
OTC (Over The Counter) here isn’t
the one listed along with the New York Stock.
(3) Derivatives
did not exist before the 1970s.
The
third figure $22,000,000,000,000.00 –
the total amount of actual currency
that exists in the world today. No one really knows exactly what the figure is,
but this is a good educated guess.[iii]
Becoming aware of the importance and meanings of the three figures below are absolute requirements
for perceiving the existing economic environment. We must be able to see what exists before we will be able to formulate options for addressing
existing problems. Until now, have you considered these figures in your
thoughts or discussions concerning economic problems?
$22,000,000,000,000.00
$17,418,900,000,000.00
$691,000,000,000,000.00
Now
you are aware of them. That was the goal for this blog. There is
much more we need to be aware of before we begin discussions that address specific problems.
Making people aware of information like
this, providing educational resources and networking people together through
values-based relationships is why we created the TOV Center. We hope you will agree and join the journey with us.
Do
you agree that there is an urgent need for the TOV Center’s mission and vision today?
If you do, let us know by going to the TOV Center Facebook Page and “Like It” by clicking here. Check our Facebook page often and watch for exciting
information about upcoming events & TOV Gatherings.
Shalom,
Jim Myers
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.