Is $203T in derivatives held by top banks causing an ‘everything bubble’?

The underlying value has been spoken for a long time ago.

The derivatives are the bets being placed on the performance of that (remaining) underlying value.

Kind of like private gamblers on a horse race putting up more money amongst themselves than the entire prize package for the actual participants in the race.

These are two completely separate groups anyway.

It could be worse, it could be a rat race.

Oh, wait . . .

It's notional. The actual quote from the report [1] is

  > Derivative notional amounts decreased in the third quarter of 2023 by $17.7 trillion, or 8.0 percent, to $204.2 trillion.

The vast majority of all these derivatives are collateralized, and the collateral is updated daily. They are also subject to some form of extra collateral called (improperly) "initial margin", so in case one bank goes down for some reason, it doesn't take its counterparties with it.

[1] https://www.occ.gov/publications-and-resources/publications/...

> everything bubble except gold , oil, and other commodities

and wages for everyday working joes

but Nvidia tho

Everyone talks about inflation. We need a new term.