For years there has been much talk about how "Derivatives" are a gigantic problem, and if Derivatives Markets collapse, it is the end of the financial world as we know it.  We looked at Bank exposure to "Derivatives" and below is a list that will likely frighten you.  US Banks are on the hook for two Quadrillion dollars, in "Derivatives."  Is **YOUR** bank on this list?   If it is, ask yourself "If they LOST all this money, would MY money still be safe in this bank?" Act accordingly.

Below is the list of United States banks and how much exposure they have to "Derivatives."  Two quadrillion dollars is the total notional value of derivative contracts off-balance sheet. Need collateral.

It’s notional. Not sustainable. Triffins dilemma. Dollar shortage. More collateral. But from where?

Of course, net notional value is completely different than directional risk.  Just seeing these numbers does NOT indicate how much the bank itself is on-the-hook for. 

Moreover, there is still value in the underlying commodities for many of these derivatives.   People that think these are all bilaterally netted (Hedged) and those people are partially correct.  But that bilateral netting will lead to the complete collapse of equities markets.

The numbers are utterly staggering and logic dictates the banks with the highest exposure, have the most to lose.  

Being that derivatives are interest rate sensitive, for most of these banks, it’s a doomsday scenario.

The majority of people don’t understand monetary inflation let alone derivatives.  So think of it like this:  Derivatives are IOU’s backed by other IOU’s. Hustling fast money by selling chickens before they hatch, 5 generations in advance, hoping all the eggs hatch because the money was already spent on fees for a loan to pay interest on credit card debt.

Below is a graphic known as Exeter's Pyramid.  It shows financial risk from the safest, GOLD; to the least safe: Derivatives.

Banks Ranked by Derivatives

The following is a ranking of all banks in the United States in terms of "Derivatives". This comparison is based on data reported on 2022-06-30.

You can verify these numbers through the Office of the Comptroller of the Currency (Page 18) HERE