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As the Wall Street Oligarchs move closer and closer to destroying the entire global financial system with their own greed-bloated casino (otherwise known as the derivatives market), this has had the unintended consequence of beginning to create awareness in the general public about what Warren Buffet dubbed “financial weapons of mass destruction”.

With the beginning of such awareness, it’s now possible to discuss and explain how these paper instruments function – without immediately causing the eyes of most readers to glaze-over as they are overwhelmed with jargon.

In their simplest form, “derivatives” are self-explanatory: they are financial instruments derived from something which exists in the real world. When Western bankers inflicted the derivatives market upon us, they billed it as a means to “increase liquidity and reduce risk”. In fact, the bankers have used this totally opaque market to make the largest, most reckless bets in the history of humanity (i.e. to increase risk dramatically)  – which is how this paper “bubble” has swollen to somewhere around the $1.5 quadrillion level (more than twenty times as large as the entire global economy).

We can no longer attach precise numbers to this market, ever since the Bank for International Settlements changed its “definition” of this market – which magically shrunk it to 1/3^rd its previous size, overnight. Of course with the BIS being nothing but a money-laundering institution to facilitate the bankers’ involvement with the (illegal) drug-trade, it has never been a credible source for information.

Previously, the BIS had always specialized in being a money-launderer for the (illegal) arms trade. This began with the creation of the BIS as a Western  money-launderer to allow the U.S. to keep supplying Hitler with arms – after it was no longer “politically correct” to do so openly. Thus, we must take any/every “fact” presented to us by the BIS with an enormous “grain of salt”.

Prior to the BIS changing its definition, and during the Crash of ’08, Wall Street banksters were steadily ramping-up their bets in this market. To suggest that such betting has dropped-off (after the supposed “U.S. economic recovery” began) totally lacks any plausibility. In short, the derivatives market is now nothing more than “the Mother of all Ponzi-schemes”. It must implode, it will implode, and when it does, the banksters will simply get central banks to print-up $trillions in new “money” to “re-capitalize” themselves – with the “little people” being stuck with the bill.

It is important to understand that the derivatives market is nothing but a huge scam, being deliberately pumped up further and further (until it bursts) in order for us to fully understand another one of the banksters “derivatives”: paper currencies.

Readers must realize that until Nixon defaulted on the U.S.’s “gold obligations” to the rest of the world (and the quasi-gold standard ended) that our currency was real “money” and not merely a derivative of money. As sophisticated precious metals investors understand, gold and silver are “stores of value” (which is the most important quality of real “money”). Thus any currency which is at least partially “convertible” to gold or silver also qualifies as “money”.

In other words, pre-1971 currencies were not “derivatives” because of the fact that they were directly convertible to gold (via converting their currency/wealth to U.S. dollars, and redeeming those dollars through the U.S. government). Thus those currencies were not “derivatives” of real money, but actual money themselves. That all changed in 1971.

Post-1971 paper currencies are now “convertible” to nothing. The paper itself is obviously worthless. Thus, in any and every sense, the scraps of paper we carry around in our wallets today are pure “derivatives” – derivatives of money. This becomes even more obvious once we see how this currency supposedly derives its value.

To attempt to artificially create some “value” out of obviously worthless paper, all paper currency is now created through the issuance of debt. Specifically, (private) central banks have been given a “monopoly” to print up all of our currencies (out of “thin air”), and then by “lending” this worthless paper to our governments (and charging us interest on this worthless paper), this supposedly bestows “value” to these currencies.

What this means is that the only way we can now attach any intrinsic value to our paper currencies is to think of them as “IOU’s”. The obvious question is “I owe you what?” The equally obvious answer is “nothing”. If we seek to “redeem” these paper IOU’s, we immediately see that they can only be “redeemed” for more paper.

Clearly, any/every IOU for which “repayment” (or redemption) is simply to be handed more IOU’s is totally worthless. If someone borrows “money” from us, we want to repaid in money – not more paper IOU’s. It is a Ponzi-scheme on the grandest of scales, and yet as blatant a scam as it is massive.

As with the derivatives market, these paper derivatives were created to fail. After less than a century of this reckless money-printing, the U.S. dollar has lost well over 95% of its value. Indeed it is the process of driving these paper currencies to zero which is the primary tool which the bankers use to steal from us. They are handed all of our new “money” fresh off of the printing press – before the inevitable process of dilution begins.

For every (worthless) dollar the bankers receive hot off of the printing press (which is already a form of “dilution”), they lend-out ten more dollars (to us). This automatic ten-to-one dilution (i.e. counterfeiting) is known as “fractional reserve banking” or simply “stealing”.

Not only was the original paper worthless, but then it is subjected to the ten-to-one dilution in the hands of the bankers (or more), and then it is lent to us – and we are expected to pay interest on it. Obviously, charging people “interest” on an asset which was totally worthless before it was diluted is a greater scam than when American settlers acquired Manhattan for the mythical “beads and trinkets” – which clearly had more intrinsic value than the worthless scraps of banker-paper we carry in our wallets. It is a scam which netted the Federal Reserve $81 billion, last year alone.

If I was to ask one hundred ordinary people the question “would you invest in the derivatives market?”, I would expect to get back at least ninety-nine negative replies. And yet every time we allow our employers to give us nothing but a stack of banker-paper in return for our week’s labour, we are involuntarily “investing” in the derivatives market. Every time we sell some asset of value for a stack of banker-paper, we are “investing” in the derivatives market.

In other words, when people contemplate whether to purchase precious metals with their banker-paper they must understand the precise nature of this implicit choice: do we “invest” in the bankers’ paper derivatives (which were created to be driven to zero), or, do we invest in precious metals – which have held their entire value for thousands of years?

This explains the most obvious reason why we are continually subjected to vast amounts of anti-gold propaganda: as with any scam, truth and information are the “enemies” of these con-men. If we convert our banker-paper (i.e. derivatives) to gold and silver, we place our wealth in a vessel from which the banksters can’t steal it. This is intolerable to these serial-thieves, and explains why they are so obsessed with manipulating this market, despite its relatively trivial size in relation to the global economy.

If I say to ordinary people “derivatives must be shunned at all costs”, they will nod their heads in agreement – and wonder why I had bothered to state so obvious a premise. Hopefully when I now remind people that their wallets (and bank accounts) are full of derivatives, my warning will be considered more carefully.

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written by redpill, January 14, 2011

Hi Jeff,

the masses will wake up - it's very easy - the elite is doing this for us (after the people have lost all their live savings!).

Yes, we are a tiny minority, but you can also see it positive:
SILVER IS NOT IN A BUBBLE...

Go on with your great work

kind regards

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written by Jeff Nielson, January 13, 2011

Hi Redpill. Thanks for your comment (and support). I actually spend quite a bit of time "networking" with German readers - since out of all Western nations they seem to have the MOST sane attitude (i.e. a sense of horror) toward the bankers' reckless money-printing.

So when you say that even in GERMANY the "silver bulls" are only a tiny minority, then I must wonder if all hope is lost (lol)?

"Group think" has always been a problem with our species. With the bankers now DELIBERATELY bombarding us with their propaganda, it will not be easy for the masses to break-away from that brainwashing.

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written by redpill, January 13, 2011

Hallo Jeff,

this is my first comment, but I can ensure you, that I have studdied your work not only on this webside but also on Youtube (interviews with SGTBULL07). Let me first congratulate to your excellent articles. May be you know Günther Hannich, a well known investment advisor in Germany. He wrote, that silver and gold are not money, because you can't buy anything at the supermarket with it - what a hoax! It is unbelievable but the sheeple listen to those "experts". I have found out that we (silverbugs)are
a absolut minority. In Germany less than 0.1% of the households own any silver and when I tried to inform friends or familymembers about the the financial system and/or the NWO-agenda they called me a pessimist or even worse.
What else can I say - I feel very fine with my (silver)-maple leafs.

btw. I found this webside because Walter K. Eichelburg from www.hartgeld.com has linked some of your articles in the past.

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written by Jeff Nielson, January 12, 2011

Mathnerd, give me some time with that question you tacked-on at the end.

You've aroused my curiosity, which means the dreaded "R" word - research.

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written by mathnerd, January 12, 2011

Very true Jeff.

The sheeple always think the things they’re used to are there because they’re beneficial. I’ll leave it to smarter people whether most things in our daily life are good. But then there’s the insidious cancer that we call “paper money.”

I hope we'll carve this tumor out of society before it's too late, but the odds are against that.

Incidentally, does anyone know how the major depression 3 centuries ago ended? Personally I'd guess the American Revolution had a part in the ending.

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