You keep missing the point, Arjay.

>>This represents $285,000 for every person on the planet and they are woven into the real productive market.<<

Try reading this Slate article all the way through - it shouldn't take you long.

http://www.slate.com/articles/news_and_politics/explainer/2008/10/596_trillion.html

The article was written in 2008, so the figure they use - $596 trillion - could well have moved today to the $2,000 trillion you refer to. But, as the article points out, this is an aggregate of all contracts, puts and calls, and therefore is not a measure of exposure at all.

"Within that $596 trillion are derivatives that effectively relate to the same assets—if you have a contract to buy euros in January and I have one to buy euros in April, we may end up buying the same currency, but its notional value will get counted twice. Moreover, in many instances, the "notional amount" is just a benchmark that never even changes hands—as in the case of the interest-rate swap, by far the most common type of derivative. Likewise, because derivatives are often used to hedge risks, there's a good probability that many contracts in the system essentially cancel one another out."

As the Financial Times put it, in the same year...

"Gross numbers are no basis on which to estimate the impact of the market in credit derivatives; net exposure is the place to start."

Hope this helps calm your fears.

Pericles I've seen people who deal in them interviewed and they don't understand the ramifications.$596 trillion is still 8 times the GDP of the planet. If our banks were healthy,they would not need to deal in them. The market is based on faith and once the panic hits,there no amount of QE will save it.

You are still missing the key point, Arjay.

>>$596 trillion is still 8 times the GDP of the planet.<<

It doesn't matter a fig whether it is $596 trillion or $2,000 trillion. The important number is the difference between the puts and calls.

Let me make it very, very simple.

There's this guy in the pub tossing a coin. One onlooker bets $10 it will come down heads, the other bets $10 it will come down tails.

If it comes down heads, one guy wins ten bucks, the other one loses ten bucks. But the total amount of money in the pub has not changed by a single cent.

You would understand all of this if you read some factual documents, instead of echoing the garbage you find on conspiracy web sites.

Arjay, if so many assets are overvalued, wouldn't the bursting of those bubbles cause prices to go down, not the opposite, hyperinflation?

Very good and has many improvements exciting new.