[GUEST ACCESS MODE: Data is scrambled or limited to provide examples. Make requests using your API key to unlock full data. Check https://lunarcrush.ai/auth for authentication information.]  Echo 𝕏 [@echodatruth](/creator/twitter/echodatruth) on x 68.2K followers Created: 2024-05-25 17:18:31 UTC 👿The Devil's Playground 👿 The world of finance is often filled with complex instruments and practices, and derivatives are some of the most influential among them. These financial contracts, whose value is based on underlying assets like stocks, bonds, or commodities, are essential for managing risk and ensuring market efficiency. However, how derivatives are used today raises significant concerns, especially when banks take on excessive leverage—sometimes as much as 100x their actual capital. Overleveraging means borrowing far more money than the value of your assets can reasonably support. In the high-stakes world of derivatives, this can create a house of cards, where even a small dip in asset values can trigger massive financial losses. Banks, driven by the lure of higher returns, frequently overleverage themselves. This means they are taking on risks they can't handle, setting themselves—and the broader financial system—up for potentially catastrophic failures. As one user on X @DaveHcontrarian said, "There's excess leverage in lots of places & it's global. Just as we saw last spring, negative surprises can come fast. Every cycle is different. There are plenty of potential triggers." This overleveraging doesn't just stay within the confines of banks' balance sheets. It spills over into the real economy, affecting things like commodity prices. Gold and silver, for instance, often see their prices manipulated by central banks and prime brokers using derivatives and swaps. By leveraging up to extreme levels, these institutions can push prices down, harming investors and distorting the market. We saw the devastating effects of overleveraging during the 2008 financial crisis. The collapse showed how interconnected and fragile the financial system could be when overloaded with debt. Yet, despite this stark lesson, it seems not much has changed. Banks continue to engage in risky overleveraging, raising the specter of another crisis. Banks' misuse of derivatives and excessive leverage pose serious risks to the global economy. These practices can create financial instability and send misleading signals to the market, making it hard for investors to make sound decisions. It's crucial for regulators and financial institutions to step up and address these issues, ensuring that the financial system remains stable and trustworthy. In essence, while derivatives can be powerful tools for managing risk, their potential for misuse—especially through excessive leverage—makes them a double-edged sword. The stakes are high, and the need for prudent regulation and oversight has never been more critical. "Know What You Hold!!!" #echodatruth #didyouknow #Gold #Silversqueeze  XXXXXX engagements  **Related Topics** [stocks](/topic/stocks) [finance](/topic/finance) [world of](/topic/world-of) [Post Link](https://x.com/echodatruth/status/1794417776099995818)
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Echo đť•Ź @echodatruth on x 68.2K followers
Created: 2024-05-25 17:18:31 UTC
đź‘żThe Devil's Playground đź‘ż
The world of finance is often filled with complex instruments and practices, and derivatives are some of the most influential among them. These financial contracts, whose value is based on underlying assets like stocks, bonds, or commodities, are essential for managing risk and ensuring market efficiency. However, how derivatives are used today raises significant concerns, especially when banks take on excessive leverage—sometimes as much as 100x their actual capital.
Overleveraging means borrowing far more money than the value of your assets can reasonably support. In the high-stakes world of derivatives, this can create a house of cards, where even a small dip in asset values can trigger massive financial losses. Banks, driven by the lure of higher returns, frequently overleverage themselves. This means they are taking on risks they can't handle, setting themselves—and the broader financial system—up for potentially catastrophic failures. As one user on X @DaveHcontrarian said, "There's excess leverage in lots of places & it's global. Just as we saw last spring, negative surprises can come fast. Every cycle is different. There are plenty of potential triggers."
This overleveraging doesn't just stay within the confines of banks' balance sheets. It spills over into the real economy, affecting things like commodity prices. Gold and silver, for instance, often see their prices manipulated by central banks and prime brokers using derivatives and swaps. By leveraging up to extreme levels, these institutions can push prices down, harming investors and distorting the market.
We saw the devastating effects of overleveraging during the 2008 financial crisis. The collapse showed how interconnected and fragile the financial system could be when overloaded with debt. Yet, despite this stark lesson, it seems not much has changed. Banks continue to engage in risky overleveraging, raising the specter of another crisis.
Banks' misuse of derivatives and excessive leverage pose serious risks to the global economy. These practices can create financial instability and send misleading signals to the market, making it hard for investors to make sound decisions. It's crucial for regulators and financial institutions to step up and address these issues, ensuring that the financial system remains stable and trustworthy.
In essence, while derivatives can be powerful tools for managing risk, their potential for misuse—especially through excessive leverage—makes them a double-edged sword. The stakes are high, and the need for prudent regulation and oversight has never been more critical.
"Know What You Hold!!!"
#echodatruth #didyouknow #Gold #Silversqueeze
XXXXXX engagements
