Is there any way to stop inflation? I realize nobody wants their bank account to be invisibly taxed, but I don't think there's really a good way to
stop it -- and besides, the banks which are responsible for lending out money, which increases inflation, also give you a portion of the profits. --
So as far as your bank account is concerned, if you want "no inflation," that also means you don't want interest payments on your savings
When I first became acquainted with fractional-reserve lending, I was outraged. I thought it was the biggest fraud on the planet -- as that was indeed
how it was portrayed. However, that was nearly a year ago, and having become more knowledgable on the subject, by doing my own homework, I can't see
a major problem with it.
Inflation means your dollar buys less, but that is because the amount of goods in the system has not increased with the amount of money. That is a
natural consequence of being able to take out a loan for a new house, a car, or a business. It also ensures lending institutions can gamble on a
basket of business ideas, which in theory leads to productive industries, which makes all our lives better. What does the bank get in return? All they
ask for is their original loan back, plus a little extra, which is payed to themselves and their depositors (you and I). It's the banks job, however,
to make sure that the business plan is sound and safe. That's what they get paid to do -- make those kinds of analyses.
I recently began investing in stocks -- how recently? 11 days before the crash in September! Boy, what a historical time to get involved, huh? Well
I've learned a lot in this category as well: One thing you learn about rather quickly is what put/call options are. Investopedia explains them this
What Does Put Option Mean?
An option contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying security at a specified price
within a specified time. This is the opposite of a call option, which gives the holder the right to buy shares.
What Does Call Option Mean?
An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument at a specified price
within a specific time period.
These are two examples of derivatives. Each put/call contract represents 100 shares of an underlying stock (usually). 1 put contract for a 100$/share
company would represent a potential for a 100$ gain X 100 shares (100$/share X 100 shares per put contract). That's 10,000$ from derivatives, if the
stock were to crash down to 0 dollars. If you buy call options, instead, and the stock goes from 100$ to 200$, that's a 10,000$ gain. In reality, of
course, it's not quite 10,000$, because there is a fee payed to the writer of the derivative, who is taking the risk of putting the put/call option
on the market in the first place. That fee is something he/she will keep, no matter what happens to the derivative contract; also there are millions,
if not billions or more, of these derivative contracts floating around, and you can buy derivatives for almost anything, not just stocks.
Now the question in my mind, is what does the author of this youtube video consider to be derivative money? Is it the potential in gains/losses of the
contract (IE, the 10,000$ gain)? Is it the fee payed to the writer of the derivative? Is it the current market value of the asset being tracked by the
derivative? Depending on what you mean by "money in derivatives," which only represent the potential gains/losses, then I can see how his 1Q$ figure
in negative gains might be true. However, it still doesn't "work" quite the way he describes it. Those derivatives are tracked by an underlying
asset, which is sold/bought depending on what happens in the future. So there would need to be 10 earths being "gambled on" in the market, for this
to be true.
Correct me if i'm wrong