Great chart here. Shows how small gold and bitcoin are today within the world's monetary system. Both have multiples to run but it will take a long time with or without a crisis.
The derivatives are denominated in money, they cost money to purchase or to honor the contracts and they have been shown to have the ability to bring down the financial system because they create systemic risk.
In software terms, it's the equivalent of tight coupling of all your components. Instead of letting a buggy (e.g. insolvent) component (e.g. underwater mortgages) crash on their own, the tight coupling (via derivatives like CDOs and CDS's) brings down the whole system.
@jcbrand They are denominated in money, but they are not. If I buy a derivative for $100 from you, I have a derivative paper with a "value" of $100, but my $100 is in your hands. So you have the money, I don't.
I'm not arguing against the fact that they can have grave effects on financial stability or the fact that they are strongly inflated and underregulated.
Generalistic and moderated instance. All opinions are welcome, but hate speeches are prohibited. Users who don't respect rules will be silenced or suspended, depending on the violation severity.