You’ve probably heard of derivatives. In 2021, they were reportedly worth $600 trillion in face value. Some critics say it was only $12.4 trillion if you count only the money “netted.” By comparison, the entire U.S. national budget in 2021 totaled $6.8 trillion.
“Derivative” as an adjective means to be hackneyed and stale or even plagiarized or stolen. So how can a small group of Wall Street banks, hedge funds, private equity and investment firms make trillions selling and trading in derivatives, and not necessarily the stuff they’re derived from? What are they exactly?