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Chapter 9: Bail-ins, Derivatives, & Employment

Derivative contracts are a part of the Futures Market
because the results will take place in the future.

Suppose we make a bet on the weather a month
from now. I say that it will rain, and you bet that it will
not rain. We then draft a contract binding our agreement
based on this future event. Whoever owns this piece of
paper on the specified day and is on the winning side of
the bet, collects money from the other party. Investors
enter into derivative contracts over the price of stocks,
agricultural products, foreign exchange rates, or
anything else.
The G20 resolution of 2014 ensures that your
life savings will be wiped out in the case of a meltdown
in the derivatives market. Rather than reining in the
trillion dollar derivatives market, the resolution prior-
itizes the payment of bank’s derivatives obligations to
each other ahead of everyone else.
One of the hardest hit will be state pension and
health-care funds who participate because they are
woefully underfunded. For example, states have almost
no money saved up for future retiree health-care costs.
This bail-in rule institutionalizes the “Too Big to Fail”
concept of the Dodd-Frank Law by allowing banks to
stay in business by expropriating creditor’s funds.
Bail-ins started elsewhere, but the United States
is the most vulnerable because of the Dodd-Frank Act
made derivative claimants go first when banks fail.
Deposits are insured by the FDIC up to $250,000 per
account, but the FDIC fund would be inadequate in a
major economic meltdown. Besides, the FDIC stands in
line behind derivatives and state and local bonds in the
event of a collapse. So derivatives have superiority over
creditors; creditors are shareholders and bondholders,

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