Emersons Financial Eve of Destruction Board Message Board

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Politics : Emersons Financial Eve of Destruction Board

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To: Proud Deplorable who wrote (9)	9/24/2007 12:45:57 AM
From: tyc:>	Read Replies (1) of 15

Thanks RE. Every loan that creates more money, is backed by a deposit. Indeed, only a percentage of each deposit is loaned, the remainder being held as "reserve". But I don't think that's the kind of backing you had in mind ? Therefore I'm inclined to believe that money is indeed a derivative. If I'm right, then derivatives may not be mysterious, but rather logical commonplace entities... what is more commonplace than money ? It is easy to place a value on money, for it is valued in terms of itself, a buck is a buck. Some assets are more difficult to evaluate. I think it was Warren Buffett who said it's easy to establish value; just throw 20% of your holding of the asset on to the market. Does the absence of a market for the asset signify no value ? I don't think so. Nevertheless people are reluctant to hold any asset for which there is no established market or valuation. Hence the credit crunch. But this reluctance extends to all assets, not just derivatives. I can think of many derivatives that ARE traded on an established market. Surely for these there is no problem, and no credit crunch. Perhaps the topic warrants thought and discussion. What do you think ?

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