"F. George McDuffee" wrote in message
...

snip

The Spondulick $USV denominated economy appears to dwarf the real
$USR economy. The real GDP is estimated at 13+ trillion [10^12]
$USR per year, while the Spondulick economy is estimated to total
over 10 times that amount [c. 170 trillion [10^12] "$USV"]

John, Ed, and everyone else -- comments?

The "Spondulick" numbers are the enormous ones that have people alarmed, but
I have to wonder what happens when someone tries to "withdraw" or cash out
those paper values and they can't be cashed, because there's nothing behind
them except the defaulted mortgage or whatever and some small margin of
reserves. I haven't thought too much about it but it appears to me that most
of it exists in the form of bonds and other real securities that simply have
lost their value, plus CDS's that are actually insurance that some real
asset will be recovered if there is a default on the real securities. From
what I can see, CDS's in themselves don't result in deposits that can be
drawn upon, like loans from a bank, so the "money" that they add to the
economy is completely ethereal. They may serve as collateral but I don't see
how; the original security may be collateral and the CDS is just something
that insures its value. But the CDS doesn't seem to add value beyond
decreasing the interest one might have to pay because of the risk of the
original security. They are supposed assets but they don't, as far as I can
tell, actually add the amount of their face value to the money supply.

But, again, I haven't tried to follow the interconnections of these
financial devices with any thoroughness. It looks to me like a lot of people
could lose their shirts but the decline in assets that affect the money
supply can only equal the original dollar amount that was invested, not the
Spondulick numbers.

However, the subject is so complicated that trying to pull it apart at this
late date is futile for a non-specialist like me, so I'm not going to try to
learn one piece at a time when you can only understand the implications of
all of these securities and transactions by understanding the whole system.
Even the specialists seem to be having trouble with that, themselves. d8-)

--
Ed Huntress