The whirlpool of speculation

Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.
        ==John Maynard Keynes

Double click to enlarge

Financial derivatives are a security not backed by any tangible asset.  Buying and selling derivatives is no different from gambling.  Notice how much larger is the market in derivatives than the market in stocks and bonds of actual companies.

The chart is from an article in Der Spiegel, the German news magazine.  Der Spiegel says out-of-control world financial markets make another economic crash virtually inevitable.

Click on Out of Control: the Destructive Power of Financial Markets for an English translation of the complete Der Spiegel article.   It is well worth reading in its entirety.

Hat tip to The Big Picture.

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