Ellen Brown Bank expert or idiot?

[NYGman]

http://usawatchdog.com/big-banks-will-t ... len-brown/

Need a little help, thought I would ask here. A friend posted the above link and is worried the banking system will collapse due to derivatives, and I think this lady is basically an idiot. In fact I see many parallels to tax protesters and Freeman in her way.

1. She seems to be mixing financial concepts and doesn't seem to have a grasp of economics at all. Although she seems to know the big words.

2. She doesn't seem to have any economic, regulatory, or banking background. She has an English degree and a JD, but seems to have a 10yr gap in her LinkedIn profile.

3. She writes and published her own books, that I may add, have some enlightening Amazon 1 star reviews or this or or this and the rest
4. She dabbles in alternative medicine
5. She formed her own public bank think tank, and believe in interest free inter government lending I think (mostly gibberish)
6. She has an exhaustive blog, does internet TV and radio.

So thoughts? Freeman of the Economy or just Dunning–Kruger. If you agree with me, idiot, how can I best persuade them the error of their way, and that derivatives are not going to bring the banking system crashing down.

[notorial dissent]

I would suspect that the place to actually start would be whatever it is the G20 is supposed to have put forth. You will notice I say "supposed to have put forth" since I have seen a lot of sputtering and spewing by people at various times over various things that never really happened but that someone said had.

[Judge Roy Bean]

I would not dismiss her and her merry band of economic thinkers too abruptly. She has been right on at least one issue all along - the TPP. Having said that, her crystal ball is no better than anyone else's.

Then again, if you put any seven economists in a room and ask for their opinion on a subject, you'll get at least eleven opposing views.

[NYGman]

Even a stopped clock is right twice a day. I have no issue if she were an economist I didn't agree with. However, she is neither an economist nor an expert, yet she poses as both.

Reading more of her stuff, I can't believe she isn't influenced by some of the save things out freemen are

[wserra]

if you put any seven economists in a room and ask for their opinion on a subject, you'll get at least eleven opposing views.

Or Harry Truman's well known plea that someone find him a one-armed economist, so that he'd have just one who couldn't say "But on the other hand . . ."

[KickahaOta]

Whenever someone starts talking about the total value of the derivative market, immediately hide in your Baloney Bunker. 99.9% of the time, they are talking about "notional value", which has essentially nothing to do with real money or risk.

Suppose that I work at a large bank or brokerage, and I am concerned that interest rates will fall in the next month (because that will cause me to lose money on some other investment or whatever). I find someone who works at a different large bank or brokerage, who is concerned that interest rates will rise in the next month (for the same reason). We strike a deal. Thirty days from now, my bank/brokerage will pay their bank/brokerage a month's worth of interest on $100,000,000 at the future rate (the rate as of a month from now); and their bank/brokerage will pay mine a month's worth of interest on $100,000,000 at the current rate (the rate as of Right Now). In practice, of course, we'll offset these two payments against each other; so that if the interest rate doesn't change, nobody pays anything. If the interest rate rises, my bank/brokerage pays theirs the difference in the rates, and likewise their bank/brokerage pays mine the difference if the interest rate falls.

This agreement is a derivative. The "notional value" of this derivative is $100,000,000, since that's the value of the hypothetical investment that we're basing the payments off of. In practice, there is absolutely no way that either of us can wind up owing anything anywhere close to $100,000,000, unless the interest rate shoots up by several hundred per cent (and in that case we've got worse economic problems to worry about than the derivatives market).

Furthermore, the "notional value" of $100,000,000 would be exactly the same even if the agreement were only covering one day (which would obviously mean a much smaller risk to both parties), and it would be the same if the agreement were covering a year (which would obviously mean a much greater risk).

Putting a value on the real risk of the derivative market is basically an impossible task, because you would have to look at the terms of every contract (the length, the volatility in the underlying thing being measured, etc.) and price every contract accordingly. But basically every derivative has a notional value. And it's printed right on the agreement. And it's an extremely big number, which sounds nice and scary. So it's used amazingly often, even though it's basically meaningless.

[fortinbras]

In my undeservedly long life I have seen many examples of financial and stock market prognosticators who got one major prediction right ... and squeezed the credit for that one right guess ruthlessly in making (and charging for) more guesses, which almost invariably went nowhere. It may be significant that their subsequent (wrong) guesses tended to be more flamboyant, less supported by anyone else in the business, and usually more apocalyptic - and associated with a pricey book or service.