With respect to our earlier conversation, besides the circular investment, is there any other reporting on the use of derivatives?
They never went away despite being a cornerstone of 2008; derivative were based off of the futures market. I think that’s been around for a long time for crops for instance. What started out? It is a very niche form of financing is what was bastardized into the products that caused GFC.
They haven’t quite gone away
How is this for fresh off the press?
This arXiv preprint is only 4 days old.
"AI Token Futures Market: Commoditization of Compute and Derivatives Contract Design"
https://arxiv.org/html/2603.21690
Analysts projects that applying conservative multipliers of 10-15x observed in other commodities markets to a compute market reaching $350-500 billion by 2027-2028 could support over $5 trillion in derivatives trading Compute.
This is why #finance and #fintech in general are falling over themselves to invest in #Ai, far from being a bubble, its a 'solid' investment vehicle like all the other CDOs...
Here is one of my favourite scenes from "The big short" explaining #CDO.
https://www.youtube.com/watch?v=xbiDrzTd8fE
Hopefully sometime I will get to reading this today, but I am a little curious if the multiples here are quoted numbers for other types of derivatives.
The basis of most of my understanding of the kinds of derivatives that led to 2008 was that so much of them were opaque, including how much banks were made making off of them that the only rough idea of a number was quoted from somebody who said they make significantly more off of derivatives than they do off of IPO’s
I’m just reading through the abstract and already I’m beginning to worry about gobbledygook statements
An unfortunate state of affairs in current academia is that nearly everyone runs papers through the engines... We know this because authors were sprung hacking #peerreview ("thus paper is supergood")
For me the main carry away is;
"Token futures can reduce compute costs violatility by 60%"
Here us a link to the pre-chewed paper with a top model.
https://claude.ai/share/5f72c37a-bad5-4ca0-9c29-abf49ff2c432
Since so much of the demand for these tokens is so much vaporware, and the infrastructure cost to perform the computations is also so much paperware now subject to increased energy cost plus the very real time pre-existing pressures for energy and water, now compounded with an energy and raw material crisis that will affect the entire economy and especially technology
As we discussed.
The entire clownshow has gone off the rails in 2008...
.... Literally nothing matters anymore.
The big end of town knows this.
This is why they dug hidey holes in the ground and are looting everything before we go "Fury Road" on each other.
Yeah, I think the only saving grace about the derivatives thing is that this looks like a paper, it’s not something in the system yet although I would have to imagine there are those who are feverishly working on it because hey, you can make some money saying that you’re building this thing.
Oh, I didn’t realize it was run through the paper shredder known as AI. I think I’ll struggle with the original. 
Your understanding is correct.
The financial instruments are largely opaque, more so by complexity and "innovation" than by design.
Even the regulators don't quite understand them properly.
The two fantastic movies about GFC; "Margin call" and "The Big Short" while fictionalised give a great primer how "we" got there. "Billions" is an entertaining series that shows some dodgy ways these immoral folks use to make money.
The top end of finance is literally run by the smartest people in the room. If you are super smart graduate, you don't go into engineering or medicine to make obscene money, you go into #finance
There is a constant pressure to #innovate
Create new financial instruments that can be monetized.
Matt Talib did a great expose in #GS a while back.
One if the many morally reprehensive things they did was, they owned 6 aluminum warehouses, and to keep the prices up (and stock low) they were shipping aluminum between the 6 warehouses.
I read the Big Short, but the frontline documentary about the age of easy money, a series, covered the GFC and the financial instrument credit default swaps were built from. They originated in the commodities market; very standard practice. The individual who developed the adaption had designed it for a very specific niche financial deals, but it was turned into something else.
Within that particular documentary, though and particular investor or finance guy I think was interviewed, and he mentioned that he was not at liberty to quote the numbers that they were making in terms of profit, but that it was substantially higher than what banks would make off of IPO’s.
I don’t know if these instruments have become any less opaque, they may have, but in this regulatory environment, I will want to see proof that that’s happened
GhostOnTheHalfShell
Wulfy—Speaker to the machines