What’s Really Going On Inside A Big Bank

Here’s a bit of inside information for you.

It’s about how things really work on the inside of a bank.

Any big bank – any big bank with an incentive to make money, which of course would be all of them.

This is one lesson you won’t ever forget…

Banks have “assets,” otherwise less technically defined as “stuff.”

The stuffing in the stuff banks own (meaning they have a position, or are the beneficiaries of a stream of income) is stuff like loans, like real mortgages, like mortgage-backed securities, like derivatives.

Let’s talk about derivatives.

Why? Because they amount to a huge pile of stuff banks own.

Why? Because derivatives aren’t exchange-traded, for one thing. And that’s where I’m going to be going in a second, so stay with me.

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