How To Defuse The QUADRILLION Dollar Derivatives Bubble

"Beware the Ides of March!"

With all the talk about (so far) isolated bank failures and the potential for a real, wider financial crisis in the near future, no one wants to talk about the real elephant in the room:  the looming QUADRILLION dollar derivatives bubble just waiting to burst.  And if the FERAL Reserve keeps on hiking interest rates in a misguided attempt to fight inflation that is already cooling, it will burst catastrophically, making 2008 and possibly even 1929 look like a walk in the park.

This massive derivatives bubble was decades in the making, resulting from the ever-increasing "financialization" of the economy.  Wall Street has basically been gambling with other people's money, in the world's largest casino, all while getting bailouts.  Privatize the profits, and socialize the losses, basically.

There is still time to defuse this ticking time bomb though:

1. Cut interest rates, YESTERDAY!  Or at least stop raising them!
2. End Quantitative Tightening, YESTERDAY!
3. Pass a financial transaction tax (aka "Wall Street Gaming Tax") of 0.1% on all financial transactions, including stocks, bonds, and especially derivatives.
4. Repeal the "safe harbor" provision of bankruptcy law, particularly as it applies to derivatives. 
5. Reinstate the Glass-Steagall Act in full.
6. Ban the practice of "quote stuffing".
7. Ban stock buybacks by corporations.
8. Going forward, ban any and all types of new and exotic derivatives that are not completely transparent. 
9. No more bailouts OR "bail-ins" of the banks (but of course depositors should still be made whole per the FDIC, with  no apologies to ultra-purist libertarians or paleoconservatives).
10. Implement "Quantitative Easing For People" (that is, with direct payments to individuals, not banks) as needed.
11. And last but not least, all banks that are "too big to fail" are really too big to exist, and should thus be either forcibly broken up, or nationalized as public utilities.  YESTERDAY!

The first five items alone, or even the first four, would be enough to defuse it in the near term, while the remaining items would be to clean up the damage and/or prevent it form happening again in the future. 

In the meantime, we all need to brace ourselves for a possible financial crisis and recession in the future.  But don't fall for the idea that we should withdraw all of our money now, as that would literally be a self-fulfilling prophecy.  The FDIC guarantees the first $250,000 per depositor per bank, so unless you have more than that (and didn't put it in multiple banks like you should have), it does not make sense to do so.

And let's not forget the role that the lockdowns played in all of this.  To paper over their predictable consequences, they printed trillions of dollars to do so (which increased demand for goods and services), at the same time that the lockdowns and their fallout constrained supply and snarled supply chains.  The resulting inflation was then belatedly papered over by raising interest rates and Quantitative Tightening, and the resulting whiplash has brought us where we are now with the banks, and making the bubble even more likely to burst.

Of course, things weren't exactly rosy for the financial system before the pandemic either.  Behind the scenes, a financial crisis was already subtly brewing, with the turmoil "repo market" in September 2019 being the first canary in the coal mine.  The FERAL Reserve kept printing more and more money to try to paper it over, but the problem wouldn't go away, even many months later.  They needed to do something BIG, and FAST.  It's almost like the pandemic was actually a PLANDEMIC, a big heist of the century to temporarily shore up the big banks in 2020 and make the rich richer, the poor poorer, and hollow out whatever is left of the middle class.  But hey, that's just a "conspiracy theory", right?

UPDATE:  The FERAL Reserve has raised the Fed Funds Rate by 0.25 percentage points.  Looks like they really, really wanna pop the "Everything Bubble".