[SeeGeeWhy]

Has anyone read Niall Ferguson's Ascent of Money?

I'm just starting it and it seems as though it might have some poignant insight into what is happening right now (despite being written in early 2008).

One surprising thing to me was the rapid growth of derivatives - nearly $0 before 1980, and just under $600 trillion in 2007, which is nearly 10x the global GDP (the output of the entire planet each year).

Part of me is wondering if anyone ever really knew what the impact of accounting for that sort of "money" as real would have if it ever went away.

Of course the banking system is screwed up right now by watching that huge sum of money evaporate... but I wonder if there will be another advancement in finance (i.e. another way to generate virtual money) that will help offset this loss to the world economy.

Fotze posted Matt Simmons' latest update regarding the oil industry in the layoffs thread, and Simmons has some poignant commentary on how the halt of the credit system is artificially deflating oil prices as large hedge funds are no longer able to borrow large sums of money to drive up futures contracts.

Its sort of a self fulfilling cycle -> oil price is high, so there is incentive to exploit reserves -> which drives demand for oil in order to supply trucking, shipping, steel, construction, etc -> causes supply shortages as firms compete to extract their resource first -> drives oil price higher -> ad nasuem

If the credit markets recover, oil price will not be far behind...