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The Bright Side of the Rise of the Shadow Banking System

The Bright Side of the Rise of the Shadow Banking System

The guys everybody loves to hate, say what you want, but these kids are awesome at making money.

Three trillion dollars pass through the forex markets on a daily basis. Much of it is redistributed from one group of people—losing traders—to another group of people—winning traders.

Numerous financial analysts have by now found that there is a lot of money that is not held in traditional banks, and doesn’t want to be held there. Instead, this money wants to get bigger, through stocks, options, futures—and forex trading.

Before the Crash of 2008, that money could get bigger through the big banks. Citigroup, for instance, could refer you out to a wealth specialist, who would be more than happy to sell you a wide variety of assets, contracts, and paper that pays 7 percent annually.

Unfortunately for the big banks, the big banks could not follow through on those 7 percent annually promises—they . The government stepped in to pay for this lesson, and now the government wants traditional banks to just be regular old banks again.

But there is still very much a market for higher returns, even if it entails higher risk. Have you met a demand yet, in the global economy, that is not being met?

The so-called “shadow banking system,” comprised of money center prop desk dealers such as the Bear Stearns team at JPMorgan and many other smaller trading players, are the banking force that is meeting investor demand for amplified returns on cash.



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The guys everybody loves to hate, say what you want, but these kids are awesome at making money. Learn about
the rise of the shadow banking system.  arrow