Editing Openai/68ed2ed1-5644-8004-ba30-42213bf3dbfa (section)

==== Take that ~$20 trillion “gross market value” of all global derivatives. ====

If even half of that exposure (say, $10 trillion) sits on balance sheets leveraged 30:1, then a 3–4% adverse move wipes out the equity supporting those positions.

That’s how you can have a world where:
* The actual losses are only a few trillion,
* But the forced deleveraging cascades through tens of trillions in nominal positions.

This is why the Bank for International Settlements and central banks obsess over “gross exposures,” collateral flows, and who’s on the other side of what.
Because the true danger isn’t “everyone loses their bets” — it’s “everyone tries to unwind their leverage at once.”