Hello everybody. Chris Martinson here. And today we're going to be talking about finance

and economics as part of finance you. Remember, anything that you see in this video and all

resources available at our websites or affiliated websites are not intended as or construed us financial

advice. This is for educational purposes. Remember, if you have a financial decision, please

consult a financial

professional. We are not attorneys. We're not CPAs. We are not financial managers. As well,

we do our best to be accurate. And everything we represent is as accurate as we know it to be.

Now, let's turn to our program. Hello, everyone, Dr. Chris Martinson here with you with another episode of Finance University.

Listen, everybody needs to understand what's going on out there in the financial world.

Today, we're going to be discussing derivatives.

Warren Buffett called them weapons of mass financial destruction.

Are they?

There's a lot of confusion about them.

As usual, I'm going to break this topic down to make it easy to understand. And you do need to understand it because, well, these things are going to create a big problem for us eventually. So let's go there and start this presentation. How about this? Yes, Warren Buffett. Now, why did he say this?

Warren Buffett said this about derivatives because

he bought a company called General Ray, a reinsurance company, and then had this derivatives

portfolio and he didn't really like it, but he said, you know what, we'll buy the company,

we'll unwind it, see what happens, and it took them forever. And so why was that? Well, because of all the derivatives

that were in that portfolio were so complex, so interconnected, so nested that even though they

wanted to get rid of them and it was just one company's worth created huge problems leading to him

to famously say that derivatives are weapons of financial mass destruction now this is what the

fed says here so you know so a reader asked and by the way it's interesting it's the

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