In a 2002 letter to shareholders, Berkshire Hathaway CEO Warren Buffett called the trillions of dollars of derivatives held by American banks “time bombs”. The “Oracle of Omaha’s” dire prognostication proved correct in 2008, when the collapse of prices of the assets to which the lion’s share of outstanding derivatives were tied led to a financial crisis that plunged the American economy into a period of economic malaise not seen since the Great Depression.

Derivatives are indeed “ticking time bombs” in this era of Fed-inspired asset …