Two years ago, a relative handful of economists and bankers understood what a financial derivative was. At that time, the rest of the public might have had a vague understanding based on their high school calculus class, and understanding that would have been wrong. Today, two years later, most of the public has heard the term “derivative”, 
and the majority still don’t know what it means. To listen to the news, one might think that a derivative is a gift from Satan; our modern world’s version of the apple from the tree of knowledge.
As much of the language in the soon to be signed financial reform bill is directed at derivatives, I think it is time for the public to learn the nature of the fruit. In our great financial conflagration, derivatives weren’t the the campfire or the careless campers; some of them were, in fact, the hot and dry wind that whipped up the blaze into the forest fire. Federal financial policy, as executed by three Republican presidents, one Democratic president, and two chairman of the Federal Reserve Board set the board up. Our consumer appetite, helped along by opportunistic realtors and mortgage lenders, put the board in motion. Some classes of derivatives served to take the crisis from economic catastrophe to potential worldwide economic failure.