You just described the Icelandic banking system circa 2007.

Good Afternoon Charles,
Yeah, that's a pretty clever way of putting it, our financialized capitalistic system.

It is intriguing. "You have two cows, you sell three of them..."

Somehow this reminds me of the film, "The Producers" which I believe became a musical comedy. The premise as I recall is about two NYC Jewish producers down on their luck, who decide to produce a musical about Adolph Hitler ("Springtime for Hitler"). The assumption is that the musical would be SO unpopular, a flop in NYC that they would lose money (borrowed?), file for bankruptcy, not worry about paying their debts and even make money themselves. Much to their chagrin the musical becomes enormously popular.

Yeah, the derivatives "market" is nominally valued at many multiples of the world GDP and of any underlying assets that those derivatives use for "collateral". Hold on to your cows!