I think that does help clarify, but I'd say it also aligns with the point I was trying to make in some important ways. They are trading one USDT for $1 of value. If they keep that capitol invested in BTC and do hold only 1:1 in collatoral...no shit, that's is pretty damn reckless BUT they are making the promise that they have the capitol to back it. Given the exponential rise in BTC again this last year I'd be inclined to agree with them for now.

Claims that this process inflates the process of BTC seem far to exaggerated. It's reallocating value that was already there. Firstly, someone has to sell the BTC in order to buy the Tether with it so that argument is somewhat of a moot point. And if they are selling the BTC for USD or other fiat it's actually increasing the sell pressure of BTC against said fiat. It might open the opportunity for trades/swaps which could drive the price either direction faster...but it doesn't make value out of thin air.

I'm not saying Tether is not responsible for poorly investing or protecting the collateral that backs their coin. I'm just saying I can't compute the claims that this is some sort of manipulation scheme. The concept is exactly the same as decentralized stable coins like DAI except the backer is a centralized entity and not a contract. Does me minting DAI magically pump the value of ETH because that is the coin I put up as collateral? No that's a ridiculous claim. I can however feel comfortable holding DAI knowing that the contract will enforce the value of the token no matter the price of the ETH backing it.