People keep posting these articles, and Tether keeps not collapsing. You can exchange your Tethers 1:1 for dollars right now, and have been able to this entire time.
If we're doing child-like examples, if the central bank prints a trillion dollars in notes and then sends them to the moon and promises never to use them, is anyone really poorer?
Also inflation in the range of 1%-3% is considered a good thing because it helps encourage trade and prevents deflation. The amount of interest one can earn in a savings account or CD should also be taken into account.
The money weren’t distributed proportionally to the wealth of the people. Another reason, which though applies only in short- and mid-term, there are various nominal rigidities: contracts mostly use nominal values.
> The second question is whether inflation if it does occur is net bad/good and for who.
Well, that’s a whole nother question. You can create inflation using direct deposits to the holders of money.
https://www.investopedia.com/binance-vs-coinbase-5120852
> FDIC-insured USD balances
> Binance security features also include [...] Like Coinbase, all USD balances are insured up to $250,000 by the Federal Deposit Insurance Corporation (FDIC) and held in custodial bank accounts.
Anything in a coin, even a stablecoin like Tether, USDC, DAI etc is not USD. Stablecoins really are not as "stable" as USD for the insurance reason. They are merely pegged to the USD.
Coinbase and Binance are not SPIC insured which covers some securities but not losses, only situations where the exchange, or bank, fails much like with FDIC.
Most brokerages are both FDIC for USD deposits, and then SPIC for deposits and some securities, not on losses on the market though [1]. Robinhood I believe is only SPIC still [2], but most brokerages are FDIC AND SPIC insured.
FDIC is backed by the US treasury. SPIC is a private company ultimately and not as backed as FDIC but it is the main securities insurance most brokerages use.
Tether is like an individual stock though, even if Coinbase, Binance or other exchanges had SPIC insurance, if Tether (USDT) fails it would be like a stock failing, there would be no insurance even then. The insurance is really at the bank/exchange level if they are insolvent or have no reserves/capital.
Side note: A good use of stablecoins is buying into that stablecoin and then converting to other coins you want, that minimizes fees but keeps tax hit at 1-to-1 since they are pegged to the USD, makes all the cost basis and other accounting easier. A common technique is buying into USDC or DAI and then converting to other coin to reduce purchase fees. Stablecoins are also a "home base" or refuge when the market is falling without going back to USD fully, that is why volume of USDC, DAI, and USDT is so immense right now.
[1] https://www.investopedia.com/articles/stocks/08/sipc-fdic-ba...
[2] https://www.cnbc.com/2018/12/14/robinhood-debate-highlights-...
Isn't the idea that if many people try to convert USDT to USD, they won't be able to, So they won't have FDIC insured USD?
It's not like the FDIC will honor your withdrawal request the same day you made it.
And none of these Tether hit pieces ever attempt to explain this in the slightest. Until they do, there's not really much to see here. The explanation given in the piece is utterly transparent nonsense.
Where? How? People have posted bounties for anyone able to show demonstrable proof that they've successfully had Tether exchange their USDT for USD. No-one has claimed them.
Last I saw, two things, 1) Tether's TOC said they had no obligation to redeem, and 2) in the hypothetical event you wished to, it was an onerous situation requiring holdings of six digits, being non-US, and requiring "90-180 days" of processing time.
If the peg breaks more significantly, it'll be worse.
Where was this event recorded? Is there a USDT/USD chart somewhere?
1. Exchange deposits/withdrawals are slower and more expensive because of ethereum network congestion
2. Other assets have larger price disparities across exchanges
Because of this reason, arbitrageurs have better pairs to arbitrage with their assets during these busy times. Why make 10% on usd/usdt when you can make 15/30% on eth or altcoin price dislocations across exchanges?
In America's situation, FYI, that insurance is supplied in the form of a gigantic economic engine and lots of guns to get more money if needed - elsewhere in the world this risk will often times be subsidized by the IMF.
Ponzi schemes do keep paying out, for as long as they are growing.
I don't know how reliable of a prediction this could be.
It is possible that Tether is a ponzi, but if it is, it's at least mostly backed. It's certainly true that the company is shady, and probably doing riskier things with the capital than it should be, but the idea that Tether is a complete ponzi that's been used to inflate the entire market is just demonstrably false.