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I sympathize with the observation of hypocrisy, but disagree that this excuses Tether. The USD note once featured the words, "This certifies that there has been

I sympathize with the observation of hypocrisy, but disagree that this excuses Tether. The USD note once featured the words, "This certifies that there has been deposited... payable to the bearer on demand". At least in this case the offending text was removed. https://en.wikipedia.org/wiki/History_of_the_United_States_dollar#/media/File:US-$1-SC-1928-Fr.1600.jpg https://en.wikipedia.org/wiki/History_of_the_United_States_d... >In February 1965, President Charles de Gaulle announced his intention to exchange its U.S. dollar reserves for gold at the official exchange rate. He sent the French Navy across the Atlantic to pick up the French reserve of gold and was followed by several countries. As it resulted in considerably reducing U.S. gold stock and U.S. economic influence, it led U.S. President Richard Nixon to end unilaterally the convertibility of the dollar to gold on August 15, 1971 (the "Nixon Shock"). This was meant to be a temporary measure but the dollar became permanently a floating fiat money and in October 1976, the U.S. government officially changed the definition of the dollar; references to gold were removed from statutes. https://en.wikipedia.org/wiki/Exorbitant_privilege https://en.wikipedia.org/wiki/Exorbitant_privilege There is some irony in the US gov objecting to Tether's methods. While the USD is backed by what exactly? What are these reserves of the Federal Reserve? Meanwhile, the 1 trillion dollar platinum coin is being proposed. Yes, it is fair to say Tether is guilty of having insufficient reserves. But how meaningful is it to say that they have insufficient reserves of an unbacked currency?

AlexandrB 5y ago
> But how meaningful is it to say that they have insufficient reserves of an unbacked currency? Because being backed by USD reserves is their whole (self reported) value proposition and the supposed reason why 1 USDT == 1 USD on the open market. If this is all false, USDT should float relative to USD like any other crypto equity.
imtringued 5y ago
>There is some irony in the US gov objecting to Tether's methods. While the USD is backed by what exactly? It's backed by the obligation to repay roughly $50 trillion (private plus public debt). I honestly don't get how people misunderstand the new system. The money system is quite simple. Money is just the liquid portion of credit and credit has value because a debtor has obligated himself to accept credit as payment. A business isn't accepting USD because it has faith in the USD, it's because it is in debt and needs to earn the money back by providing goods and services or alternatively it needs the money to buy products and services from other companies that are in debt. The way tether is run is quite strange. It's not a bank so people expect it to have a reasonable amount of cash reserves or alternatively they expect tether to declare that they do not intend to hold cash reserves and that holding tethers has a completely different risk profile than holding USD which also means it would have its own exchange rate vs USD instead of 1:1. >Meanwhile, the 1 trillion dollar platinum coin is being proposed That's just a hack to get around a self imposed debt ceiling. Everyone knows it's stupid. Blame the bigger idiots in congress that want it to be necessary.
vmception 5y ago
Is it really ironic? The US is saying "we don't care if you market your product as a currency, all we see is a product. If you say it is redeemable for something, it actually better be or we fine you. But it doesn't matter to us if it is redeemable for anything, just make that match how you advertise it." People care way more about this than government regulators do. The derivatives regulators looked at it, found something that affected the spot market based on confidence alone, and got their fine and a company agreement to match so people can be more objective about their confidence.
- aww_dang 5y ago
  Consider that the etymology of 'dollar', coming from 'thaler' has always meant a fixed weight of metal. Yes, for me there is some irony there. We still call them dollars, not debt instruments or tally sticks. As you say the key points are redeemability and backing.

AlexandrB 5y ago

> But how meaningful is it to say that they have insufficient reserves of an unbacked currency? Because being backed by USD reserves is their whole (self reported) value proposition and the supposed reason why 1 USDT == 1 USD on the open market. If this is all false, USDT should float relative to USD like any other crypto equity.

imtringued 5y ago

>There is some irony in the US gov objecting to Tether's methods. While the USD is backed by what exactly? It's backed by the obligation to repay roughly $50 trillion (private plus public debt). I honestly don't get how people misunderstand the new system. The money system is quite simple. Money is just the liquid portion of credit and credit has value because a debtor has obligated himself to accept credit as payment. A business isn't accepting USD because it has faith in the USD, it's because it is in debt and needs to earn the money back by providing goods and services or alternatively it needs the money to buy products and services from other companies that are in debt. The way tether is run is quite strange. It's not a bank so people expect it to have a reasonable amount of cash reserves or alternatively they expect tether to declare that they do not intend to hold cash reserves and that holding tethers has a completely different risk profile than holding USD which also means it would have its own exchange rate vs USD instead of 1:1. >Meanwhile, the 1 trillion dollar platinum coin is being proposed That's just a hack to get around a self imposed debt ceiling. Everyone knows it's stupid. Blame the bigger idiots in congress that want it to be necessary.

vmception 5y ago

Is it really ironic? The US is saying "we don't care if you market your product as a currency, all we see is a product. If you say it is redeemable for something, it actually better be or we fine you. But it doesn't matter to us if it is redeemable for anything, just make that match how you advertise it." People care way more about this than government regulators do. The derivatives regulators looked at it, found something that affected the spot market based on confidence alone, and got their fine and a company agreement to match so people can be more objective about their confidence.

aww_dang 5y ago
Consider that the etymology of 'dollar', coming from 'thaler' has always meant a fixed weight of metal. Yes, for me there is some irony there. We still call them dollars, not debt instruments or tally sticks. As you say the key points are redeemability and backing.