5 ms·

You could just remove the T. In all seriousness the way the US gov has been playing with the debt ceiling and the enormous amount of money being printed the USD

You could just remove the T. In all seriousness the way the US gov has been playing with the debt ceiling and the enormous amount of money being printed the USD also has some serious issues.

qeternity 5y ago
This stuff is so disingenuous from maxis. I get that you want someone to pump your bags. But the US Govt gets to print dollars. That’s how that works, for better or worse. Tether does not get to print dollars (which is what they are doing by claiming they are “fully backed”).
- arcticbull 5y ago
  It’s an asinine take in at least three separate ways. First 1USDT should equal the value of 1USD, so any drop in value of the USD would also be a drop in USDT purchasing power. Second, 1USDT backed by less than 1USD in value is obviously worth less than 1USD no matter what happens to the USD. Third, the charter of the fed, created by congress, is to maintain a low fixed rate of inflation and maximal employment (along the Philips curve). They adjust the supply to meet this objective. Tethers goal is to pump the bags of early crypto entrants to simulate - and stimulate - liquidity to the benefit of the few.
  - leppr 5y ago
    > Second, 1USDT backed by less than 1USD in value is obviously worth less than 1USD no matter what happens to the USD. That's obviously not how it works. For instance, US banks have capital requirements of ~8%, but the dollars they issue aren't worth $0.08, they're worth a full dollar (as long as no bank run happens). The same mechanics hold for Tether, whether they're regulated or not. In fact, USDTs are often worth more than a real dollar because the demand for them trumps their risk discount.
    - qeternity 5y ago
      Here is a perfect problem with crypto: people understand just enough tech or economics to be dangerous, and not enough to truly understand the system. This is of course absolutely not how things work. The risk isn’t with the dollar holders in the banking scenario because a dollar isn’t backed - it doesn’t need to be backed. This is the essence of fiat currency. The risk is with depositors (creditors), and as you say they do not value their deposits at 8 cents on the dollar just because that’s what capital reserve ratios are. We have tons of regulation and insurance and centuries of mistakes that have led to the current system. But your argument conflates one core thing: assets vs liabilities. The dollars that banks lend are real dollars, and the people who receive those dollars don’t care what the bank’s financial health is. That’s because the dollars they receive in a loan are liabilities, whereas when people receive Tether, it’s an asset. Let’s explore… People don’t deposit dollars in banks, and receive a certificate of deposit and use that in lieu of dollars. This is what is happening with Tether. Tether doesn’t take USD deposits and turn around and issue USD loans, it takes USD deposits and issues USDT certificates of deposit, which the market trades at par with USD. This difference is crucial though. Banks are fundamentally limited in the number of loans they can make versus the amount of deposits they hold. So they might be overlevered, but borrowers don’t worry about the dollars they receive being fake. And if the bank collapses, who cares, I’m a debtor, not a creditor. Reserve ratios matter to creditors, and don’t impact the legitimacy of any loans of they’ve made. Tether on the other hand takes deposits and issues certificates of deposit that they call USDT and claim are redeemable for one USD. These then trade on the open market as fungible USD. The problem is that this makes USDT holders creditors, whereas in the bank example USD holders are debtors. So this means as a creditor the solvency of the issuing institution is of paramount importance. If Tether implodes, USDT are worthless, just like if a bank implodes, its certificates of deposit might be worthless (ignoring insurance). But in the bank scenario, the dollars that it loaned out aren’t worth any less.
      - acjohnson55 5y ago
        On top of that, even though banks aren't required to keep more than 8% of deposits in reserve, they are subject to loads of regulation on their balance sheet to ensure that they are well capitalized. The FDIC exists to stop a run on any bank, but the regulations exist to ensure that if a bank needs to be taken into conservatorship, the assets to bank the deposits will eventually be recoverable.
  - bluecalm 5y ago
    Their clever trick is this: instead of making every USDT worth less than 1USD they made some of the USDT worth 1USD and the rest worth nothing. This plus relentless misinformation and shaming of the skeptics apparently makes it possible to keep up for a very long time.
    - cecilpl2 5y ago
      This is a very insightful way to put it. When the wheels fall off USDT will become valueless in no time at all.
- carnitine 5y ago
  The vast majority of dollars are created by private banks, not the US government.
  - qeternity 5y ago
    Not anymore, and the impact on money supply is very different. But I understand what you mean, the issue is that central bank rates and facilities combined with reserve ratios are the primary determinants of money creation (well, and GDP growth). So the transmission mechanism winds up being private banks, but it's still at the behest of the US Government.
- whatanorigtht 5y ago
  Ooo you just shutdown all the reasons for bitcoin existing by calling us maxis! So brave! Enjoy your printed dollars and decimated savings, ph4gut
- DonHopkins 5y ago
  Isn't the official denomination of Maxis the Simoleon?
gremloni 5y ago
There’s a difference between backed by the entire United States and being backed by a company with $66 million in their coffers.
- sporedro 5y ago
  Ya I’m a person that really believes in crypto and the major changes it can make but, people need to remember the US dollar is a different beast. It’s got the strongest military on earth backing it, a pretty powerful IRS, and decently structured government. Sure it and it’s government has its faults but so does everything.
- ur-whale 5y ago
  >There’s a difference between backed by the entire United States Indeed. The us currently has in its coffers a $29T hole [1] [1] https://www.usdebtclock.org/ https://www.usdebtclock.org/
  - arcticbull 5y ago
    That’s not really how the financial system works. Debt is an investment in the economy, like you taking out a loan to buy a pizza shop. If your pizza shop generates more revenue than cost to service your debt, then the fact you have the debt doesn’t really matter does it? After all your own a pizza shop too, right. On the US side, the system fails once the economy fails - and then we have much bigger problems. You’re looking only at the liabilities without checking what assets those liabilities are backed by, and what kind of new revenue those liabilities created. Debt isn’t burned money, it’s invested money at work in the economy. Out creating new revenue to service said debt. Also, the value of a dollar isn’t driven by the federal balance sheet but rather demand for those dollars. When dollars enter the world, via fractional reserve borrowing, the new dollars are issued against new debt. The obligation to repay the dollar to the lender is what creates demand for dollars and gives them value.
    - ur-whale 5y ago
      Yes, and indeed, the USistan's long-term viability, like any human enterprise must be looked in terms of assets vs liabilities. And right now, the picture isn't exactly rosy, certainly not something I'd invest in. I'm no fan of Tether (as a matter of fact, I'm pretty certain it'll blow up in fairly short order. I am actually looking for a well constructed way to short it) I was simply point out how ridiculous the comparison is.

You could just remove the T. In all seriousness the way the US gov has been playing with the debt ceiling and the enormous amount of money being printed the USD also has some serious issues.

qeternity 5y ago

This stuff is so disingenuous from maxis. I get that you want someone to pump your bags. But the US Govt gets to print dollars. That’s how that works, for better or worse. Tether does not get to print dollars (which is what they are doing by claiming they are “fully backed”).

arcticbull 5y ago
It’s an asinine take in at least three separate ways. First 1USDT should equal the value of 1USD, so any drop in value of the USD would also be a drop in USDT purchasing power. Second, 1USDT backed by less than 1USD in value is obviously worth less than 1USD no matter what happens to the USD. Third, the charter of the fed, created by congress, is to maintain a low fixed rate of inflation and maximal employment (along the Philips curve). They adjust the supply to meet this objective. Tethers goal is to pump the bags of early crypto entrants to simulate - and stimulate - liquidity to the benefit of the few.
- leppr 5y ago
  > Second, 1USDT backed by less than 1USD in value is obviously worth less than 1USD no matter what happens to the USD. That's obviously not how it works. For instance, US banks have capital requirements of ~8%, but the dollars they issue aren't worth $0.08, they're worth a full dollar (as long as no bank run happens). The same mechanics hold for Tether, whether they're regulated or not. In fact, USDTs are often worth more than a real dollar because the demand for them trumps their risk discount.
  - qeternity 5y ago
    Here is a perfect problem with crypto: people understand just enough tech or economics to be dangerous, and not enough to truly understand the system. This is of course absolutely not how things work. The risk isn’t with the dollar holders in the banking scenario because a dollar isn’t backed - it doesn’t need to be backed. This is the essence of fiat currency. The risk is with depositors (creditors), and as you say they do not value their deposits at 8 cents on the dollar just because that’s what capital reserve ratios are. We have tons of regulation and insurance and centuries of mistakes that have led to the current system. But your argument conflates one core thing: assets vs liabilities. The dollars that banks lend are real dollars, and the people who receive those dollars don’t care what the bank’s financial health is. That’s because the dollars they receive in a loan are liabilities, whereas when people receive Tether, it’s an asset. Let’s explore… People don’t deposit dollars in banks, and receive a certificate of deposit and use that in lieu of dollars. This is what is happening with Tether. Tether doesn’t take USD deposits and turn around and issue USD loans, it takes USD deposits and issues USDT certificates of deposit, which the market trades at par with USD. This difference is crucial though. Banks are fundamentally limited in the number of loans they can make versus the amount of deposits they hold. So they might be overlevered, but borrowers don’t worry about the dollars they receive being fake. And if the bank collapses, who cares, I’m a debtor, not a creditor. Reserve ratios matter to creditors, and don’t impact the legitimacy of any loans of they’ve made. Tether on the other hand takes deposits and issues certificates of deposit that they call USDT and claim are redeemable for one USD. These then trade on the open market as fungible USD. The problem is that this makes USDT holders creditors, whereas in the bank example USD holders are debtors. So this means as a creditor the solvency of the issuing institution is of paramount importance. If Tether implodes, USDT are worthless, just like if a bank implodes, its certificates of deposit might be worthless (ignoring insurance). But in the bank scenario, the dollars that it loaned out aren’t worth any less.
    - acjohnson55 5y ago
      On top of that, even though banks aren't required to keep more than 8% of deposits in reserve, they are subject to loads of regulation on their balance sheet to ensure that they are well capitalized. The FDIC exists to stop a run on any bank, but the regulations exist to ensure that if a bank needs to be taken into conservatorship, the assets to bank the deposits will eventually be recoverable.
- bluecalm 5y ago
  Their clever trick is this: instead of making every USDT worth less than 1USD they made some of the USDT worth 1USD and the rest worth nothing. This plus relentless misinformation and shaming of the skeptics apparently makes it possible to keep up for a very long time.
  - cecilpl2 5y ago
    This is a very insightful way to put it. When the wheels fall off USDT will become valueless in no time at all.
carnitine 5y ago
The vast majority of dollars are created by private banks, not the US government.
- qeternity 5y ago
  Not anymore, and the impact on money supply is very different. But I understand what you mean, the issue is that central bank rates and facilities combined with reserve ratios are the primary determinants of money creation (well, and GDP growth). So the transmission mechanism winds up being private banks, but it's still at the behest of the US Government.
whatanorigtht 5y ago
Ooo you just shutdown all the reasons for bitcoin existing by calling us maxis! So brave! Enjoy your printed dollars and decimated savings, ph4gut
DonHopkins 5y ago
Isn't the official denomination of Maxis the Simoleon?

gremloni 5y ago

There’s a difference between backed by the entire United States and being backed by a company with $66 million in their coffers.

sporedro 5y ago
Ya I’m a person that really believes in crypto and the major changes it can make but, people need to remember the US dollar is a different beast. It’s got the strongest military on earth backing it, a pretty powerful IRS, and decently structured government. Sure it and it’s government has its faults but so does everything.
ur-whale 5y ago
>There’s a difference between backed by the entire United States Indeed. The us currently has in its coffers a $29T hole [1] [1] https://www.usdebtclock.org/ https://www.usdebtclock.org/
- arcticbull 5y ago
  That’s not really how the financial system works. Debt is an investment in the economy, like you taking out a loan to buy a pizza shop. If your pizza shop generates more revenue than cost to service your debt, then the fact you have the debt doesn’t really matter does it? After all your own a pizza shop too, right. On the US side, the system fails once the economy fails - and then we have much bigger problems. You’re looking only at the liabilities without checking what assets those liabilities are backed by, and what kind of new revenue those liabilities created. Debt isn’t burned money, it’s invested money at work in the economy. Out creating new revenue to service said debt. Also, the value of a dollar isn’t driven by the federal balance sheet but rather demand for those dollars. When dollars enter the world, via fractional reserve borrowing, the new dollars are issued against new debt. The obligation to repay the dollar to the lender is what creates demand for dollars and gives them value.
  - ur-whale 5y ago
    Yes, and indeed, the USistan's long-term viability, like any human enterprise must be looked in terms of assets vs liabilities. And right now, the picture isn't exactly rosy, certainly not something I'd invest in. I'm no fan of Tether (as a matter of fact, I'm pretty certain it'll blow up in fairly short order. I am actually looking for a well constructed way to short it) I was simply point out how ridiculous the comparison is.