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> Commercial paper is not dollars, so tether effectively admits it is not backed. What do you think backs bank deposits?
by unmole 4y ago
> Commercial paper is not dollars, so tether effectively admits it is not backed.
What do you think backs bank deposits?
- marcinzm 4y agoThe government via FDIC.
- unmole 4y agoFDIC is insurance, it's not a backing asset. And it's limited to 250k USD.
- ceejayoz 4y agoIt’s substantially better than nothing.
- marcinzm 4y agoAnd without it you get occasional massive runs on banks since they don't have actual full backing. Moreover the government will bail banks out if needed providing another but non-guaranteed layer of protection. Maybe a better way to say it would have been that banks are safer because they're backed by the government including FDIC, bailouts, regulations, oversight, etc.
- unmole 4y ago> And without it you get occasional massive runs on banks FDIC doesn't prevent runs on banks. It only pays out after a bank is declared insolvent and there's nobody willing to buy the bank. Banks are regulated for good reasons which make them safer. But at the end of the day banks are in the business of transmuting unsafe long term debt into safe demand deposits.
- ceejayoz 4y agoBanks don’t claim otherwise for years while providing misleading non-audit “audits”, and they have the FDIC to fix things for anyone under $250k if they collapse.
- unmole 4y agoTether in all probability is a scam. My comment was in response to a very specific claim about what it means for a security to be backed. Something backed by commercial paper is by definition backed.