How Tether Destroys Our Wealth
Tethers are created when a person sells a CRYPTO/USDT pairing. Tether is a commodity, specifically, a means of exchange.
Cryptocurrency exchanges like KRAKEN accept CRYPTO/USDT pairings because USDT is essentially a credit from BITFINEX, a trusted exchange. As market makers, many exchanges handle USDT transactions everyday.
When the price of CRYPTO/USDT goes up due to retail traders converting DOLLARS into CRYPTO/USDT, the price of CRYPTO/USDT rises. As this pairing rises in price, more CRYPTO/USDT can be leveraged using CRYPTO/USDT as collateral.
The problem:
Since greater USDT now appear to be on ledgers after this feedback loop occurs, it appears as if new DOLLARS have been invested in CRYPTO/USDT. All mediums of exchange, including dollars, are scarce commodities.
However, what no one realizes anymore because it's TOO COGNITIVELY ABSTRACT is that there are no new DOLLARS coming in. And because there's no new dollars, BITFINEX has a limited ability to add capital to the USDT market cap because DOLLARS are SCARCE in CRYPTO.
People holding DOLLARS can't afford CRYPTO/USDT at current prices.
The CRYPTO/USDT market then becomes detached from REAL PRODUCTIVE DEMAND. It's only the investors holding DOLLARS, EUROS, or YEN (etc.) who can approximately increase the real worth in terms of real GDP of CRYPTO commodities. (I say "approximately," because CENTRAL BANKS have disconnected MONEY from ECONOMICS.)
Holders of USDT can only "print" more demand using leverage when and if new investors holding DOLLARS show up.
During INFLATION of FIAT CURRENCY, new investors will NOT show up because all FACTORS OF PRODUCTION will now be more expensive. An investor can't buy as much CRYPTO as he could previously if it's now more expensive to pay for CHICKENS to lay eggs, HOMES to work from, TRACTORS to farm, or SAWMILLS to make wood pulp. He is in danger of losing his factors of production (the things that keep him and his business alive, such as chickens, homes, tractors or sawmills) because his own RISING COSTS FOR CONSUMPTION increase SELLING PRESSURE FOR HIS PRODUCTIVE ASSETS (he needs to sell some of his chickens to buy exorbitantly priced gasoline, etc.), making him less productive.
In such a scenario, buying more cryptocurrency is obviously a dangerous luxury. The CRYPTO market cap will do very badly during inflation. Most BITCOINERS don't understand this because there are many abstract relationships involved to think about. Most people cannot understand how human beings on a global scale actually behave in reality versus fantasy.
This is how TETHER creates malinvestment. Malinvestment destroys our WEALTH.
Cryptocurrency exchanges like KRAKEN accept CRYPTO/USDT pairings because USDT is essentially a credit from BITFINEX, a trusted exchange. As market makers, many exchanges handle USDT transactions everyday.
When the price of CRYPTO/USDT goes up due to retail traders converting DOLLARS into CRYPTO/USDT, the price of CRYPTO/USDT rises. As this pairing rises in price, more CRYPTO/USDT can be leveraged using CRYPTO/USDT as collateral.
The problem:
Since greater USDT now appear to be on ledgers after this feedback loop occurs, it appears as if new DOLLARS have been invested in CRYPTO/USDT. All mediums of exchange, including dollars, are scarce commodities.
However, what no one realizes anymore because it's TOO COGNITIVELY ABSTRACT is that there are no new DOLLARS coming in. And because there's no new dollars, BITFINEX has a limited ability to add capital to the USDT market cap because DOLLARS are SCARCE in CRYPTO.
People holding DOLLARS can't afford CRYPTO/USDT at current prices.
The CRYPTO/USDT market then becomes detached from REAL PRODUCTIVE DEMAND. It's only the investors holding DOLLARS, EUROS, or YEN (etc.) who can approximately increase the real worth in terms of real GDP of CRYPTO commodities. (I say "approximately," because CENTRAL BANKS have disconnected MONEY from ECONOMICS.)
Holders of USDT can only "print" more demand using leverage when and if new investors holding DOLLARS show up.
During INFLATION of FIAT CURRENCY, new investors will NOT show up because all FACTORS OF PRODUCTION will now be more expensive. An investor can't buy as much CRYPTO as he could previously if it's now more expensive to pay for CHICKENS to lay eggs, HOMES to work from, TRACTORS to farm, or SAWMILLS to make wood pulp. He is in danger of losing his factors of production (the things that keep him and his business alive, such as chickens, homes, tractors or sawmills) because his own RISING COSTS FOR CONSUMPTION increase SELLING PRESSURE FOR HIS PRODUCTIVE ASSETS (he needs to sell some of his chickens to buy exorbitantly priced gasoline, etc.), making him less productive.
In such a scenario, buying more cryptocurrency is obviously a dangerous luxury. The CRYPTO market cap will do very badly during inflation. Most BITCOINERS don't understand this because there are many abstract relationships involved to think about. Most people cannot understand how human beings on a global scale actually behave in reality versus fantasy.
This is how TETHER creates malinvestment. Malinvestment destroys our WEALTH.
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