If you spend a little longer in the cryptocurrency market, you can't avoid getting to know the "Tether" cryptocurrency. Tether is currently the fourth largest cryptocurrency behind Bitcoin, Ethereum and XRP.
Tether is the so-called "Stablecoin", these are cryptocurrencies that always have a value of, for example, $ 1 (or 1 € or 1 gram of gold) and are therefore "stable".
With Tether, this price stability is simply ensured by the fact that Tether has adequate reserves for each Token Tether to replace for $ 1 each. The legitimacy of Tether has always been controversial.
Tether prints money "out of nowhere" to buy bitcoin?
One of the most popular claims is that Tether is not fully covered and simply prints USDT at will, making "dollars out of nothing." According to theory, these tendons are used to buy tons of Bitcoin for "junk" tethers.
Of course, as a result of this process, the price of Bitcoin is also rising, and as growth is not based on real demand, a bubble is created. Tether is also currently suing the creation of such a bubble.
In Tether conspiracy theory – for stocks quite normal
Sounds scary? Is that it! But what is more exciting is that the stock and bond markets are no different to ensure stability in the markets.
In the US, this is taken care of by the Federal Reserve. Bloomberg reported that as of October 15, the U.S. Treasury bonds will be in effect $ 60 billion a month (!) buy. The current value of all cryptocurrencies combined is currently $ 224 billion ($ 4 billion from Tether), just to put this into perspective.
Where did the money come from?
The Fed, like the US Federal Reserve, can print money simply and naturally legally. It is noticeable that "new" money will be considered long-term inflation and rising consumer prices in the United States. Thus, printed money will be billed as an "indirect tax" to each US dollar holder. Because if more money is in circulation, its own share in the total is lower.
What's in Europe?
It's the same in Europe. The money is printed by the European Central Bank (ECB). This freshly printed money buys stocks and / or government bonds legal enough to stabilize and stimulate the economy.
The whole thing is called Quantitative Facilitation, which has been in use in Europe since 2015. But isn't that exactly what Tether is accused of? That's right, it's just been legalized.
The last turns off the light
But what happens if the quantitative easing policy ends? Well, you would probably have a problem first. Suddenly, demand for stocks and government bonds would fall and all prices fall. "The biggest balloon of all time," who else remembers the entrance?
Therefore, you cannot currently do so. "Ponzi" / "our economy" must continue and come as it can. How long this will work will become apparent, but as soon as things don't go well, it will be super exciting. Especially for all investors who, for example, have invested retirement funds. As soon as the ECB ceases printing, it is likely to be the first to see an immediate huge rise in stock and Co.
The ultimate and total disaster for the monetary system in question
Or, to put it Ludwig von Mises:
"The recurrence of a boom period with later periods of depression is the inevitable result of repeated attempts to reduce market rates by credit expansion. There is no way to prevent the ultimate collapse of a boom caused by credit expansion. the ultimate and utter disaster for the monetary system. "
Anyone who wants to look for an alternative method to safely store their savings can now read the following article:
Big thanks also to the block coach who described our article in their last video!
This post may contain promotional links that help us fund the site. Clicking on the links gives us a commission – but the prices do not change for you! 🙂
Also keep in mind general eToro risk education. CFDs are complex instruments and carry a high risk of losing money quickly with leverage. 76% of private investor accounts lose money when trading with this provider's CFD.