[tlb]

There's some amount of USD reserves that would make this scheme work. Certainly with $100T it would work. Might it work with only a few billion? Hard to guess. I was surprised how little reserves seemed to be needed to make Tethers work.

The proposal addresses how to discourage consumer withdrawals. But at some point currency traders will get involved and find ways to short the new currency. In the past, traders have created runs on the treasuries of large countries who were propping up their currency.

[incrudible]

> Certainly with $100T it would work.

That's more dollars than are in existence, by the narrower money supply definitions.

> I was surprised how little reserves seemed to be needed to make Tethers work.

An ordinary bank has maybe 10% reserves. Tether had a whopping 70%, if you assume that this money actually exists.

Of course it could all be make-belief. You can fool some of the people, all of the time.

> But at some point currency traders will get involved and find ways to short the new currency.

That's not necessarily a problem. You can do that with Tethers and wait for some big dump to lower the price. As long as the currency is backed by withdraw-able US-dollars, there's little opportunity for profit, it just doesn't make sense to sell low.