this post was submitted on 13 Feb 2024
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The Fed printed at most 200bil in 2023, down from 330bil in 2022. There’s about 2.25 trillion in circulation and about 15% of the notes are destroyed every year, which is loosely equivalent to the cash order the Fed created, give or take a couple of percent. Inflation for 2023 using the Consumer Price Index was about 3%. That means net cash supply didn’t really change much and prices went up.
If you think that ~200bil in cash has any effect on inflation I’ve got an amazing investment opportunity for you: it’s called crypto and it’s totally legit.
I noticed now that tether (a crypto coin that claims to be 100% backed by USD) printed 10% of what the fed printed in 2023.
And a similar amount for usdc
Surely all those freshly printed crypto coins are backed by real dollars
You raise a really interesting question there. I always ignore Tether as a joke because it’s just a crock of shit. But what happens if someone makes a run on Tether? They publish accountability reporting which, crucially, tells consumers to inform themselves of the general risks and potential legal issues. It would appear that Tether does have ~80bil in USD assets of various maturity. Only ~400mil of that is cash. There’s another ~20bil in other assets. If there is a run on Tether, it collapses at under 1% of its balance, ie of the ~100bil in Tether only ~400mil/0.4bil of it could be converted to USD today (well, 2023-12-31 per the last report). Since it’s not insured, there’s nothing to prevent a run on it. Its value is supposed to be its ability to be converted to USD, so if a run occurs and people are not able to make the conversion, its value plummets and can only be rescued by the fire sale of assets well below market value. Tether, more so than fiat currency, has completely made up value.
I’m not a finance person so I bet someone that knows more than me has already done a better job of explaining how Tether is a scam.