The cryptocurrency economy relies on Tether…

The cryptocurrency economy relies on Tether, specifically, far more than the global financial system relies on money market funds. It has convinced itself that they’re equivalent.

That is wrong. It has always been wrong. It may soon be experimentally disproven catastrophically.

Tether doesn’t have single digit percentage point exposure to a US financial institution who couldn’t pay them 100% and wouldn’t be able to settle for months. They probably have close to total exposure to a financial institution which will be offering much worse.

(If you believe I am wrong you can call up your OTC desk of choice and offer to buy N million dollars of tether at a 3% discount to par. Hoover up that free money.)

(You know why you can’t call up an OTC desk and offer to buy a deposit held in a US bank for a 3% discount to par, at a trade size of millions? And indeed financial professionals would laugh you out of the room for suggesting it? Yeah.)