Time magazine writes a rambling piece on stablecoins entitled, "What the History of Money Says About Its Future." The article has a section on money market funds, which tells us, "What should we worry about when we worry about the future of money? Sure, there are plenty of new cryptocurrencies whose values fluctuate wildly from week to week. But if we're worried about broader risks -- to the economy, rather than just to speculators -- maybe we should focus on stablecoins. Rather than promising overnight wealth, many stablecoins offer stability with the claim that each virtual coin will be worth exactly $1 today, tomorrow and forever. As more and more people trade a growing number of crypto-currencies, stablecoins such as Tether and USD Coin have exploded in popularity. And in the history of money, we often find the promise of boring stability is ultimately more risky than the promise of quick riches." They write, "Money-market mutual funds are a telling example. They were invented in the 1970s, and the idea was to offer something that seemed like a bank account but paid higher interest. As Bruce Bent, the inventor of the money-market fund, said again and again, 'The purpose of the money fund is to bore the investor into a sound night's sleep.' Even the name is dull. Money-market funds worked like banks. Investors put money in. The fund then lent that money out, collected interest and paid some of the interest back to the investors. People and companies put trillions of dollars into money-market funds for safekeeping, and it seemed a lot like money in the bank -- put a dollar in, take a dollar out, plus interest. But, unlike bank deposits, money-market fund investments were not guaranteed by the federal government." Money's history explains, "In September 2008, the investment bank Lehman Brothers went bankrupt. As it happened, a large money-market mutual fund had lent $785 million to Lehman Brothers -- and the bankruptcy meant that the fund might not get that money back. Investors in the money-market fund started demanding their money back. But the fund couldn't deliver. In the parlance of money-market mutual funds, it 'broke the buck' -- investors could no longer take out a dollar for every dollar they put in. The moment an asset that seemed safe suddenly seems risky can be profoundly destabilizing. Overnight, investors started trying to pull hundreds of billions of dollars out of money-market mutual funds. It was like a bank run, and as often happens in a run, the money-market funds weren’t going to be able to come up with all the money. Within a few days, as part of an effort to prevent a broader economic collapse, the federal government stepped in." The piece adds, "The most popular stablecoins work a lot like these funds. When people buy stablecoins, some of the companies that run stablecoins turn around and invest that money.... And over the past few months, some of the most powerful economic officials in the country have suggested that stablecoins may soon come in for stricter regulation. The rise of stablecoins, and the government's response, is the history of money and the future of money playing out in the present: a new monetary technology that brings new benefits, new risks and new fights between public and private interests."

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