Fractional reserve banking has the same problem, yet provides a real, functional purpose for finance.
Tether has a purpose - to be a savings account is not that purpose.
Tether has a purpose - to be a savings account is not that purpose.
Hundreds of millions of people do this every day around the world without issue, because this is a solved problem.
You cannot withdraw your Tether balance. They literally do not allow that. The best you can do is get an intermediary coin that some places might let you change into cash or another crypto.
But it's at least possible to withdraw from banks. Redeeming Tethers is impossible.