No, they don't. In the event of a bank run, a bank cannot cover their liabilities. This is the same thing that you point in tether as a fatal flaw and a "scam".
Timing difference, i.e. majority of assets are not held in cash (it is put to work), so if many people try to withdraw lots of money at the same time, it can trigger a downward spiral (“bank run”).
I don't understand, what does that have to do with anything? The issue being discussed is Tether, and how it's totally a pyramid scam since it doesn't hold 100% in reserve.
