If you look closely in the whitepaper you will notice that just for holding Steem Dollars you can get 10% interest. This creates a huge market for Steem Dollars for investors. It might go on to explain why Steem Dollars are going for a price higher than the regular dollar because Steem Dollars are better than regular dollars.
Regular dollars do not provide any interest. In fact if you hold the USD then you are going to have to deal with inflation. Additionally if you hold Steem Power you have possibly 5% dilution if you aren't active. Steem Dollars on the other hand in the current economic circumstances are great because you can't get a risk free 10% interest almost anywhere else. You won't get that in stocks unless you really really know what you're doing and even then it could have an off year.
If Steem Dollars are used a lot on the Steem Platform then the growth of Steemit itself would be what backs the Steem Dollar. What can you do with this interest on your Steem Dollars? You can compound it by buying Steem Power.
I found this handy Steem Dollar Compound Interest Calculator for anyone who wants to calculate how much compound interest they can get.
I wasn't aware of the 10% interest on steem dollars, but it would definitely have consequences in terms of real-life economics if it builds up in terms of people having them parked to get interest.
If steem dollar = dollar, then that would make the steem platform something that would attract a lot of external investment to acquire steem dollars appreciating at 10% per year.
So say a fund comes along and buys 10mn steem dollars in order to make them 11mn steem dollars. That's -1mn dollars for the ecosystem in the end of the year. Is this sustainable? I mean banks get your deposits, give you 2% interest and then loan you with 5% - so they have a business model where they have income. Here there's no income except inflation. So perhaps that would create a lot of pressure in steem price as a lot of steem would be needed to support all the steem dollars interest.
What this means is if you decide to Power Down your Steem Power the smartest thing to do with it might not be to put it into your fiat bank account where you could have to deal with inflation and other issues. The smartest thing might be to Power Down when you have enough money that you can put it into Steem Dollars and either live off the interest from Steem Dollars or let it compound. At 10% a year if you're a Steem whale with $400,000 then you'll be getting $40,000 in Steem Dollars every year. You could reinvest that into Steem Power or you could spend it as you please.
Oh yeah and I guess by law I have to say none of this is investment advice. This is just my opinion based on common sense understanding of Steem Dollars, compound interest, and it's what I would do if I had the Steem Power to do it.
I wouldn't say it's risk free. It's highly speculative at this point.
but remember you get taxed 15% due to trading later so you have to keep that in mind