^NEW 8/22/2007 12:35:19 PM

Don'tlaugh. This is more than a simple scheme of printing money and throwingit out of the window. The whole system goes up in smoke the minute asheet of notebook paper becomes as collateralized as the last dollarsent back to the Fed. It isn't a matter of what the dollar is worth,but that it will acquire something of worth, namely a piece of papersecured by a title. That is why they deal in sovereign debt for themost part. It is why mortgages are so important for the system as awhole, one of the few things left secured by a title.

See,there are some things going on most of us don't understand withoutwatching. The rate on t-bills fell to the floor last week. Maybe theFed pumped too much money into the system and the system wantedsecurities of high quality. Well, at some point when lending gets toorisky, all these dollars will be redeemed back to the Fed for somethinginterest bearing. You might realize that the banks have assets thatthey equate to money many times greater than the supply of money fromthe Fed. What is to stop the depositors of these banks from asking fortheir money and buying treasuries with it? At some point, there isn'tenough good credit out there to redeem all the deposits. If this occurswith the Fed, the entire system goes down, most likely around theworld.