Alan Greenspan has been away from the taps at the Fed for more than 24 hours now. But the juice still flows. So far, so good. This reminds us of a joke our grandfather used to tell. The poor man was a major depositor and on the board of directors of a bank when the Great Depression hit. Rumors flew around that the bank was going belly up. So, he rushed over to the bank to take out his money. "Wait a minute," said the manager. "You're a director. If people see you taking your money out, they'll know we're in trouble. Then there will really be a run on the bank and we'll go under."

Our grandfather was a good-hearted fellow. He left his money in the bank. The next day, the bank went bust...and he lost everything. Most of his possessions were sold off, but at least he managed to hold onto his sense of humor. He recalled that during the darkest days in the early thirties, broken men would take the elevator up to the top of the First National Bank downtown and jump off. One of them was heard to remark as he went by the 9th floor: "Well, I'm all right so far."

Yes, the maestro is history. And yes, we are all right so far.

But we left one Big E unmentioned yesterday - the world's Experimental money system. And it is heading straight for a crack up. Since August 15, 1971, central banks have embarked on a bold test. Until now, every time central bankers tried to operate a money system based on nothing more than faith, goodwill and careful custodianship, it has been a dismal failure. We have explained why many times.

Central bankers can only control the quantity of the money they create...or the quality. They cannot control both at the same time. Since they always tend to err on the side of quantity (who doesn't like more of the green stuff?), quality suffers. Soon, there is more and more money around....until eventually, even investors notice and they begin to worry about it. They then want to exchange their money for things of unblemished quality - like gold. Gold doesn't lose value for a good reason: its quantity is limited by nature. Rarely does the world's supply of new gold exceed 2% or 3% per year...nicely - almost divinely - in line with GDP growth.

Alan Greenspan once knew this very well; he wrote essays about it in his early days...noting that gold backing for currency was necessary to keep central bankers honest. Otherwise, they won't be able to help themselves, he predicted; they will press down so hard on the money quantity pedal that money quality will go haywire.

No one pressed down harder than Alan Greenspan. He jumped on it with both feet. More money and credit was created during his time at the Fed than under all the U.S. Treasury secretaries and Fed chiefs put together. The value of the dollar - in terms of what it will buy - was reduced by half during Greenspan's 18-and-a-half-year service. Our guess is that that is just the beginning. The quality of the dollar will continue to erode until there is nothing left.

The price of gold is telling us that more and more people are getting worried - not just about the dollar, but about all paper currencies. Their fretting couldn't come at a worse time. This quarter, the U.S. government needs to sell a record amount of dollar-denominated debt. Last week, it was reported that the amount was even larger than previously reported. Things have not gone as smoothly as the government expected. - So now, the U.S. Treasury will borrow more than $180 billion during those three months. And yesterday, we saw that the feds have already crashed through the legal debt ceiling, though no one seems to care any more.

"The last time so much long-dated paper gushed from the Treasury," notes Grant's Interest Rate Observer, "In February 1996, 10-year yields rocketed to 7% from 5.6% in just four months." Lenders will be spoiled for quantity, but starved for quality.

In addition to the feds' borrowing needs, the private sector is looking to sell $250 billion worth of new bonds in the first quarter. Hedge funds, as we observed ourselves last week, have stopped hedging. Instead, they're in there with all the other yield-grubbing speculators, buying up dicey bonds to get an extra point or two of earnings. So far, they seem to be doing well...thinking only about the return on their money. When they - and foreigners - start thinking about the return of their money is when the bottom will fall out.

Rome was conquered after the empire lost control of its army and then its frontiers. Lacking enough homeland boys to do the job, barbarian soldiers were paid to police the borders. Then, the barbarians figured they might just as well take over completely.

Fifteen centuries later, Americans lose control of their money. Lacking sufficient savings in the homeland, and unable to balance its income against its outgo, the United States is forced to get its savings from abroad. Ben Bernanke is supposedly at the head of the group of bankers that sets U.S. short-term interest rates. That's what we read in the paper. But if overseas central bankers and foreign investors fail to raise their hands at the next Treasury auction, we will find out who is really in charge.

Bill Bonner is the President of Agora Publishing.  For more on Bill Bonner, visit The Daily Reckoning.