"The Federal Reserve will do what it takes to maintain its credibility, which is central to preserving the integrity of the U.S. dollar," Dallas Federal Reserve Bank President Richard Fisher said on Tuesday.

This report, from Reuters, continues:

"'We seek to get it right. And the answer to your question is we will do what gets it right,' said Fisher.

"Answering audience questions after a speech to the Dallas Friday Group, Fisher said the U.S. dollar is a 'faith-based currency' dependent on the credibility of a central bank.

"'In addition to a faith-based currency, we are the currency of the world and we must maintain its integrity...'"

How can you maintain the integrity of something whose integrity rests on faith? There is the problem right there...out in the open. Faith is a matter of perception, of hope, of desire. The dollar will be worth something as long as people have faith in it. You can have faith in God. You can have faith in Mother Nature or in the cosmos, but how can you have faith in the dollar? Is not the dollar managed by men? Are not men easily corruptible? Are they not born of woman? Do they not eat bread, drink whiskey and wallow in sin from time to time? And, will they not be tempted to liven up the party occasionally, and try to get their pictures in the paper. And, being human, won't they give into it every once in a while? People who have faith then, won't they be chumps?

We've taken great comfort and amusement this week from the realization that even the swindles are phony. We have been worrying about fraud, but the fraud is fraudulent, too. We feel a perverse kind of comfort, we admit. It's the kind that a man who is going blind feels when a judge takes away his drivers license on a DUI charge; he won't need it anyway.

The dollar is a swindle. It is an imposter - pretending to be something of value. But neither Americans nor foreigners can seem to get enough of them. Their faith seems boundless. 

What are Americans going to do, we wondered, when the Chinese decide to stop taking dollars for their gadgets? And, when the Iranians and Saudis stop exchanging greenbacks for oil? What will Americans do when U.S. householders can no longer refinance their houses to close the gap between expenses and income? And, how will they pay for health care? How will they afford to retire?

This is not a problem for Americans only. The Western world has grown fat and happy in the last half a century. Generations of politicians have made promises that not even geniuses or saints could keep, and the lumps have been living on expectations that only rapid economic growth could meet.

Western nations are not run by saints or geniuses, but by lunkheaded sinners. And rapid growth? In America, the average working man has seen no real gain in his disposable income since the Carter administration. In Europe, wages are up, but so are the costs of the social programs that are keeping marginal workers off the payrolls. That is why the rioting French students are so afraid of labor reform. They are not the idealistic dreamers of '68; instead, they are the selfish hallucinators of  '06, hoping to keep globalized pay levels away from the land of the Frogs.

Meanwhile, the growth is in the East. Wages are currently rising by 10% per year in both India and China. GDP growth rates are nearly as high. 

The tadpoles can stop worrying. American wage earners and retirees can relax, too.  Yes, they are losing ground compared to the skinny Asians, but what difference does it make? The dollar is a fraud, and they don't need so many of them anyway. Who is worse off for not being able to buy a big screen TV? We can remember back to the 1950s when our father brought home a TV. It was a big boxy thing with a curved greenish screen. We had to pull down the shades to watch it during the daytime.  I Love Lucy...the Honeymooners...Amos and Andy - we loved them all. Does an eight-year-old today get more pleasure out of his big flat screen than we got from our old green one? 

We doubt it.

And, what American really needs more food? That is the problem with prosperity, dear reader; a little goes a long way. The typical American has not too little food, but too much. He also has too many gadgets...too many diversions...too many mindless ways to spend his time and his money.

But, we are ranting, aren't we? Besides, who are we to tell people how to spend? What do we know? Nothing. Still, we have a theory!

Our theory is that all institutions, bodies, societies, organizations - all things animal, vegetable, mineral - erode, degrade, and degenerate over time. That goes for the consumer economy, too. As time goes by, there are more parasites, leeches, conmen, grifters, anglers, idlers, kibitzers and no-account GS-6s globbing up the system. People begin by buying things they need with money they've saved. Then, they buy things they want with money they earn. Finally, they end up buying things they don't even want with money they don't have and will never earn. That is what home equity extraction is all about. It is not savings; it is not earnings. It is dream money - money that came in the door while the owner was asleep. 

The giant swindle is that people think they are getting richer by having access to more dollars. They are suckered into spending and debt, like a lobster into a trap, believing they need more and more. But the promise of spending is as phony as the swindle itself; the more they spend the less they get for it. Before long, the real return on spending - as say, in eating too much, having too much surgery, too many mistresses, or too many soldiers throwing their weight around - is negative.

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