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I would imagine at this point that its a VERY real idea being tossed around. Look at it this way, what currency of what Nation is actually pegged to a commodity? Like God or Silver? There is none. Its all paper, literally pegged to an idea of Value. When the US up-pegged its currency from Silver, it allowed the currency to float on a value system, and if there is FAITH in that value of that idea it works great. But when that faith disappears... the paper is worthless. That's what we have happening here, the faith in the system has disappeared, no one knows what anything is worth anymore, they use the loose term “uncertainty” to describe that with out alarming anyone. They can “Fix” that by re-pegging Currency to a Commodity, like Gold or Silver which has real intrinsic value. BUT, for that to work, it would have to be done on a Global level at this point, because our markets are all so closely tied together. Most likely they would shut down the markets until such time as they could revalue the Currencies. I am not smart enough to even begin to unravel how complicated that would be. Or how painful.... But I think that it's coming. If you won gold, and have it in your hot little hands, you are sitting real pretty right now.

Interesting. I had debate- got a little heated- with my cousin last week. She’s a big commercial paper banker in Manhattan- and I kept talking about Fannie/Freddie and the housing bubble that was based on lies but made billions of $ for some. She honestly wasn’t seeing the connections between liberal policy and the road to King Henry.

She was convinced that when we started seeing the Lehman CDS today there would be at least 30% value. I read a little while ago that Lehman is showing 9 3/4 % on the dollar this morning.

Wonder what she’s thinking right about now..

Try the flip side. The current theory I'm kicking around: Just as the US government disconnected the dollar from gold, maybe soon they'll disconnect the physical dollar (which is in relatively limited quantities) from the virtual dollar (which is really a fraction of on-books Federal Reserve debt). Most people just use "plastic" for money now, not caring that there isn't anywhere close to enough real dollars to cover what's allegedly in their checking accounts - just as most people came to use paper dollars, not caring that there wasn't anywhere close to enough gold to cover what was allegedly represented by those "Reserve notes".

Notice that as this current crisis unfolded over a few days, the price of oil plummeted - indicating that the value of the dollar (real dollars) has increased dramatically. Internationally, real dollars are considered the strong place to be ... but there aren't enough of them.

Come enough pressure on the dollar system, methinks Congress will eventually refuse paper/coin dollars as legal tender, and only accept electronic payments - which are merely fractions of US Treasury / Federal Reserve debt.

Thoughts?