and this (from Bill Bonner) ...In the vaults of various central...

and this (from Bill Bonner) ...

In the vaults of various central banks around the world lies $4.8 trillion worth of foreign currency reserves - the fruit of selling oil and widgets, mainly to U.S. consumers. And like oranges or papayas...these dollars have a limited shelf life.

We have not been invited to peek into these vaults, but we have no doubt what we would find: huge stacks of green money, with the faces of dead U.S. presidents on the notes. Americans have been the world's biggest spenders of the last 20 years. Naturally, it is their money that makes up the bulk of those foreign currency reserves. It is their money, too, that now poses the biggest problem - not only for the people who shipped it overseas, but also for those who have it in their vaults.

By our very rough calculation the total of these reserves will hit $5 trillion before the end of this calendar year. Then, we will be talking about real money. But that is the trouble; we are not really talking about real money at all, are we?

We should have said: $5 trillion is a lot of money; too bad it isn't real. These are dollars, remember, the faith-based currency. The same dollars that have lost approximately 97% of their value over the last hundred years...and, according to the statisticians on the government payroll...now loses value at about 4% per year.

If we take the government's number goons at their word, and presume that the entire $5 trillion were invested in 91-day U.S. Treasury bills, currently yielding 1.63%, the holders of all this dough are losing about $120 billion per year. The fruit is starting to smell a little rich, in other words.

But it could be a lot worse. If the euro, gold, oil, or commodities rise sharply, foreign dollar holders will feel like chumps. A few may give up on the dollar and dump it on the world market in large quantities. This could cause a sudden drop in the value of the greenback...leading other holders to rush for the exits. The dollar's collapse would bring down the whole post-'71 monetary system...and pitch the world into a much more serious problem.

Already, many dollar holders are getting itchy. Many are looking to lighten up their loads. Some are trading dollars for food...

("Hoarding nations drive food costs ever higher," says the New York Times.)

A few have helped recapitalize the banks. And Abu Dhabi just traded $900 million for the Empire State Building. Only about $4.7 trillion left to go.

By comparison, the entire world's stock of gold - above ground - is only worth about $4.2 trillion.