I was in Atlanta for a real estate conference last week and here is a partial report.

Two different former Federal Reserve governors spoke to us.

Of the first ex-central banker, after his speech, I got to ask a question: I said, "A few weeks ago, the Fed created a trillion dollars out of thin air and bought US Government Bonds. This monetizing of our debt can work, sort of, as long as we have the world's reserve currency...but China has been making noises about a new world currency being necessary. What do you think the chances are of that happening over the next decade?"

Before I get to his answer, isn't it remarkable how our Fed can create money? They literally can create a billion, a trillion, whatever they want, with a few strokes of the keyboard. So what they just did is not far removed from the banana republics who crank the printing press up when economic times get tough. However, and fortunately, the Fed is not run by politicians who keep the presses on full bore indefinitely and have no ability or interest in slowing things down...if/when that day comes when politicians are running the fed, run for the hills; woe is us.

So, this ex-Fed governor heartily pooh-poohed my question about the chances of the Chinese being successful within a decade, of pushing a new world currency. Maybe he is right. And if I did my own assessment, I would give the Chinese a 25% chance of success in doing this. If I could have followed up, (and if I had very large *ahem*) I would have said, "Isn't that the kind of short-sighted, unthinking certainty that you and the Fed were guilty of when you kept interest rates too low for too long and helped inflate our housing bubble? You laughed at anyone who even suggested that home prices could go down nationally and simultaneously, let alone by 10% to 50%."

Later, the other ex-central banker took a very good question: "What's the prefix to "-flation" that we should be most worried about: 'in-' ; 'de-' ; or 'hyper-'? "

Like any good central banker, the fellow didn't give a straight answer. But he later said something in reply to another question that both assuaged my fears about monetizing our debt and simultaneously made them worse. The fellow said that he had worked with and known Ben Bernanke for many, many years, and Ben doesn't give a rat's arse (my paraphrase) about politicians. And that Ben has publicly and privately said he will do the right thing and will shrink the Fed's balance sheet (e.g., sell those government bonds he just bought for a trillion dollars as soon as possible). Bernanke knows well that continuing such purchases as he just made, for a sustained period, is the road to monetary armageddon.

But, this ex-Fed governor pointed out, Bernanke's "hell with what politicians want" attitude is exactly why we have to be so concerned when he is considered for another term...the temptation will be strong to replace him with a political animal who can be bent to the will of our feckless politicians who probably wouldn't be able to control spending if their very lives depended on it. Hence my advice on running for the hills if this happens.