So the US made a switch. Instead of saying, "This dollar is backed by the gold in Fort Knox," it said, "This dollar is backed by forests, factories, stockyards, oil fields, etc., etc. You can use this dollar to buy stuff" (The Soviet Union's response for the ruble was, "Wanna buy a bowl of borscht? How about a slightly used T-54?"). We tied the dollar to the national economy.
The problem is that we've gradually dismantled that economy over the last half-century. What do we make now? Electrons and paper. Those products are irrelevant (or only peripherally or derivatively so) to the vast majority of people, and the dollar is irrelevant to those products. In other words, they ain't buyin' what we're sellin'. That's the dollar crisis.
But assets are no longer going up and no one can figure out how to get them to resume their former appreciation. This has put a severe crimp in the game. The way it was played by the financial sector never really took account of what might happen if assets stopped appreciating. Most of those in the financial and regulatory world are as confounded as if gravity suddenly became a repulsive force. Their world is flying apart and they don't know why, or are afraid to admit that their darkest fears might be the problem, and thus they can't figure out how to fix it.
In order for the financial community and related players in the government and regulatory institutions to understand what is happening they would have to accept that they were engaged in massive, systemic fraud and that most of them belong in jail. They can't and won't admit that. Therefore the responses are to everything but the real problem. That is why the responses can't and won't work. As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
