Done what research I plan to do. Looks like something similar to SS "Trust Fund":

Federal Reserve Notes are printed by the Bureau of Engraving and Printing (BEP), a bureau of the Department of the Treasury.[3] The Federal Reserve Banks pay the BEP only the cost of printing the notes (about 4¢ a note), but to circulate the note as new currency rather than merely replacing worn notes, they must pledge collateral for the face value, primarily in Federal securities.
http://en.wikipedia.org/wiki/Federal_Reserve_Note

So, in one way or the other, you end up at a "step 7".

Story on US Treasury-issued Notes is here.

After the end of the gold standard in 1933, all types of issued currency (silver certificates, Federal Reserve Notes, and United States Notes) were redeemable only for silver. This ceased to be the case in 1963-4, during a time in which all U.S. currency (both coins and paper currency) was changed to fiat currency. At this point, the United States Note became obsolete and began to be removed from circulation. No more were issued after January 21, 1971.
http://en.wikipedia.org/wiki/United_States_Note

See also, Treasury's explanations ("...no backing by anything..."):

http://www.ustreas.gov/education/faq...l-tender.shtml