A picture is worth a thousand words right?
Cut a length of ribbon and fold it in half and knot.
Cut off the other raised edge spine, you will be left with a cute fringe piece that you could use on another project (we craters can be such hoarders can't we?) Do this to both ends of the ribbon. Now you have your tassel!
What can you make with the left over fringe? I don't know, it reminds me of a cowboy shirt. But, am I going to toss it? not yet ;)
Add a brad and attach it to the cap.