First of all decide if you're felting the fiber once it is knit because felting shrinks the length by 1/4 to 1/3.
To make a hefty i-cord, start with 4-6 stitches, cast on, and knit, then move the stitches to the left needle, repeat knit and move to left needle, this places the loose yarn to the left but the first stitch is on the right, bringing the stitches around into a tubing effect. Knit the piece until it is 1 and 1/3 the length of the finished desired piece.
To attach to a felted bag, I use grommets, they come with instructions and in various sizes, and need a little grommet tool for each size, and a hammer and a workbench surface. Make the holes in the felted bag by using graduated sizes of metal needles to poke the holes in the fabric.
THIS IS A GREAT LINK TO HOW-TO MAKE AN I-CORD
Once the holes are the right size, add the grommets, thread the felted strap through and use your yarn to sew the two ends together with a darning needle, the yarns match the strap and using invisible stitches (hiding each stitch inside the two ends of the strap, the strap becomes one continuous loop - make sure it is woven through the grommets first though, or you'll be cutting it apart to fasten it to the bag.
To felt the strap, you must use 100% wool yarn for it to work effectively, place in a pillow case, fasten closed, throw in a pair of jeans and the case wash in hot water about 8-12 minutes. When done, stretch the strap very tight, and often, and let dry completely. DONE!!
Judy M-I-L at 10:41 PM