You need to have made your fringe from Rug Making.
Apply your fringe as a Tube, Scale 70, on a new layer Left Side.

Use the Unsharp Mask with these settings.

Now copy and paste as a New Layer 3 times. Arrange along the left side.
Trim the last one.  See the image below for how it should look.

Note:  While arranging, move each layer as you go down the side to the top, ie, move the layer to the top.  Once your left side is all set, turn off all of the layers except those fringe pieces.  Do this in the Layer Palette.  Now right click on one of the fringe layers in the Layer Palette and choose "Merge Visible Layers".  Now turn your other layer/layers back on.

Copy your newly merged left-side fringe piece.  Paste as a new layer and mirror.  Arrange it on the right side of the pillow.  My trick for making sure everything is on the same level is to use the selection tool as shown below.  You can move layers around while the ants are marching around.  You should zoom in close to make sure you have everything lined up correctly.