I agree: China’s “Bretton Woods 2” type of exchange rate policy (a quasi fixed parity of the Yuan vis-à-vis the dollar) pushes the US Federal Reserve towards more monetary easing (i.e. money creation) in order to depreciate the dollar and stimulate the economy, also stimulating the carry trade (borrowing cheap liquidity in the US to invest in emerging economies. The US financial system earns fat profits recycling the Chinese savings towards other emerging markets. Meanwhile, the next step of the euro’s crisis could come from Ireland, even before the widely anticipated second act of the Grece’s crisis. And overall, European governments and ECB continue to advocate self-defeating deflationary austerity while preparing to borrow more in order to bail out Ireland.
That’s why so many investors currently see gold as the ultimate refuge, but an attempt to revive the defunct gold standard would bring about the ultimate disaster.