As Jim Rickards explains, the ongoing "yuan revaluation" controversy must be understood within the context of the collapse of the dollar.
This isn't the first time Rickards has theorized that in order to save the dollar, the Treasury and Fed will have to resort to some kind of gold backing -- and at levels that would shock most CNBC watchers: $5,000-10,000 an ounce.
This might be true... but I've always believed that it's more likely that the U.S. would experience a total economic collapse than its leaders would be willing and able to do the right thing. In all other cases of governments rescuing a doomed fiat currency by returning to gold, there were institutional memories of sound money. For instance, during the Bolshevik Revolution and ensuing Civil War, Lenin's regime had debased the ruble into oblivion. When the Bolsheviks sought stability in the 20s -- and reluctantly returned to many aspects of capitalism -- they introduced a gold-backed money to replace the ruble, the "chervonet." (The name itself once referred to pure gold coins of foreign mintage.) Today, the American Treasury and Fed are filled with wonks who are convinced that gold is a ridiculous, barbarous relic as well as once-and-future investments bankers whose entire profession is predicated on fiat money and centralized credit creation.
Put another way, we can't count on our leaders being as sensible as the Bolsheviks.