Note for the Medievalists, aka Gold Standard Dummies

Hello Ron Paul moonies, I would just like to point out that a gold standard can be manipulated in exactly the same ways as a fiat currency. Market forces have no more impact on a gold-based currency than a fiat currency.

Those who favor a return to the gold standard (you know, the good ol' days before 1933) are in the same position as certain French or Japanese nobles were during the 16th century, arguing in favor of heavy infantry in a gunpowder age. The French adapted and became a world power for several centuries. The Japanese closed their borders and became a backwater until reality hit them in the face.

Like it or not, we live in a world where central banks wield enormous power. The policies of these central banks are transnational in effect. Coordination amongst these banks (undemocratic actions indeed) are necessary to prevent systemic collapses.

What we have learned in this crisis should reify the role of the central bank in international conflict resolution. Watch in the coming months as China gets pressured into the modern world as the coordinated quantitative easing by the Fed, the ECB, and the various national European central banks forces the renmimbi up in value.