GOP Spending Law Gives Corporations $16 Billion in Retroactive Tax Breaks: Analysis

“You cannot change what a company did in the past, so that half-year of retroactive effect of the provision is just a windfall to companies,” said one critic.


US President Donald Trump, joined by Republican lawmakers and others including First Lady Melania Trump, wields a gavel after signing the One Big Beautiful Bill Act into law on the South Lawn of the White House on July 4, 2025 in Washington, DC.
(Photo by Eric Lee/Getty Images)

Brett Wilkins
Dec 02, 2025
COMMON DREAMS

Corporations are likely to claim $16 in fresh tax breaks on expenditures made before the passage of the budget legislation signed earlier this year by US President Donald Trump, according to an analysis by a nonpartisan congressional committee released Tuesday.

The analysis by the Joint Committee on Taxation (JCT)—a panel composed of five members each from the Senate Finance Committee and House Ways and Means Committee—came in response to a September query from Sen. Elizabeth Warren (D-Mass.) regarding the One Big Beautiful Bill Act’s (OBBBA) extension of full bonus depreciation, a tax-savings tool allowing businesses to automatically deduct costs of qualifying assets.

As Warren explained in her letter, full bonus depreciation enables corporations “to immediately deduct some or all of the cost of new business investments, such as the purchase of manufacturing equipment, software, and furniture, rather than deducting those costs over the estimated lifetime of those assets.”

“This policy was first implemented in 2010 as an intended temporary economic stimulus in the aftermath of the Great Recession, and Congress allowed it to expire the following year,” Warren noted.

“However, President Trump’s 2017 tax law reinstated 100% bonus depreciation from 2018 through 2022 in what amounted to a massive corporate giveaway,” the senator continued, highlighting nearly $67 billion in tax savings for more than two dozen corporations including Google, Facebook, UPS, and Target.

“And after extensive lobbying from billionaire-funded right-wing lobbying groups, the OBBBA reinstated 100% bonus depreciation permanently to the tune of hundreds of billions of more dollars over the next decade,” Warren added.

Applying retroactively to capital expenditures since January 19, corporate tax deductions under the OBBBA’s reinstatement of the full bonus depreciation will cost $16 billion in lost federal revenue, according to the JCT’s analysis. The tool has been hailed as game-changer for Bitcoin miners, who can write off 100% of hardware costs in the year of purchase.

The OBBBA provision allows firms to use the deduction to write off certain qualifying business-related properties, such as corporate jets. Meanwhile, millions of lower-income US households are suffering from the law’s unprecedented cuts to vital social programs including Medicaid and the Supplemental Nutrition Assistance Program.

While proponents of the full bonus depreciation argue that large corporations benefit most from the tool because they make up the lion’s share of investments, critics point out that such breaks are generally poor investment incentives because they are applied after companies have already made their spending decisions.

“Thanks to Donald Trump and Republicans’ Big Beautiful Bill, giant corporations will win big while American families see their costs skyrocket,” Warren said Tuesday in response to the JCT analysis. “Next year, the federal government will spend over five times more on these tax handouts for billionaire corporations than it spends each year on childcare.”

“Time and time again, Donald Trump and Republicans have made clear that they stand with billionaires and billionaire corporations—not American families,” she added.

Numerous corporations taking advantage of the full bonus depreciation have paid effective federal corporate tax rates far below the statutory 21%, according to a 2023 analysis by the Institute on Taxation and Economic Policy (ITEP).

One tax expert called the deduction “a cheat code to saving millions in taxes,” as thousands of companies have dodged paying their fair share by effectively reducing their income to zero, or even making it negative.

As Warren noted Tuesday, “over 80% of the 100% bonus depreciation claimed by corporations from 2018-22 went to companies with over $1 billion in yearly income,” while “99% of bonus depreciation benefits went to corporations making over $1 million annually.”

ITEP federal policy director Steve Wamhoff told the Washington Post Tuesday that “it is quite obvious that if an incentive is retroactive, it is not actually an effective incentive.”

“You cannot change what a company did in the past, so that half-year of retroactive effect of the provision is just a windfall to companies,” Wamhoff added. “That part is just ridiculous.”

‘Trump is now doing their bidding’: Journalists say they know why trafficker got pardon

Alexander Willis
November 30, 2025 

RAW STORY


FILE PHOTO: Republican presidential nominee and former U.S. President Donald Trump gestures at the Bitcoin 2024 event in Nashville, Tennessee, U.S., July 27, 2024. REUTERS/Kevin Wurm/File Photo/File Photo

President Donald Trump has been hammered over his recent pardon of a convicted Honduran drug trafficker, with the president being pressed for an explanation as his administration escalates military pressure on Venezuela over alleged narcotics trafficking. But on Sunday, two journalists said they’ve uncovered the real reason behind the move.

On Friday, Trump said he plans to pardon Juan Orlando Hernández, former president of Honduras and convicted drug trafficker who, according to court testimony, planned to “stuff the drugs right up the noses of the gringos.”

The move comes amid Trump declaring Venezuela’s air space to be closed, ongoing strikes on suspected Venezuelan drug-carrying sea vessels, and the deployment of an aircraft carrier strike group to Venezuela’s coast – all with the purported aim of combating drug trafficking.

While Republican lawmakers have struggled to reconcile Trump’s war on drugs with his pardoning of a major drug trafficker, journalist Pedro Gonzalez said recently that he believes he’s figured out the reason.

“There’s a 90% chance Trump wants to pardon Juan Orlando Hernández, the former president of Honduras, who was convicted for his role in a major drug trafficking enterprise, because he is connected to people like Peter Thiel and Marc Andreessen and the rest of the tech bro morons,” wrote Chronicles Magazine correspondent Gonzalez in a recent social media post on X.

Thiel and Andreessen – two billionaire tech industry giants that hold major influence over the Trump administration – are both strong backers of Honduran Zones for Employment and Economic Development, or ZEDEs, a proposal for a type of autonomous city or area with its own administrative and political system operating on libertarian principles.

Hernández was a supporter and promoter ZEDEs, which Gonzalez – tying the two topics together – suspects is the primary reason for Trump’s unprecedented and poorly timed pardon of the convicted drug trafficker.

“Let’s be very clear: the narco dictator Trump is pardoning was beloved by the crypto world for creating lawless, sovereign zones for tech utopias organized around crypto,” wrote journalist Ryan Grim in a social media post on X. “The current [government] moved to shut them down. The crypto class fought back and Trump is now doing their bidding.”

 

'A Biden setup': Trump doubles down on pardon for drug trafficker

Ewan Gleadow
December 1, 2025 


Donald Trump disembarks Air Force One after the G7 Summit in Canada. 

REUTERS/Kevin Lamarque


Donald Trump says a convicted drug trafficker will receive the presidential pardon, doubling down on a statement made two days ago.

The president made it clear he would issue a "full and complete pardon" to former Honduran president Juan Orlando Hernandez, who was convicted of drug trafficking last year. He was sentenced to 45 years in U.S. federal prison for helping move massive quantities of cocaine into the United States.

Trump announced the plan to pardon Hernandez on Friday, and speaking with reporters on Air Force One on Sunday, confirmed the plan to pardon the former president would go ahead. Trump even referred to the arrest and subsequent charge of Hernandez as "a Biden setup", The Daily Beast reported.


He said, "Well, I was told—I was asked by Honduras, many of the people of Honduras, they said it was a Biden setup. He was the president of the country. And they basically said he was a drug dealer because he was the president of the country."

Hernandez was extradited to the U.S. in 2022 and sentenced in a New York federal courtroom two years later for taking bribes from drug traffickers to move “well over approximately 4.5 billion individual doses of cocaine.”

But Trump has since insisted that the people of Honduras believe Hernandez was set up, and that he "agreed" with them. He added, "He was the president of the country, and they basically said he was a drug dealer because he was the president of the country, and they said it was a Biden administration setup. And I looked at the facts, and I agreed with that."

When pushed to share evidence of Hernandez's innocence, Trump replied, "They could say that you take any country you want, if somebody sells drugs in that country, that doesn’t mean you arrest the president and put him in jail for the rest of his life. That includes this country."

Earlier this week, Trump passed comment on the Honduras elections, calling on people to "vote for Tito Asfura" and even congratulated Hernandez on his "upcoming pardon".

He wrote, "This cannot be allowed to happen, especially now, after Tito Asfura wins the Election, when Honduras will be on its way to Great Political and Financial Success.

"VOTE FOR TITO ASFURA FOR PRESIDENT, AND CONGRATULATIONS TO JUAN ORLANDO HERNANDEZ ON YOUR UPCOMING PARDON."

CRIMINAL CRYPTO CAPITALI$M

Trump-pardoned CEO's firm accused of 'knowingly' enabling Hamas attacks

Matthew Chapman
November 24, 2025 

RAW STORY


FILE PHOTO: Binance founder Changpeng Zhao, also known as CZ, speaks at the Bitcoin Asia conference, in Hong Kong, China, August 29, 2025. REUTERS/Tyrone Siu/File Photo

A new lawsuit against a cryptocurrency company whose billionaire founder was recently pardoned of federal crimes by President Donald Trump argued that the firm "knowingly" helped finance the Oct. 7, 2021, attack on Israel by Hamas, Reuters reported on Monday.

The firm, Binance, serves as an exchange for cryptocurrency trading, and was the primary competitor to FTX before the latter firm was implicated in a fraud scheme by its CEO and declared bankruptcy in 2022.

"According to a complaint made public on Monday, the world's largest cryptocurrency exchange laundered money for Hamas even after pleading guilty in November 2023 and paying a $4.32 billion criminal penalty for violating federal anti-money-laundering and sanctions laws," reported Reuters.

The plaintiffs, who include 306 American victims and relatives of victims, "accused Binance of knowingly enabling Hamas, Hezbollah, Palestinian Islamic Jihad and Iran's Revolutionary Guard to move more than $1 billion through its platform, including more than $50 million after the October 7 attack," according to the report.

"Binance intentionally structured itself as a refuge for illicit activity," the complaint said. "To this day, there is no indication that Binance has meaningfully altered its core business model."

Binance's former CEO and founder, Changpeng Zhao, pleaded guilty to money laundering charges in 2023. Earlier this year, Trump gave him a full pardon, claiming that he was politically targeted by the Biden administration.

However, that pardon came after Binance spent months promoting a stablecoin issued by World Liberty Financial, a cryptocurrency venture owned by Trump family members that has netted them over $1 billion in profit.

 

Greener cryptocurrencies are less volatile as they react less to energy price movements

University of Vaasa

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Davide Sandretto

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Credit: Photo: University of Vaasa

The sharp swings in global energy markets are directly reflected in cryptocurrencies and can explain part of their volatility. Davide Sandretto’s cotutelle dissertation at the University of Vaasa and the University of Turin finds that greener, energy-efficient cryptocurrencies respond more steadily to market movements. However, significant risks persist, highlighting the need for effective risk-mitigation tools.

Davide Sandretto's doctoral dissertation in finance shows that traditional trading strategies used in equity markets often do not perform well in the crypto context. The research highlights mechanisms that can help investors navigate this uncertainty. One major finding relates to the environmental impact of different cryptocurrencies.

– We found that more environmentally friendly cryptocurrencies, such as those that transitioned from the Proof-of-Work to the Proof-of-Stake protocol, react less to energy shocks, says Sandretto.

The Proof-of-Work protocol used by Bitcoin among others, requires massive amounts of energy, making the asset's value highly sensitive to shocks in energy prices.

– Volatility is lower because the currencies that made this transition become less exposed to fluctuations in energy markets. It's a win-win for the environment and for the investor, who faces fewer risks from sudden energy price shocks, Sandretto notes.

Investors must understand the complex market

The dissertation also explores enhanced trading strategies that can help investors manage volatility by timing the market. This guidance is useful for asset managers and regulators looking to make more informed decisions in this diverse and complex asset class. 

– What stood out to me was the heterogeneity of cryptocurrencies’ functions. Bitcoin represents only one category, while many other projects, such as those enabling smart contracts, operate in very different ways, Sandretto explains.

Given the high risks and complexity, Sandretto's main advice for those interested in investing is to be cautious and informed.

– I would never recommend putting all your savings into cryptocurrencies. A small allocation can support diversification and improve the risk–return profile of a portfolio, but only if you understand the risks and the project behind each coin, Sandretto advises.

Dissertation

Sandretto, Davide (2025) Essays on Financial Innovations: Expected Returns and Volatility in the Cryptocurrency Market. Acta Wasaensia 572. Doctoral dissertation. University of Vaasa.

Publication PDF

Public defence

The public examination of M.Sc. Davide Sandretto’s doctoral dissertation “Essays on Financial Innovations: Expected Returns and Volatility in the Cryptocurrency Market” will be held on Monday 1 December 2025 at 11:00 (UTC+2) in Turin, Italy (University of Turin, School of Management and Economics, Room "O. Volpatto"). The defence is organised in Cotutelle co-operation with the University of Turin, Italy. 
It is possible to participate in the defence online.

Professor Jonathan Williams (University of Surrey, United Kingdom), Professor Enzo Scannella (Universitá di Palermo, Italy) and Associate Professor Heikki Lehkonen (University of Jyväskylä, Finland) will act as opponents and Associate Professor Klaus Grobys (University of Vaasa, Finland) as custos.

Further information

Davide Sandretto was born in 1998 in Turin, Italy. He completed a Master’s degree in Corporate Finance and Financial Markets at the University of Turin in 2022. Sandretto is currently a joint PhD student in finance at the University of Turin and the University of Vaasa.

 

Research on optical communication and cryptocurrency

Boris Karanov and Frank Rhein receive grants from Carl Zeiss Foundation – “CZS Nexus” funding program supports interdisciplinary research in STEM disciplines

Karlsruher Institut für Technologie (KIT)

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Two early-career researchers from Karlsruhe Institute of Technology (KIT) convinced the expert reviewers of the Carl Zeiss Foundation with their projects. They now have five years to establish their research groups at KIT through the “CZS Nexus” funding program. Each researcher will receive approximately 1.5 million euros. Boris Karanov is developing new algorithms for digital signal processing in optical communication systems, while Frank Rhein is investigating how the CO2 emissions produced by cryptocurrency mining can be reduced by means of physical processes.

 

“We are very excited about the success of Boris Karanov and Frank Rhein,” says Professor Oliver Kraft, KIT’s Vice President Academic Affairs. “The fact that both young scientists managed to acquire funds from the Carl Zeiss Foundation highlights the quality and topicality of their research.”

 

Optimization of Digital Signal Processing in Optical Networks

Over 95% of the global data is transferred via optical networks, with demands on speed and data exchange growing rapidly. However, the rising data volume leads to nonlinear effects that affect signal quality. To reduce these interferences, two approaches exist: Classic algorithms are based on mathematical models, which are particularly suitable for linear systems, while advanced methods, in contrast, utilize machine learning, especially neural networks that analyze system behavior directly from the data. These methods can model nonlinear phenomena, but require high computing power.

 

Dr. Boris Karanov from the Communications Engineering Lab aims to combine both methods to understand nonlinear relationships while benefiting from existing knowledge about optical systems. Karanov will conduct comprehensive lab experiments to validate the new algorithms. “With our research, we want to ensure that optical communication systems maintain their performance even with increasing traffic,” says Karanov. “Our approach can help to transmit significantly more data in shorter time and over greater distances – with less power consumption.”

 

Reduction of CO2 Emissions in Connection with Cryptocurrencies

Most cryptocurrencies are based on blockchain technology, a kind of decentralized ledger. With Bitcoin, blockchain security is guaranteed by the “proof-of-work” consensus mechanism: Powerful networked computers compete to solve complex mathematical problems. The first one to solve a problem may add a new block to the blockchain and is rewarded with Bitcoins. The blockchain is trustworthy, as manipulating it would require an unachievable amount of work and computing power. However, this security comes at the price of massive CO2 emissions.

 

The goal of Dr. Frank Rhein’s research project is to transfer this principle to the physical world and reduce CO2 emissions by developing a “proof of physical work.” For this purpose, he is developing physical one-way functions, which are easily executable but do not allow any conclusions to be drawn about their input. An example of this is creating pigment structures by printing color pigments on top of each other, which generates unique patterns. Subsequent optical analysis yields an unambiguous result, and verification is only possible if the same process and identical materials are used. “A blockchain protocol based on this principle uses expensive physical resources or time instead of cheap electricity,” Rhein explains. “High costs limit profitability, thus reducing CO2 emissions.” 

 

The CZS Nexus Funding Program of the Carl Zeiss Foundation

The Carl Zeiss Foundation funds research and teaching in STEM subjects (science, technology, engineering, and mathematics). The CZS Nexus funding program supports outstanding young scientists who wish to implement exciting ideas at the interfaces between the different STEM fields. They have the opportunity to establish their own interdisciplinary research groups and are thus supported on their path to an academic career. The funding amounts up to 1.5 million euros per junior research group over a period of five or six years. 

 

In close partnership with society, KIT develops solutions for urgent challenges – from climate change, energy transition and sustainable use of natural resources to artificial intelligence, sovereignty and an aging population. As The University in the Helmholtz Association, KIT unites scientific excellence from insight to application-driven research under one roof – and is thus in a unique position to drive this transformation. As a University of Excellence, KIT offers its more than 10,000 employees and 22,800 students outstanding opportunities to shape a sustainable and resilient future. KIT – Science for Impact.

 

Trump sons back ASPI’s uranium unit QLE in convertible note sale

Bloomberg News | November 7, 2025 | 

View of nuclear power plant (Stock Image)

ASP Isotopes Inc.’s uranium-enriching arm is offering convertible notes in a deal that has drawn the backing of investors including Eric Trump and Donald Trump Jr.

Quantum Leap Energy LLC, wholly owned by ASP Isotopes, is offering the notes in a private placement, and has raised about $64.3 million in an agreement with certain investors, according to the Friday statement. It’s now canvassing additional investors with a view to raising about $100 million in combined proceeds, according to a person familiar with the matter.

The notes are set to value QLE at $400 million prior to the addition of new capital, according to a person familiar with the terms, who asked not to be named discussing non-public information.

The deal has been led by American Ventures, an investment firm with ties to Dominari Holdings Inc., the boutique bank that sits in Trump Tower. President Donald Trump’s two eldest sons, Eric and Donald Jr., advise and invest in Dominari. They contributed capital to the QLE note offering, according to the statement. QLE is also offering the notes to foreign investors. It is building enrichment facilities in South Africa.

The deal is the latest in a string of high-profile investments involving President Donald Trump’s family. 1789 Capital, the investment firm that Trump Jr. joined as a partner last year, has backed American rare earth magnet company Vulcan Elements, and Hadrian, a company that builds factories for aerospace and defense manufacturers. Other ventures backed by the Trump family span drones, blank-check companies and Bitcoin mining.

QLE enriches isotopes primarily for use in nuclear energy production, according to company filings. Its technology can enrich isotopes at a fraction of the cost of traditional facilities, according to its website. The company intends to use the proceeds from the offering to “build and develop laser enrichment production facilities,” it said.

A company majority owned by Dominari was named manager of American Ventures, according to a securities filing.

The offering is expected to close Nov. 10, pending normal closing conditions. Canaccord Genuity Group Inc. has arranged the placement in the US, and Ocean Wall Ltd. served in that role for the foreign transaction. The issuance of the convertible notes will trigger the automatic conversion of promissory notes issued in March and June of 2024, the statement said. 

ASP Isotopes said in September, before the US government shutdown, that it was targeting a public listing for the unit in the fourth-quarter. The convertible notes would convert into stock if the company goes public or under certain other events, the Friday statement said. 

ASP aims to take QLE public through a direct listing, though the timing is not firm because of the government shutdown. The listing could value the firm higher than the convertible note, the person said.

(By Pablo Mayo Cerqueiro, Swetha Gopinath and Annie Massa)

IT'S STATE CAPITALI$M

'Commie' Trump’s 'national socialism' will make 'America wind up like China': analysis

AMERIKANS ARE IDEOLOGICAL MORONS

U.S. President Donald Trump speaks with reporters, as he departs for travel to Pennsylvania (Reuters)

Lesley Abravane

November 03, 2025

ALTERNET

The Bulwark's Jonathan Last says that President Donald Trump's latest foray into national socialism makes him "a commie," but as opposed to Sen. Bernie Sanders' (I-VT) democratic socialism, Trump's brand is "not compatible with liberal democracy."

Last points to some of the Trump administration's actions as examples of national socialism, including Trump's tapping of Westinghouse to build nuclear power plants for $80 billion.

"In return, he has compelled Westinghouse to " pay him the government 20 percent of any 'cash distributions,'" Last writes.

"Between now and the end of January 2029, the government can compel Westinghouse to go public via an IPO, at which point the government will be awarded 20 percent ownership of the company, likely making it the single largest shareholder," he adds.

This, Last explains, "is literally seizing the means of production. But to, you know, make America great again Or something."

Other examples of Trump's "national socialist policies" include "refusing to enforce the 2024 law requiring the sale of TikTok until he was able to compel that the business be sold at an extortionately discounted price to his political allies," Last writes.

"Requiring Nvidia and AMD to pay the government 15 percent of all revenues from chip sales to China; acquiring a 10 percent ownership stake in chipmaker Intel; acquiring a 15 percent stake in rare earth producers MP Materials, a 10 percent stake in Lithium Americas Corp., and a 10 percent stake in Trilogy Metals Inc.; creating a 'Strategic Bitcoin Reserve and Digital Asset Stockpile'; and taking steps to create a sovereign wealth fund to be used as a vehicle for government investment," Last writes.

Trump has also demanded that Microsoft fire Lisa Monaco, the company's President of Global Affairs, due to her previous roles in the Biden and Obama administrations, Last explains, and Trump's demanding of private law firms committing to doing pro bono work "on behalf of clients he chooses for them," are two more examples of his national socialism.

And while Last says, "this is not quite the economic regime of China or Saudi Arabia," "it's in the same zip code. And it’s heading in their general direction and away from the regulated American free market economy as it had existed until ten months ago."

What Trump is doing, Last says, is obvious, yet no one has actually admitted it — until now.

"So why is it so hard for people to just say, out loud, what is obvious: Donald Trump is a socialist who is trying to make the American economy function more like Communist China?" Last asks.

Last explains that while "there are different flavors of socialism," noting that Sanders' style of "democratic socialism is modeled not on China, but on Scandinavia," "the national socialists surrounding Trump" want different things.

Among those things include "a state-directed economy in which economic activity must be sanctioned by the president, meaning that businesses must ally themselves with the president in the hopes that the president makes decisions which beat the market — i.e., create more growth than the economy would have created if left to its own devices," Last says.

He also points to the contentious New York City mayoral race in which if leading Democratic socialist candidate Zohran Mamdani wins as he is predicted to, Trump and his cohorts will use his brand of socialism to deflect blame on others.

"It is a stone-cold mortal lock that every bad thing that happens in New York City over the next three years is going to be hung around Zohran Mamdani and the Democratic party’s necks as the fruits of 'socialism,'" Last says.


"Maybe Mamdani’s mayoralty will be a failure. But he could be the second coming of La Guardia and if there’s a robbery on a bus? Socialism. Your favorite bagel shop closes? Socialism. The Yankees miss the playoffs? Socialism. That’s just the reality. You know it. I know it. The American people know it," he writes.

But, Last says, "there are two forms of socialism on the march in America."

"The Sanders/Mamdani style of democratic socialism is, whatever its merits, at least compatible with America’s tradition of liberal democracy. The Trump style of national socialism is not," he notes.

"If you follow the logic of democratic socialism to the horizon, America winds up like Scandinavia. If you follow the logic of national socialism to the horizon, America winds up like China. So even when it comes to socialism it’s not, you know, both sides."

 

Gold: what’s behind the boom? – Michael Roberts

20th October 2025Leave a Commenton Gold: what’s behind the boom? – Michael Roberts

“If companies, individuals and other governments can no longer trust that the dollar will hold its purchasing power for goods and services, they start to sell dollars for gold.”  

By Michael Roberts

This week the price of gold in US dollars hit $4000 per troy oz.  This is an historic high (at least in nominal dollars).  But even that high looks set to be surpassed, with investment bank Goldman Sachs forecasting $4900 per oz by year end.  And the gold price in other major currencies has also been rising.

What is behind this unprecedented rally?  And does it matter?  Before answering those questions let’s remind ourselves of the role of gold in capitalist economies.  Capitalist economies are monetary economies.  Capitalists employ workers to produce goods and services for sale on a market for a profit.  But goods and services are not exchanged for each other in a so-called barter system.  Instead, historically, different commodities were chosen to be universally accepted as money ie as a means of exchange, a unit of account in transactions and as a store of value. 

Gold eventually became that universal commodity- i.e. the money commodity.  It was ideal because it was not perishable, but malleable into coinage for exchange or ingots for hoarding; and accepted everywhere. As Marx put it: “The truth of the proposition that, ‘although gold and silver are not by nature money, money is by nature gold and silver,” is shown by the fitness of the physical properties of these metals for the functions of money.”

Gold was the main money commodity even before the capitalist system of production became dominant in the major economies.  But gold soon dominated the monetary and exchange system in capitalism.  Gold became the trusted measure of value.  However, as capitalism expanded production to new heights, there was not enough gold or gold coinage to support the expanding flow of transactions. It became necessary to create ‘fiat currencies’ ie. coinage or paper notes (or now mainly bank deposits) issued by banks or governments that could be created without limit to meet the growth in production of goods and services.

Governments now controlled the supply of money (not the demand) and thus they could ‘force’ people to accept the national currency unit in place of gold. To avoid fiat currencies getting out of line with gold as the universal value, national currencies were usually tied to gold at a fixed price – a so-called gold standard. Traders could then have confidence in the value of the national currency, while international transactions involving the export and import of goods and services were still settled for any imbalances by gold itself.

In the 20th century, capitalism became dominant globally and fiat currencies mainly replaced gold as the means of exchange, even in international transactions and in the store of value held by companies, banks and governments.  Foreign exchange reserves were now mainly in the dominant national fiat currency; the US dollar, with gold relegated to a minor role. The end of gold as the major form of money or even as the ultimate standard of value came with the decision of the US government in the 1970s to no longer exchange dollars for a fixed amount of gold.  The gold standard was ended and replaced by the dollar’ standard’.

Gold was still held in national government reserves, but it mainly became, not so much ‘money’,  but a financial asset, like company shares or bonds.  Gold became speculative ‘fictitious capital’ for investors to buy or sell to make capital gains; more money out of money. But gold never lost its historic role in the memes of capitalists, namely as the universal commodity or money that is acceptable for all.  So in periods when the value of fiat currencies appeared to be ‘debased’, hoarders turn back to gold. Gold became the financial asset to hold if the dominant fiat currency globally, namely the US dollar, started to weaken.  It was going back to the relic of the barbaric past.

There have been several upward bursts in the gold price (as measured in the main fiat currency, the dollar).  If economies look like heading into a slump; if inflation in economies rises sharply; if there is a risk of a financial crash – all these crises in capitalist production would mean a debasement of the national currency and internationally, the dollar. Thus gold becomes an attractive alternative to the government currency.  If companies, individuals and other governments can no longer trust that the dollar will hold its purchasing power for goods and services, they start to sell dollars for gold.

This time the gold price has risen so quickly because of a number of factors.  First, inflation returned with a vengeance after the pandemic slump.  Accelerating inflation meant that the real return (interest) on holding fiat currencies fell even though central banks hiked up their policy interest rates.  Gold does not earn interest, but with the real return on ‘cash’ staying low, gold became more attractive as a financial asset.

Then Trump arrived.  Trump’s tariff tantrums created huge uncertainty about global trade and, in particular, what will happen in the US economy. And it was not clear what the Trump administration’s intentions were: did they want the US dollar to stay strong to keep import prices stable or weaken in order to boost US exports?  So gold became even more attractive.  The US dollar’s value against other currencies dropped by over 10% in the first six months of the Trump presidency.

But another reason for the gold rally is that the metal is seen as a hedge against Trump’s tariff measures so many central banks in the so-called emerging economies (the Global South), facing rising US tariffs decided to increase their gold reserves as dollar become less necessary in international trade.

Financial speculation gains its own momentum.  Just as with the rocketing rise in the dollar price of cryptocurrencies like bitcoin, gold is another form of fictitious capital investment.  FOMO – fear of missing out – is the classic characteristic of financial speculation and gold along with bitcoin ( the US stock market is now again at record highs) are in forefront of FOMO.

Where does all this end?  First, it ends if the US dollar does not continue to fall – and actually since July, the dollar index against other currencies has stabilised at a level that is close to its historic average. 

Second, it ends this time if the world economy goes into a slump.  That would kill inflation and so boost the dollar.  In slumps, the gold price can rise as an asset to hold (hoard) in crises, waiting for better times.  But in its current boom, gold is increasingly driven by speculative demand.  Such speculation will collapse in a slump and so will stock, bitcoin and gold prices.

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• This article was originally published on Michael Roberts’ blog The Next Recession on 9 October 2025.
• Michael Roberts is an economist and author – you can follow his work on his blog, as well as on Facebook and YouTube.