Category: Market News

Modern Monetary Theory and the crisis of capitalism: Part one

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The Deficit Myth by Stephanie Kelton

This is the first part of a two-part article.

Throughout the history of capitalism and its recurrent crises, various theories have been brought forward by “left” theorists who maintain that these crises and the social ills they generate can be ameliorated, if not entirely eliminated, by changing the monetary system without touching the foundations of capitalist production itself.

While presenting themselves as “leftist” and “progressive,” advocating reform of the capitalist system, history shows that in periods of great crisis they seek to divert the working class from the program of socialist revolution while at the same time providing the ideological foundations for political forces that advance a counterrevolutionary solution to the crisis.

Modern Monetary Theory (MMT), the essential principles of which are outlined in this book by one of its foremost advocates, is the latest expression of this phenomenon.

The struggle against such tendencies goes back to the very origins of Marxist political economy.

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Gold Rebounds Toward $2,000 After Dollar Drops to Two-Year Low

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A worker plunges a gold ingot into a cooling bath at the Uralelectromed Copper Refinery, operated by Ural Mining and Metallurgical Co. (UMMC), in Verkhnyaya Pyshma, Russia, on Thursday, July 30, 2020. Gold surged to a fresh record Friday fueled by a weaker dollar and low interest rates. Silver headed for its best month since 1979. , Bloomberg

(Bloomberg) — Gold is rebounding, with Comex futures climbing back to $2,000 an ounce as the dollar weakened and investors bet U.S. interest rates would stay lower for longer.

The dollar dropped to the lowest in over two years, fueling a broad advance in commodities. Spot gold gained more than 3% over the past three sessions, following its first monthly loss since March, as the Federal Reserve’s new approach on inflation added support. That came after a slowdown in buying from gold-backed exchange-traded funds raised concern that a key driver of the metal’s record rally may be losing momentum.

“Now that month end is out of the way, the underlying trends can resume, one of which is a lower U.S. dollar,” said Shyam Devani, chief strategist at SAV Markets in Singapore. “Broadly, the massive increase in global money supply keeps gold in an uptrend.”

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The pros are getting ready for a market crash — retail investors, not so much, top economist warns

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‘A large market correction, should one materialise, would encourage more professional selling that could overwhelm the buy-the-dip retail investor.’

That’s Mohamed El-Erian, Allianz’s chief economic adviser, explaining in an op-ed for the Financial Times how action in the options pits should be taken as a warning by retail investors who have been cashing in on the stock market’s relentless push higher in recent months.

“The seemingly endless rally… gives the impression that prices are endorsed and supported by the entire professional investment community,” he said. “After all, despite the vocal concerns over valuations having split away from underlying corporate and economic fundamentals, few fund managers have been willing to challenge the market by placing outright shorts. “

However, “sophisticated investors” are expressing their cautious views with the use of derivatives, and El-Erian says the mom-and-pop types should take note.

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Gold rebounds as Fed’s new inflation strategy boosts investor appetite

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The fallout from the US Fed’s new inflation strategy continued on Friday, with investors finding comfort that policy will remain accommodative. This saw the ANZ China Commodity Index ending the session up 0.2%. This capped off a positive week for commodities, with the CCI rising 0.6%. Industrial metals led the complex, with nickel and copper recording strong gains. Precious metals were also stronger, with gold rising 1.3% over the week. Crude oil gained, sending the energy sector higher. Bulk commodities ended the week lower, as iron ore fell. Agriculture was down over the course of the week.

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Gold prices slide as bond yields and the dollar firm

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Commodity investors await Powell’s Jackson Hole speech

Gold futures on Wednesday edged slightly lower, hovering around the unchanged mark, as a rise in bond yields and the U.S. dollar, both bearish factors for bullion, weighed on precious metals.

The moves come ahead of a highly anticipate speech from Federal Reserve Chairman Jerome Powell, who is expected to provide a more accommodative signal, signaling that the U.S. central bank is willing to embark upon on unconventional way of thinking about rising inflation.

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