The founder and chief investment officer of Bridgewater Associates, the world’s largest hedge fund firm, has warned the government could impose a ‘ban on capital movements’ on assets such as bitcoin. He added that regulators could also impose tax changes that “could be more shocking than expected.”
Ray Dalio warns of government bans and taxes
Ray Dalio, founder and chief investment officer of Bridgewater Associates, wrote an article on Linkedin last week entitled: “Why would you own securities in the world when …”
He pointed out that the bond markets are currently offering “ridiculously low returns”, which “do not meet these financing needs of these asset holders.” The executive board wrote: “There are now more than $ 75 billion US debt assets with different maturities,” adding that their holders want to sell them at some point to get cash to buy goods and services.
However, Bridgewater’s Chief Investment Officer estimates that ‘at the current valuations there is too much money in these financial assets that it can be a realistic expectation that any significant percentage of the mortgage can be converted into cash and exchanged for goods and services. He added: “It needs to be accommodated … by printing a lot of money and devaluing it, and by restructuring a lot of debt and government finances, usually with big increases in taxes.”
Dalio explained: “Based on how things have historically worked and what is happening now, I am confident that tax changes will also play an important role in driving capital flows to different investment assets and different locations, and the movements will influence market movements. ”
The billionaire fund manager stressed that “if history and logic are to be a guideline, policy makers who are short of taxes will raise taxes and not like these capital movements from debt assets and in other stocks of wealth assets and other tax domains,” Warning:
It could very well impose bans on capital movements on other assets (e.g. gold, bitcoin, etc.) and other locations. These tax changes may be more shocking than expected.
The founder of Bridgewater Associates used Elizabeth Warren’s proposed wealth tax as an example, saying it was ‘of unprecedented magnitude’. Referring to his study of “wealth taxes in other countries at other times”, he expects that this proposal “is likely to lead to more capital outflows and other movements to evade these taxes.”
As a result, “the United States can be seen as a place inhospitable to capitalism and capitalists,” Dalio said, emphasizing that “the chances of a substantial wealth tax bill succeeding over the next few years are high.” Finally, the management of Bridgewater warned:
Tax changes and the possibility of capital controls must be taken into account.
Dalio has been studying bitcoin for the past few months. In November last year, he admitted that he may have been wrong about bitcoin, but he was nonetheless concerned about governments banning cryptocurrency. In December, he said bitcoin could “serve as a diversifier for gold and other such stocks of wealth assets.” Then, in January this year, he said that ‘bitcoin is a hell of an invention’, revealing that his firm is investigating the cryptocurrency well.
What do you think of Ray Dalio’s warning? Let us know in the comments below.
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