The founder and chief investment officer of Bridgewater Associates, the world’s largest hedge fund firm, warned that the government could “impose prohibitions against capital movements” on assets such as bitcoin. He added that regulators can also impose changes in taxes that “may be more shocking than expected”.
Ray Dalio warns of government bans and taxes
Ray Dalio, founder and director of investments at Bridgewater Associates, wrote a post on Linkedin last week with the title: “Why the hell would you have titles when …”
He pointed out that the bond markets currently offer “ridiculously low yields”, which “do not meet the financing needs of these asset holders”. The executive wrote: “There are now more than $ 75 trillion in US debt assets with varying maturities”, adding that their holders will at some point want to sell them to get money to buy goods and services.
However, Bridgewater’s chief investment officer estimates that “in current valuations, there is a lot of money in these financial assets so that it is a realistic expectation that any significant percentage of that security money can be turned into cash and exchanged for goods and services. ”He elaborated:” It has to be accommodated … by printing a lot of money and devaluation, and restructuring a lot of government debt and finance, usually including big tax increases. “
Dalio explained: “Based on how things have worked historically and what is happening now, I am confident that fiscal changes will also play an important role in directing capital flows to different investment assets and different locations, and these movements will influence market movements. “
The billionaire fund manager emphasized that “If history and logic are to serve as a guide, legislators who are short of money will raise taxes and will not like these capital movements from debt assets to another deposit of wealth assets and other tax domains, “notice:
They could very well impose prohibitions against capital movements for other assets (for example, gold, bitcoin, etc.) and other locations. These fiscal changes can be more shocking than expected.
The founder of Bridgewater Associates used Elizabeth Warren’s income tax proposal as an example, saying it “has an unprecedented size”. Citing his study of “taxes on wealth in other countries at other times”, he hopes that this proposal “is likely to lead to more capital outflows and other measures to evade these taxes”.
Consequently, “the United States can be seen as an inhospitable place for capitalism and capitalists,” said Dalio, emphasizing that “the chances of passing a sizeable wealth tax in the coming years are significant”. In conclusion, the Bridgewater executive warned:
Attention should be paid to tax changes and the possibility of capital controls.
Dalio has been studying bitcoin for the past few months. In November last year, he admitted he may be 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 reserves of wealth assets”. Then, in January of this year, he said that “bitcoin is quite an invention”, revealing that his company is closely analyzing the cryptocurrency.
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