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The founder and chief investment officer of Bridgewater Associates, the world\u2019s largest hedge fund firm, has warned that the government could \u201cimpose prohibitions against capital movements\u201d into assets such as bitcoin. He added that regulators may also impose changes in taxes that \u201ccould be more shocking than expected.\u201d<\/strong><\/p>\n Ray Dalio, founder and chief investment officer of Bridgewater Associates, wrote a post on Linkedin last week entitled: \u201cWhy in the World Would You Own Bonds When\u2026\u201d<\/p>\n He pointed out that the bond markets currently offer \u201cridiculously low yields,\u201d which \u201cdo not meet these asset holders\u2019 funding needs.\u201d The executive wrote, \u201cThere is now over $75 trillion of US debt assets of varying maturities,\u201d adding that their holders will at some point want to sell them to get cash to buy goods and services with.<\/p>\n However, Bridgewater\u2019s chief investment officer estimates that \u201cat current valuations, there is way too much money in these financial assets for it to be a realistic expectation that any significant percentage of that bond money can be turned into cash and exchanged for goods and services.\u201d He elaborated: \u201cIt has to be accommodated \u2026 via printing a lot of money and devaluing it, and restructuring a lot of debt and government finances, usually including large increases in taxes.\u201d<\/p>\n Dalio explained: \u201cBased both on how things have worked historically 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 those movements will influence market movements.\u201d<\/p>\n The billionaire fund manager emphasized that \u201cIf history and logic are to be a guide, policymakers who are short of money will raise taxes and won\u2019t like these capital movements out of debt assets and into other storehold of wealth assets and other tax domains,\u201d warning:<\/p>\n They could very well impose prohibitions against capital movements to other assets (e.g., gold, bitcoin, etc.) and other locations. These tax changes could be more shocking than expected.<\/p>\n<\/blockquote>\n <\/ins> <\/ins> <\/p>\n The Bridgewater Associates founder used Elizabeth Warren\u2019s proposed wealth tax as an example, stating that it \u201cis of an unprecedented size.\u201d Citing his study of \u201cwealth taxes in other countries at other times,\u201d he expects this proposal \u201cwill most likely lead to more capital outflows and other moves to evade these taxes.\u201d<\/p>\n Consequently, \u201cThe United States could become perceived as a place that is inhospitable to capitalism and capitalists,\u201d Dalio opined, emphasizing that \u201cthe chances of a sizable wealth tax bill passing over the next few years are significant.\u201d In conclusion, the Bridgewater executive cautioned:<\/p>\n One should be mindful of tax changes and the possibility of capital controls.<\/p>\n<\/blockquote>\n Dalio has been studying bitcoin over the recent months. In November last year, he admitted that he may be wrong about bitcoin but was nonetheless worried about governments outlawing<\/a> cryptocurrency. In December, he said bitcoin could \u201cserve as a diversifier<\/a> to gold and other such storehold of wealth assets.\u201d Then, in January this year, he said<\/a> that \u201cbitcoin is one hell of an invention,\u201d revealing that his firm looking closely at the cryptocurrency.<\/p>\nRay Dalio Warns About Government Prohibitions and Taxes<\/h2>\n
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