If you invest, and you can think outside the box, this really is a great article.
It is so strange how other countries incentivize investing, as we used to do here. Now, they make it almost prohibitive for the normal person.
“Because I believe that we are in the late stage of this Big Debt Cycle … I believe cash is and will continue to be trash (i.e., have returns that are significantly negative relative to inflation) so it pays to a) borrow cash rather than to hold it as an asset and b) buy higher-returning, non-debt investment assets,” Dalio wrote in a LinkedIn post.
Tax changes will play a massive role in dealing with the debt problem going forward, he elaborated. And more importantly, there might be restrictions in terms of where investors could move their capital.
“Policymakers who are short of money will raise taxes and won’t like these capital movements out of debt assets and into other storehold of wealth assets and other tax domains so 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,” the founder of the world’s biggest hedge fund said.
Dalio’s analysis is based on how things have worked in the past and what is happening with debt 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,” he said.
As an example, Dalio reminded investors that during the 1930-45 period, the Fed was able to control yields by “outlawing gold and the movement of capital elsewhere.”
State Dept. Cable Confirms Gold Futures Market Was Created for Price Suppression
TO THE DEALERS’ EXPECTATIONS, WILL BE THE FORMATION OF A
SIZABLE GOLD FUTURES MARKET. EACH OF THE DEALERS EXPRESS-
ED THE BELIEF THAT THE FUTURES MARKET WOULD BE OF SIGNIFI-
CANT PROPORTION AND PHYSICAL TRADING WOULD BE MINISCULE BY
COMPARISON. ALSO EXPRESSED WAS THE EXPECTATION THAT LARGE
VOLUME FUTURES DEALING WOULD CREATE A HIGHLY VOLATILE MAR-
IN TURN, THE VOLATILE PRICE MOVEMENTS WOULD DIMINISH
THE INITIAL DEMAND FOR PHYSICAL HOLDING AND MOST LIKELY
NEGATE LONG-TERM HOARDING BY U.S. CITIZENS.
h/t McDonald Trunalimunumaprzure