Ray Dalio Believes U.S. Could Prohibit Wealth Transfer To Bitcoin

0
Ray Dalio Believes U.S. Could Prohibit Wealth Transfer To Bitcoin

Ray Dalio, a recent convert to bitcoin, says investors should cut their exposure to the U.S. dollar, although he warns that tax changes could end up banning transfers to bitcoin in the country. However, MicroStrategy Incorporated (NASDAQ:MSTR) CEO Michael Saylor suggests bitcoin is the “obvious solution” for investors who do want to reduce their exposure to the dollar.

Play Quizzes 4

Get The Full Ray Dalio Series in PDF

Get the entire 10-part series on Ray Dalio in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues

Q4 2020 hedge fund letters, conferences and more

Ray Dalio warns about tax changes for bitcoin

In a LinkedIn post, Dalio explained why bonds have become useless for preserving wealth. To try to pull in money to make up for the massive amounts of debt the federal government created in response to the pandemic, it plans to raise taxes. Dalio believes the situation could be a lot worse than anyone thinks and that taxes will become a "new paradigm."

How A Weakening PE Market Serves As Another Sign Of A Weakening Economy

InvestAmid the turmoil in the public markets and the staggering macroeconomic environment, it should come as no surprise that the private markets are also struggling. In fact, there are some important links between private equity and the current economic environment. A closer look at PE reveals that the industry often serves as a leading indicator Read More

Ray Dalio explained that "if history and logic are to be a guide," policymakers will raise taxes and won't like it when people move out of debt assets and into other stores of wealth like bitcoin or gold. Thus, they could "impose prohibitions against capital movements to other assets," he warned.

"These tax changes could be more shocking than expected," Dalio added.

"Inhospitable to capitalism"

Dalio noted that Elizabeth Warren's proposed wealth tax hike is of such an unprecedented size that he believes it will lead to more capital outflows and other moves to evade those taxes. He bases that view on his study of wealth taxes in other countries at other times.

Dalio warned that the U.S. "could become perceived as a place that is inhospitable to capitalism and capitalists." He added that Warren's tax bill is unlikely to pass this year, but the odds of a massive wealth tax bill passing in the coming years are significant.

Dalio advises investors to shift their portfolio out of debt and into non-dollar assets with a short cash position instead of maintaining the traditional stock and bond mix heavily skewed toward U.S. dollars.

Michael Saylor to Ray Dalio on bitcoin

In response to Ray Dalio's post, Saylor said bitcoin is the answer to the potential tax problems. He tweeted that he agrees with Dalio that bonds don't work as a Treasury asset anymore. However, he also said bitcoin is "the obvious solution, and much more practical than 'a well-diversified portfolio of non-debt and non-dollar assets' in 'Asian emerging… markets."

CoinTelegraph notes that MicroStrategy is still adding to its bitcoin position. Saylor said last week that the company had bought 260 bitcoin for $15 million. MicroStrategy now owns more than 91,000 bitcoin.

Updated on

Michelle Jones is editor-in-chief for ValueWalk.com and has been with the site since 2012. Previously, she was a television news producer for eight years. She produced the morning news programs for the NBC affiliates in Evansville, Indiana and Huntsville, Alabama and spent a short time at the CBS affiliate in Huntsville. She has experience as a writer and public relations expert for a wide variety of businesses. Email her at Mjones@wordpress-785388-2679526.cloudwaysapps.com.
Previous article Industrial Production Declined 2.2% In February
Next article Howard Marks February 2021 Memo: 2020 in Review

No posts to display