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2021 tax and economic policy could effectively neutralize holders of stores of value (Bitcoin, Gold, Housing, Stocks), and redistribute economic wealth to those closest to the money printer.
Here's how it works:
Here's how it works:
25-30% of all USD in existence was printed last year. (M2 money supply expanded by over 25%)
Savings reached a record high of 33%, the highest since tracking started in the 1960s. https://www.cnbc.com/2020/05/29/us-savings-rate-hits-record-33percent-as-coronavirus-causes-americans-to-stockpile-cash-curb-spending.html
Housing and other real assets like Bitcoin are likely to go up rapidly as the pandemic unwinds and record-high savings re-enter the economy. Wider inflation will follow. https://www.marketwatch.com/story/the-housing-market-already-is-on-fire-and-inflation-will-soon-follow-this-former-morgan-stanley-economist-argues-11616756309
On the backdrop of this, the new US administration has proposed to increase the capital gains tax rate for gains above $1m to a new effective rate of 43.4% (instead of 23.8%). https://taxfoundation.org/joe-biden-tax-plan-2020/
At a 43.4% federal capital gains tax rate (56.4% in California) assets would need to appreciate at double the inflation rate just to maintain purchasing power after taxes.
This effectively locks holders of appreciating assets into holding these assets longer (forced holding), but also prevents them from realizing gains to invest in new ventures.
Thus to avoid a recession, massive money-printing needs to continue, which favors insiders close to the money faucet, and effectively locks out savers and producers with more assets and less access to credit.
Someone asked me about a strategy for this.
There are only really two things you can do: Make more money/get closer to the money printer, or find ways to reduce your tax burden.
Any strategy in the middle is gonna get hit hard.
There are only really two things you can do: Make more money/get closer to the money printer, or find ways to reduce your tax burden.
Any strategy in the middle is gonna get hit hard.
