Page 38 - DIY Investor Magazine | Issue 36

Dec 2022 38
DIY Investor Magazine ·
Widespread price controls are introduced to cap official inflation
As the war economy deepens in 2023, national security perspectives turn increasingly inward to industrial policies and Inflation will remain a challenge as long as globalisation
the protection of domestic industries.
continues to run in reverse and long-term energy needs remain
unaddressed.
As defence spending, reshoring and investments in the energy transition are expensive, governments look for all available
Wars bring price controls and rationing; 2022 has also seen
potential tax revenue sources and find some low-hanging fruit early and haphazard initiatives to manage inflation with
in haven-enabled tax dodgers that cost governments between taxes on windfall profits but no rationing of supplies - actively
USD 500 and USD 600 billion p.a. in lost corporate tax revenue.
subsidising excess demand. As French utilities go bankrupt, the bill is passed to the government, then to the currency via inflation. Policymakers think rising prices suggest market failure and that more intervention is needed to prevent inflation from destabilising society.
In 2023, the OECD launches a full ban on the largest tax havens in the world. In the US, the carried interest taxed as capital gains is also shifted to ordinary income.
The EU tax haven ban and US change to the carried interest
In 2023, expect broadening price and even wage controls. But
taxation rule jolts the entire private equity and venture capital the law of unintended consequences says controlling prices
industries, shutting down much of the ecosystem and seeing without solving the underlying issue will not only generate
publicly listed private equity firms dealt a 50% valuation haircut. more inflation, but also risk tearing at the social fabric through
declining standards of living.
Market impact: iShares Listed Private Equity UCITS ETF falls 50%
Market impact: please see Outrageous Prediction on gold
rocketing to USD 3,000.
OPEC+ and Chindia walk out of the IMF, agree to trade with new reserve asset
Recognising the ongoing weaponisation, non-allied countries move away from the USD and the IMF to create an international clearing union (ICU) and a new reserve asset, the Bancor (currency code KEY), using Keynes’ original idea from the pre- Bretton Woods days to thumb its nose at the practices of the US in leveraging its power over the international monetary system.
Market impact: Non-aligned central banks vastly cut their USD reserves, US Treasury yields soar and the USD falls 25 percent versus a basket of currencies trading with the new KEY asset.
Tax haven ban kills private equity
In 2016, the EU introduced an EU tax haven blacklist identifying countries or jurisdictions deemed ‘non-cooperative’ because they incentivize aggressive tax avoidance and planning.
This was in response to the leaked Panama Papers, millions of documents that revealed tax cheating by wealthy individuals including politicians and sports stars.