Core Viewpoint - Legendary investor Ray Dalio warns that the world is "on the brink" of a capital war, highlighting the potential for geopolitical tensions to escalate into financial conflict, including trade embargoes and capital controls [1][2][4]. Geopolitical Tensions - Dalio expresses concerns about mutual fears between Europe and the United States regarding sanctions and restricted access to capital markets, indicating that while a capital war hasn't started, the situation is precariously close [2][4]. - The remarks come amid heightened tensions over U.S. international policies, including tariffs and attempts to acquire Greenland, which have caused market volatility and reflect fears of a capital imbalance between major economies [3]. Capital Controls and Market Dynamics - Dalio notes that capital controls are being implemented globally, raising questions about who will be affected, and emphasizes that while a capital war is not currently happening, it is a logical concern [4]. - European investors accounted for 80% of foreign purchases of U.S. Treasurys between April and November, highlighting the interconnectedness of global financial systems and the associated risks [5]. Historical Context and Investment Strategies - Dalio draws historical parallels to the U.S. sanctions on Japan before World War II, suggesting that similar dynamics could unfold between the U.S. and China or Europe [6]. - In response to these geopolitical concerns, central banks and sovereign wealth funds are preparing for potential capital controls, indicating a growing awareness of the risks posed to global capital markets [7]. Investment Recommendations - Amid market uncertainties, Dalio advocates for gold as a reliable hedge against volatility, emphasizing its critical role as a diversifier despite recent price fluctuations [8]. - He advises central banks and investors to maintain a percentage of their portfolios in gold to safeguard against economic downturns [8].

The success of Chinese money-laundering networks is due to technical innovation, trade surpluses and strict capital controls. We explain how the illicit industry works https://t.co/6fmosaCzHu ...

Chinese authorities step up efforts to collect taxes from citizens with overseas investment income as part of broader push to suppress cross-border trading that evades capital controls https://t.co/oiycfv7TxB ...

Group 1 - The discussions around a Korean Won stablecoin are gaining traction ahead of Korea Blockchain Week, highlighting the political significance of local currencies as digital alternatives to the U.S. dollar [1][2] - Most Asian currencies face capital controls that limit their global circulation, with the Hong Kong dollar being the only currency in the region that can function as a stablecoin on an international scale [2][6] - A bill to legalize stablecoins in Korea is progressing, but it is not aimed at globalizing the Won due to existing regulations that prevent capital flight, reflecting a desire to maintain monetary sovereignty [3][4] Group 2 - The Korean central bank is open to the idea of Won stablecoins but expresses concerns regarding foreign convertibility, indicating that the same restrictions that protect sovereignty also hinder international utility [4][5] - Other Asian currencies, such as Taiwan's New Taiwan dollar and the renminbi, are similarly constrained by capital controls, limiting their potential for global stablecoin proposals [6] - The Hong Kong dollar's full convertibility and its established role in international markets position it uniquely as a potential global stablecoin, capable of meeting both domestic and international liquidity needs [7][8]

Capital Controls - UK imposes capital controls [1] - New limit: £3,000 max withdrawal per day [1]

Capital Controls & Economic Impact - UK introduces capital controls limiting withdrawals to a maximum of 3,000 GBP per day [1] - Concerns raised about potential confiscation of assets [1] - Economic downturn may lead to individuals bearing the financial burden [1] Financial Risk & Mitigation - Urgency to withdraw assets quickly to avoid potential losses [1]

Fourth Turning Overview - The theory of the Fourth Turning suggests that history moves in predictable cycles of roughly 80 to 100 years, divided into four phases: the High, the Awakening, the Unraveling, and the Fourth Turning [1] - Fourth Turnings are periods of deep crisis that reshape society, often involving wars, revolutions, economic crashes, or widespread social unrest [1] - The current Fourth Turning is driven by economic imbalances, political and social fragmentation, geopolitical shifts with China's rise, and a generational transition [2] Economic Implications - Decades of economic imbalance, fueled by debt accumulation and low interest rates, have created a fragile system [1] - Governments may resort to inflating away debts, which benefits them but erodes citizens' savings and purchasing power [2] - Financial repression, where investors are forced to hold government debt despite diminishing values, may be implemented [2] Geopolitical Risks - Tensions between the US and China, particularly over Taiwan, could escalate into conflict, disrupting global supply chains and financial markets [2] - Polarization between Western nations and the BRICS countries is an early sign of this geopolitical shift [2] Investment Strategies - Bonds could become a risky bet due to inflation and rising yields [3] - Tangible sectors like infrastructure, defense, commodities, manufacturing, and energy may outperform growth-focused tech stocks [3] - Precious metals like gold and silver historically perform well during inflation and currency devaluation [3] - Cryptocurrencies with genuine real-world adoption are more likely to survive the upcoming bear market [3] - Geographic diversification is critical to avoid capital controls [4]

Market Restructuring - Brokerages in Argentina are restructuring following President Milei's removal of capital controls [1] - The removal of capital controls eliminated lucrative arbitrage opportunities for brokerages [1]