Deutsche Bank expressed concern about the 'revenge tax' proposed by former President Trump, suggesting it could provoke a capital war. George Saravelos explained the potential global financial consequences.
Deutsche Bank's warning about the 'revenge tax' is significant due to its potential impact on the financial reputation of the United States and attract international attention.
George Saravelos, head of currency market research at Deutsche Bank, emphasized the risk that the proposed 'revenge tax' poses to foreign investors in global markets. The goal of the tax is to increase rates on passive income flows, which could reduce the effective yield on U.S. Treasury securities by about 100 basis points for foreign investors. Saravelos argues that this could turn a trade war into a capital war.
The tax targets foreign individuals and companies, particularly affecting assets such as U.S. Treasury bonds and corporate debt. Deutsche Bank notes the concerns of Wall Street analysts regarding potential declines in financing and capital inflows. Previous tariffs from the Trump era provide historical context, drawing parallels with reduced foreign investment and decreased market confidence.
Immediate effects may include a decreased appetite for American assets among foreign investors, which could lead to increased financing costs in the U.S. Saravelos highlights broader market implications, emphasizing potential disruptions to global financial stability. Ongoing declines in investor confidence could impact U.S. deficit financing.
Potential financial outcomes include greater scrutiny of risks in the U.S. market, with decentralized assets like BTC and ETH potentially gaining attractiveness. Historical trends indicate that periods of economic stress often lead to increased interest in alternative means of saving, underscoring the changing financial landscape amid political moves.
$BNB, $SOL, $XRP
#Cryptomarketnews