Trump Proposes a Sovereign Wealth Fund
Is this the Bitcoin Reserve?
Donald Trump just signed a new Executive Order establishing a United States Sovereign Wealth Fund.
Will the federal government start building a pile of treasure -- and Bitcoin -- to match up against its $36 trillion mountain of debt?
What’s a Sovereign Wealth Fund
A sovereign wealth fund is a government-run investment fund that can hold stocks, bonds, or other assets like real estate and, yes, Bitcoin.
There are hundreds worldwide, including about 1 in four countries and half of US states.
The biggest are oil-producing countries like Saudi Arabia, Kuwait and Norway, where they set aside a hunk of oil revenue. East Asian exporters also have them, stashing excess dollars since they export much more to the US than they import.
Some of these funds are very big; Norway's sovereign wealth fund has $1.7 trillion. Which is about seven times Norway's national debt, and comes to almost $700,000 per household in Norway.
Gulf Arab countries have a bunch of funds totaling nearly $5 trillion.
China's funds hold about $2.8 trillion, while tiny Singapore has nearly $2.1 trillion -- which includes social security funds, which Singapore does not piss away like we do.
Hong Kong, Korea, Malaysia -- even Australia all have sovereign wealth funds.
US State Funds
As for US states, 23 states have some form of sovereign fund holding a total of $300 billion in assets.
The biggest is Alaska, which salts away some of its oil revenue and hands out a check every year to Alaskans.
Called the Alaska Permanent Fund, it has over $72 billion -- almost $300,000 per household in Alaska. And every year it sends out several thousand dollars to Alaskans, which helps with Alaska’s famously high cost of living given everything from drywall to ketchup is imported.
Most other states with sovereign wealth funds also fill them with oil and mineral rights like Texas, Wyoming, or North Dakota. A few are funded by tobacco settlements or unclaimed properties.
Of course, a federal fund would dwarf all these given that Washington is already sitting on nearly $6 trillion in assets. That's nothing compared to its $36 trillion debt, but would still make it by far the largest sovereign wealth fund in the world overnight.
These assets include cash, deliverables, about $1.2 trillion in buildings and structures -- much of it empty since federal workers don't come to the office. And student loans worth nearly $2 trillion -- the ones Biden hasn't cancelled to buy votes.
Into this giant pot Trump's floated pouring tariff revenue, and he even suggested the federal government take a share of TikTok in return for letting it operate in the US.
Which could be a pattern for other foreign -- especially Chinese -- companies: Give the feds a share and you can operate.
What’s Next
Trump's sovereign wealth fund will probably happen and soon.
And depending what assets it buys, it could quickly turn a profit. Trump's already promised a Bitcoin Reserve, and stakes in TikTok or other companies might give taxpayers some juicy returns.
That could convert federal assets from a $6 trillion graveyard to a way to reduce the cost of the federal government.
Still, Trump won't be President forever, and this risks building a $6 trillion slush fund that's liable to future corruption and mismanagement given governments are famously bad -- and corrupt -- at managing money.
In which case why not just pawn the assets and reduce the national debt.
If a sovereign fund is a step to that, it's a winner. If not, there's a lot that could go wrong.
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Thanks for the information about SWFs. Why would we not advocate for wealth held only in the hands of private individuals, period, end of story, top and bottom of it, and both sides. Don't we all know what happens when wealth is in the hands of government operatives?
For a perspective on why a US SWF is an absurd and immoral idea, read here (original available on my substack):
https://mises.org/mises-wire/comic-absurdity-us-sovereign-wealth-fund