Can the United States really build a sovereign wealth box?

President Donald Trump has recently signed an executive matter proposing to create an American sovereign wealth box.
The idea is simple: Use government assets to generate returns, just like Norway or Saudi Arabia.
But the United States does not sit on a pile of surplus oil money or commercial reserves. So, how will this do exactly? And most importantly, is it necessary?
What is the sovereign wealth box and why does Trump wants one?
The sovereign wealth fund (SWF) is a government -run investment vehicle carrying shares, bonds, real estate or goods. The goal is to convert the state -controlled assets into long -term financial gains.
Countries with large reserves of the natural resources of the car, such as SWF, benefit to invest in global assets.
The biggest examples are Norway with its fund of $ 1.7 trillion, and Saudi Arabia with a fund worth $ 900 billion.
Even small countries like Singapore ($ 2.1 trillion combined between GIC and Temasek) built huge money.
Trump’s motive is clear. He wants the United States to generate a wealth of its current assets rather than relying on taxes and debt. In his words:
“It is time for this country to have a sovereign wealth fund.”
It has been suggested that the box can be used to buy Tiktok, although the details are still mysterious.
This is not a new idea. The Biden Administration has also explored a fund similar to investing in critical metals, defense and infrastructure.
But no chief of the trigger withdrew. But since Trump is known for his aggressive cent, he will want to change this.
Where does the money come from?
The biggest challenge of the American sovereign wealth fund is funding. Norway and the Kingdom of Saudi Arabia were built thanks to their rich oil reserves.
China and Singapore did this through large trade surpluses.
However, the problem in the United States is that it runs a budget deficit of $ 1.8 trillion and has national debts of $ 36 trillion.
Trump put forward several ideas. One is the liquefaction of federal assets, which total $ 5.7 trillion, including:
- $ 1.2 trillion in federal buildings, many of which are not used.
- 2 trillion dollars of student loan assets, although many of them can be removed.
- I seized bitcoin, at least 21 billion dollars In the confiscated digital assets.
The definitions were also suggested as the flow of revenue. The idea is to transfer money from import duties to the box instead of spending it immediately.
Another possibility requires foreign companies, such as Tiktok, giving the US government a stake in exchange for working in the country.
Nothing of these solutions is clear. Selling government buildings is not easy.
Student loans do not generate immediate cash flow. And definitions, although they are profitable, unpredictable and can provoke commercial wars.
Can this really work?
If the United States succeeds in building SWF, it may become the largest in the world overnight. The huge size of the government’s assets dwarves up to the largest sovereign money today.
State level examples show that this can be done. The permanent fund in Alaska ($ 80 billion) is funded by oil revenues and sends direct payments to residents.
North Dakota Legacy Fund ($ 11.5 billion) returns oil and gas taxes for the future.
The federal version can do the same at the national level, financing infrastructure, reducing debt, or even direct cash payments for Americans.
Some analysts have suggested using it to support the global basic income program (UBI) similar to what Alaska does.
But there is hunting. SWFS works better when it is built from excessive capital, not borrowed money.
The United States will need to re -allocate current assets or find new revenue flows. If it is not well managed, the box may become another political box instead of being a dangerous investment vehicle.
What are the risks?
The idea of the investment fund of $ 6 trillion looks good, but the implementation is everything. The greatest risks are political intervention, poor investment decisions, and deficiency.
Many sovereign wealth boxes work independently to avoid political influence. For example, the Norway Fund runs professional managers who follow strict rules to avoid risky beta.
However, the American fund will be deeply linked to Washington. If politicians begin to use pets, rescue operations, or political motivated investments, this may be responsible instead of the original.
There is also the risk of choosing government and losers. If the United States government begins to buy risks in private companies, it raises ethical and legal concerns.
Does taxpayers want to invest their money in a controversial technical company like Tiktok? What about fossil fuel? Big pharma? Bitcoin strategic reserves?
Then there is a global reaction. Countries with the current SWFS, such as China and the Kingdom of Saudi Arabia, use strategic cars by investing in industries that give them political influence.
If the United States follows its example, can these investment wars lead between nations?
A bold idea with an uncertain future
Trump’s sovereign wealth fund proposal, and unconventional and full of risks.
If it is a good organization, it may be a strong financial tool that helps America to manage its wealth more effectively.
If misuse is offended, it may become another source of government waste and mismanagement.
The next 90 days will be decisive. The treasury and commercial officials must determine a clear plan that addresses how to finance the fund, who will be honored, and what will be its long -term investment strategy.
If this is done correctly, this may be one of the largest financial moves in the history of the United States. If he makes a mistake, it may be just another political point of discussion that fades.
This position can the United States really build a sovereign wealth box? First appeared on Invezz