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On this episode of Building Fortunes Radio, JHean Luc expl;ains Donald Trump's new idea of a Sovereign Wealth Fund.

Donald Trump's Sovereign Wealth Fund: A Bold Vision or a Risky Gamble?

On February 3, 2025, President Donald Trump signed an executive order directing the Treasury and Commerce Departments to develop a plan within 90 days for a U.S. sovereign wealth fund (SWF), a state-owned investment vehicle aimed at maximizing national wealth. Trump's vision, first floated during his 2024 campaign, seeks to emulate countries like Norway and Saudi Arabia, whose SWFs manage vast assets—$1.7 trillion and $925 billion, respectively—to secure long-term economic stability. The fund, Trump claims, could finance "great national endeavors” like infrastructure, medical research, or even the acquisition of TikTok, while reducing the tax burden and promoting U.S. global leadership. Yet, with the U.S. grappling with a $36 trillion debt and a $1.9 trillion deficit, the proposal raises serious questions about feasibility, funding, and governance.

A sovereign wealth fund typically invests surplus revenues from commodities like oil or foreign exchange reserves to generate returns for future generations. Norway's fund, for instance, channels oil profits into global stocks and bonds, owning 1.5% of all listed companies worldwide. The U.S., however, lacks such surpluses, making Trump's plan unconventional. Treasury Secretary Scott Bessent has suggested "monetizing the asset side of the U.S. balance sheet,” pointing to $5.7 trillion in federal assets, including land, buildings, and mineral rights. Some speculate the fund could leverage tariffs or sell public lands, a move critics warn could privatize treasured national parks for quick cash. Commerce Secretary nominee Howard Lutnick proposed taking equity stakes in companies doing business with the government, like vaccine manufacturers, to generate revenue.

Trump's suggestion that the fund could buy TikTok, amid efforts to broker its sale to avoid a U.S. ban, has sparked intrigue and skepticism. While he envisions a fund rivaling the world's largest, experts question its structure and safeguards. Without clear governance, SWFs can become conduits for corruption, as seen in Malaysia's 1MDB scandal, where $4.5 billion was misappropriated. Critics, including the Carnegie Endowment, warn that a Trump-run fund risks becoming a political slush fund, especially given suggestions from allies like David Sacks to invest in cryptocurrencies, potentially benefiting campaign donors. Congressional approval, required for funding, could face resistance due to concerns over privatizing federal assets or increasing debt.

Supporters argue the fund could harness underutilized assets to drive economic growth, citing state-level funds like Alaska's $82 billion Permanent Fund, which pays citizen dividends from oil revenues. The idea has bipartisan roots—Biden's administration explored a similar fund for national security investments. However, without a budget surplus, financing remains a hurdle, and borrowing to invest in risky assets could destabilize the economy.

Trump's SWF proposal is ambitious, aiming to reposition the U.S. as a financial powerhouse. Yet, its success hinges on transparent governance and sustainable funding. As the plan unfolds, it could either redefine America's economic future or become a cautionary tale of overreach.

The post Jean Luc and Peter Mingils on Sovereign Wealth Funds appeared first on Building Fortunes Radio Network.