Back in Mar '23 we discussed but given the quoting issues with the new format I thought to bring this forward in a new thread. I left off reference to Comrades in the title
Since both candidates are in favor, well Trump is and the current admin is working out the pros and cons, while candidate Harris has yet to weigh in, I was curious what the current thinking of the room is. I am illiterate on such matters and reading this latest article from the Washington Post only provides more questions. https://wapo.st/4haBpoa
How does this compare to nationalizing industries? Free markets? Trump’s tariffs? Private ownership and Capitalism? How are supply chain worries resolved through investment by a sovereign fund?
It seems Norway did it right with their offshore oil and continues to work well. While the Saudi’s do it maybe not so well, as they throw money at international golfers. How do we come up with the cash to start seeing as how we have a large National debt already?
So why does a US fund in the hands of Trump frighten me?
We have 20 trillion fucking dollars in debt (not counting social security) . The best investment would be get that lower.
We had 4 trillion in tax receipts. Let’s say we want 10% offset or 400B in cashflow (not just unrealized returns). We would need an 8 trillion wealth fund throwing off 5% cash.
You’d get about the same return dumping the 8T into paying down debt but the asshats in DC won’t do that
So we, the CIA and by extension the US Government, are already invested and cashing in ? Do we know how much involvement Congress had or has? and for that matter the US Treasury as well ?
Countries with Sovereign Wealth Funds are generally those with excessive foreign exchange reserves, some of which they place into a fund for higher returns (Singapore’s GIC), or strategic investments (Saudi investing $2bn in Kushner’s fund). These countries tend to be those that are running a large current account surplus and low net debt, often because they have significant mineral resource deposits (oil, natural gas, copper, etc.). The fund offers an added layer of support for a country in difficult times, such as during COVID when Chile tapped its fund.
None of this particularly applies to the US, and yes, there could be political influence on the investments.
It seems rather ludicrous to suggest a sovereign wealth fund that is going to be funded with borrowed money. Which is the only way America could do it until they can balance their budgets. A good start might be backfilling the Social Security Trust Fund so it does not run out by approx 2030
I think one of the rules for Norway’s fund is it doesn’t invest in Norway. That way one avoids propping up non efficient industry in Norway. Very smart. I doubt America could manage that.
Norway has two Sovereign Wealth Funds, one is global and the other focuses on investments in Norway and the Nordics.
It is interesting that you bring up Norway. Their Sovereign Wealth funds are funded largely by a tax on oil companies that extract from Norway’s territories. This tax is currently at 71.8%.
Contrast Norway’s 71.8% with America’s royalty rate. Until recently it was at 12% for Federal leases. America is the world’s largest oil producer, yet revenues from oil and natural gas leases on onshore federal lands only totaled $4.202 billion in FY2019. In Norway that revenue was $131 billion in 2023.
You may recall when Biden paused new oil leases the GOP lunched a misinformation campaign. The reality was the pause was designed to explore how Congress could increase America’s small Federal royalty rate and get it more in line with what States and other governments charge. Biden was eventually successful in increasing it to 16.67% but that is still lower than most state royalty rates.