We do not believe President Trump’s idea of a SWF (sovereign wealth fund) should be dismissed. We call this the ‘MAGA SWF’.
- While most SWFs are run by countries with net savings positions, having a savings surplus is not a pre-requisite for a SWF. Also, the financial justifications of a SWF do not disappear just because a country is cash-poor.
- The US has a high federal debt, but the US federal government is extremely wealthy, in the sense that it has huge financial and non-financial assets. Some of the latter could indeed be ‘monetised’ to be seed capital for such a project. We think USD2.0 trillion is entirely possible. A USD200 billion start would be quite easy to achieve but less meaningful for a country this size.
- A MAGA SWF that starts with USD2.0 trillion could grow to USD13.4 trillion in two decades, at the total return of the SnP over the past 20 years (10 percent), USD36.3 trillion in 30 years, and almost USD100 trillion in 40 years. Of course, the actual performance could be lower or higher. But given the potential, we are puzzled why anyone would dismiss this idea, even with the obvious challenges. The negative side-effects of such a program seem second-order and less significant than other policies such as tariffs.
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What is covered in this note?
Our note covers topics such as:
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Introduction
- Overview of the MAGA SWF concept
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Why the US should consider a Sovereign Wealth Fund
- The myth of savings surpluses
- Financial justifications for a SWF
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The US government’s asset wealth
- High federal debt vs. asset-rich government
- Potential monetisation of assets
- Feasibility of a $2.0 trillion fund
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Growth potential of a MAGA SWF
- Projections based on historical returns
- Potential long-term valuations
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Comparison with existing Sovereign Wealth Funds
- Singapore’s Temasek
- Norway’s NBIM
- China’s Silk Road Fund
- Middle Eastern oil-funded SWFs
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Funding strategies for a US SWF
- Monetization of public assets
- Private sector co-investment & institutional backing
- Potential Introduction of a ‘MAGA Bond’
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Strategic investment focus of the MAGA SWF
- Domestic investment in AI, technology, and infrastructure
- International expansion and geostrategic influence
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Addressing common criticisms
- Risks vs. rewards analysis
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Conclusion
- Why this idea deserves serious consideration
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Disclosure
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