the executive orders just keep on coming they keep coming first there was the digital asset stockpile order now president Trump has ordered the creation of a sovereign wealth fund and even hinted that it might be used to nationalize Tik Tok folks you can’t make this stuff up but what is a sovereign wealth fund anyway what is that how is it different from a strategic reserve and what is Trump’s endgame with this latest big idea here my name is guy and in this video we’ll explain what Sovereign wealth funds are and dig into Trump’s plan including possible investments in crypto stay tuned so a handful of countries around the world have a very happy problem they’ve got more money than they know what to do with it’s a burden usually borne on the shoulders of countries rich in oil and gas like Saudi Arabia and Norway other countries possess vast foreign exchange reserves that just sitting around Gathering dust and whether it’s revenue from oil exports or excess foreign reserves a surplus of idle cash is a missed opportunity so why not invest it to make more money for the country I’m investing we invest this would be especially prudent for energy exporting countries because their revenues are subject to volatile commodity prices unpredictability of extraction and ultimately the exhaustion of their natural resources of course you don’t have to be an oil producing country to be affected by macroeconomic cycles of boom and bust which hamper government revenue and spending plans all over the world a stable source of returns can help to mitigate risks of all kinds and put idle cash reserves to good use and this is essentially why Sovereign wealth funds exist now the first example of a nation state doing this was qwa which became a major exporter of oil in the 1940s in 1950 3 the government newly flush with cash created the Kuwait investment Authority or kia to manage its oil revenues these revenues are held in Kuwait’s General Reserve Fund in 1976 the Kia used 50% of the balance of the general Reserve fund to create a future Generations fund a new Branch tasked with diversifying oil profits into long-term financial investments since then each year 10% of of all state revenues have been transferred to the Future Generations fund to be invested in financial assets primarily stocks and bonds throughout the Middle East and North Africa fast forward to today and the Kia is now the world’s fifth largest Sovereign wealth fund with more than $1 trillion doar in assets under management despite Kuwait’s early success story however it wasn’t until 2005 that the term Sovereign wealth fund was coined and swf self-conscious started to proliferate between 2000 and the mid-2010s 56 countries established new Sovereign wealth funds at the turn of the century Global swfs held around $1 trillion in assets compared to around 13 trillion dollar in January 2025 so then why the sudden spread of these funds in the 21st century well not everyone is convinced that this can be explained by economic imperatives a 2014 study found that the spread of swfs after 2008 quote Best resembles the diffusion of a fashion or fat shaped by peer group emulation especially among fuel exporting countries fuel importers however were not immune to the trend although the classic swf is a repository for Surplus revenue from fuel exports countries without an equivalent commodity export Surplus or even excess cash in general have not been deterred from starting their own after all Sovereign wealth fund is a powerful collection of words that plays well with voters famously big fans of sovereignty and especially wealth sometimes this appears more important than the substance of the fund itself for example the UK’s labor party pledged to create a national wealth Fund in its 2024 election Manifesto after winning power the new government changed the name of the UK infrastructure Bank to the National wealth fund it just sounds cooler I guess now comparing the classic example of Kuwait’s trillion dollar Kia to the UK’s National wealth fund PR exercise shows us how very different institutions in different countries can be filed under the ever expanding Sovereign wealth fund classification nonetheless if president Trump wants to jump on the bandwagon now it won’t be the UK’s example he wants to follow he’ll be thinking of how to upstage the biggest swfs in the game so before we dissect Trump’s plan let’s check out the heavyweights who might provide a template for a US government pension fund Global or gpf G is the world’s largest Sovereign wealth fund with 1.7 trillion in assets under management at the time of making this video this is equivalent to around around $325,000 for every Norwegian this monster fund was founded in 1990 as a repository for the large surpluses from taxes on Norway’s oil exports as a result of its success the fund now contributes 20% of Norway’s entire budget each year allocations are 70% to equities 25% to bonds and 5% to real estate all of which is invested abroad the BFG has investments in 8,763 companies in 71 countries Norway also has a smaller separate swf for domestic Investments anyways what’s crazy is that Norway’s swf owns 1.5% of all Global stocks and has even dipped its toes into crypto upping its BTC exposure by 153% in 2024 through indirect investments in crypto related companies like strategy and Riot platforms now the gpf G’s Investments are to some extent influenced by ethical considerations leading to some high-profile divestments from tobacco nuclear weapons cluster Munitions and companies implicated in human rights abuses war crimes and so on as the largest Sovereign wealth Fund in the world gpf G is therefore not only a huge money printer but also a soft power tool for advancing the Norwegian government govern’s agenda abroad okay in second place is the leading non-commodity based Sovereign wealth fund the China Investment corporation now the Chinese government founded the cic in 2007 handed it $200 billion of its 1.4 trillion doll stash of Foreign Exchange reserves and charged it with securing a higher rate of return than what was available from government bonds the cic has since grown its portfolio to $1.35 trillion with a combination of investments in global infrastructure and tech companies on the infrastructure side the cic’s Investments are aligned with beijing’s belt and Road initiative funding New Ports and Railways in Eurasian countries the cic also has a reputation for investing early in Chinese startups that go on to become unicorns most notably Alibaba and Dei the Uber of China other Tech Investments include big bets on AI via sense time semiconductors via smic and blockchain Via digital Yuan R&D as one of the world’s top s wfs the cic’s Investments tend to prompt other institutional investors to perceive its portfolio companies as relatively safe bets however the cic was not always as successful as it is today after its establishment in 2007 the cic initially went in heavy on us real estate and got wrecked in the Great finan financial crisis of 2008 this made possible a land grab by China’s State administration of foreign exchange or safe which manages the rest of China’s foreign exchange reserves as a result safe expanded its own role as a sovereign wealth fund investing China’s excess reserves in infrastructure projects real estate private equity and strategic resources at home and abroad it owns 65% of the government’s Silk Road fund which invests in Eurasian countries to support China’s Bel and Road initiative safe Now controls more than $1 trillion doar in assets under management meaning that China’s Sovereign wealth funds control well over $2 trillion in AUM combined and put together this makes China not Norway the country with the biggest swf footprint not surprising but worth noting because like norways gpf G China’s swfs are part investment vehicles and part sof power instruments now next up behind China and Norway is the Abu Dhabi investment Authority or Adia another $1 trillion plus Sovereign wealth fund of fossil fuel origin there is less information available about Adia than gpf G or the cic and the Wikipedia page emphasizes that it is quote secretive opaque and perplexing a report by intelligence firm Global swf also took issue with ad’s quote increasingly opaque annual report which no longer includes such details as the funds relationship with the government although for what it’s worth the same report says that this is a problem across Gulf swfs in general with Kuwait’s Kia allegedly being even more opaque than the Adia although the inner workings and politics of the Adia are less wellknown than those of Norway and China’s Sovereign wealth funds we’ve no reason to doubt that it too is a tool of soft power pursuing the uae’s political interests alongside economic ones so Norway China and Gulf monarchies it’s quite a mixed bunch at the summit of sovereign Financial Firepower most of the money is oil money some of it is from foreign exchange reserves but all of it is Surplus cash this is one of the reasons why president Trump’s executive order to create a US Sovereign wealth fund has raised eyebrows in some quarters the US has not had any budget surplus since 2001 on the contrary the US is $36.4 trillion in debt and the federal government is regularly faced with the prospect of either shutting down or raising the ceiling on the amount of debt it can issue financing a sovereign wealth Fund in such circumstances is therefore going to require some creativity so the us will have three main options for procuring funding issuing more debt increasing Revenue from taxes and tariffs or selling US Government assets president Trump has gestured towards the latter two options on the campaign Trail he spoke of raising money for an swf from quote tariffs and other intelligent things however the text of the executive order specified that the swf will quote promote fiscal sustainability lessen the burden of taxes on American families and small businesses establish economic security for future generations and promote United States economic and strategic leadership internationally now it’s not clear how the administration will Square the part about lessening the burden of taxes on American families and small businesses with tariffs as a source of funding for anwf tariffs are essentially taxes that are paid by American importers of foreign Goods with the costs inevitably passed on to Consumers so raising a lot of money through tariffs means taxing the living Daylights out of American businesses and consumers especially if there are retaliatory tariffs now it’s still early days for the Tariff program and it’s difficult to assess how it will ultimately affect federal revenue revenue gained from tariffs will be to some extent offset by retaliatory tariffs on US exports or entirely lost if the tariffs succeed as tools of diplomatic coercion and are consequently not in force so it’s more likely that the administration will will try to monetize the assets owned by the federal government this was the suggestion implicit from a fact sheet accompanying the executive order that pointed to the $5.7 trillion in assets held by the federal government these include physical assets buildings transport infrastructure and about 640 million Acres of federal land Financial assets for example shares in government corporations Spectrum licenses and Loan portfolios and strategic reserv specifically of rare earth minerals and of course the Strategic petroleum Reserve there is a lot of value here but selling any of these assets will require the approval of Congress and there may be some difficulty persuading lawmakers why One Federal asset should be sold to buy another riskier one then again the House and Senate are both controlled by the Republican party so this might be doable if not then assets could be monetized by other means for example federal land could be leased for mining or energy projects and this would require less Congressional oversight however it wouldn’t generate enough Revenue to fund a sovereign wealth fund of any meaningful size president Trump has stated that the US would soon quote have one of the biggest funds and that his swf would surpass the size of Saudi arabas quote eventually now the Saudi public investment fund has just shy of one trillion dollar in assets under management so we can expect the Trump Administration to aim for a 12 figure swf it’s hard though to see what part of the government’s balance sheet has enough potential for monetization by sale or other means to finance a USS swf anywhere near this size president Trump’s team appears confident though so perhaps they know something we don’t the ink was barely dry on Trump’s order to come up with a plan when treasury secretary Scott Bessant started telling reporters that the US Sovereign weal fund would be up and running within 12 months bessent will be the co-architect of the swf alongside Commerce Secretary Howard lutnick now this peaked the interest of the crypto Community because lutnick is the CEO of caner Fitzgerald custodian of a significant portion of tether’s US dollar reserves he’s also a passionate Bitcoin Advocate who claimed in an interview late last year year to have quote hundreds and hundreds of millions of dollars of exposure to BTC bessent is also understood to be cautiously Pro crypto and between the two of them there is a good chance that BTC would be included among other asset classes in a US Sovereign wealth fund now this would be a smaller ask than say buying BTC for a strategic Bitcoin reserve on the taxpayers dollar if the government accumulating BTC for a dedicated strategic Reserve ve is the deep end then a sovereign wealth fund including some BTC is very much the kids corner of the pool if BTC does make it into the swf it could become a stepping stone towards a dedicated Bitcoin Reserve but then again this is pure speculation very little has been said about the composition of the proposed fund what would it buy well as we’ve seen swfs are intended to generate higher returns than are available from government bonds alone as such they’re mostly composed of equities private Equity Investments and other alternative asset classes crypto could certainly make an entrance under that alternative asset classes heading but for the moment only one investment idea has been made public in what appeared to be a passing comment at the signing of the executive order president Trump alluded to the US government buying Tik Tock for inclusion in the swf quote we’re going to be doing something perhaps with Tik Tok and perhaps not we might put that in the Sovereign wealth fund whatever we make or we do a partnership with very wealthy people a lot of options but we could put that as an example in the fund we have a lot of other things that we could put in the fund now I have to admit that nationalizing Tik Tok was not on my trump 2.0 bingo card but it could happen if they can do Doge then hey why not the department of brain Rod now if you haven’t been following this Saga after trying to ban Tik Tok during his first Administration Trump immediately put on hold a Biden era Tik Tok ban Upon returning to office in January the Chinese social media giant is now required to find a US buyer who will take a 50% share of its business if it wants to continue operating in the United States now there has been interest from potential buyers as varied as Microsoft and Trump’s former treasury secretary Steve minuchin however they probably didn’t expect to have to compete with the federal government to buy the platform if Tik Tok were to become owned by the US government it would raise questions about freedom of speech and content moderation but it could also be a lucrative source of returns for the USS swf Tik Tok has around5 million monthly active users in the US slightly lower than short form video rival in Instagrams 130 million valuations of Tik tok’s business in the US range from 20 to 50 billion compared to $70 billion for Instagram so if the government can buy Tik Tok somewhere at the lower end of the valuation range it could be a shrewd investment that said the government might actually end up being a buyer of Last Resort according to Bloomberg intelligence analysts finding a buyer who can not only afford the transaction but also deal with the accompanying regulatory scrutiny on data privacy will make finding a private buyer very challenging Elon musk’s name has of course been invoked a lot but another us billionaire involved in a recent Bid to Buy Tik Tok has commented that although he is quote a huge Elon Musk fan the idea that the regulator even under Trump’s Administration would allow this is pretty slim so at the moment there are more questions than answers about the US Sovereign wealth fund how will it be financed what will it invest in we can only speculate at this stage if the fund is a long-term success it’s returns could eventually supplement the federal budget as Norway’s gpf G does they could be used to slow the growth of the national debt they could even be used to fund a full-blown Bitcoin Reserve however critics will argue that a rainy day fund only Mak sense when you have funds to spare the US does not have this luxury in instead it has a heck of a lot of debt on the other hand president Trump’s recent comments about irregularities found in US Treasury data have prompted speculation that the scale of the national debt may now be open to interpretation if the government discovers that it is in less debt than previously thought well the Sovereign wealth fund equation may change slightly although this is rather a big if so we’ll continue following this story closely and we’ll be keeping an eye on Howard lutnick involvement in particular as he is crypto’s man on the inside and could push for an allocation to BTC and let us know how you think the US Sovereign wealth fund is going to shake out will it flip norways is it a precursor to a BTC Reserve is Tik Tok going to become a federal agency we’d love to know your thoughts if you got something out of this video don’t forget to smash the like you can invest in your own knowledge by subscribing to the channel and pinging that Bell to make sure you never miss another upload and check out our latest video over here if you’re wondering what to watch next and as always thank you for watching this is guy over and out [Music]
