Why would a nation have a sovereign wealth fund?

Vambram said:

The United States does not currently have a federal sovereign wealth fund. However, more than 20 U.S. states—including Alaska, Texas, New Mexico, North Dakota, and Wyoming—operate their own state-level sovereign wealth funds, some of which date back to the 19th century. These state funds are typically funded by revenues from natural resources or other state assets.

At the federal level, the U.S. government has historically not maintained a sovereign wealth fund. Recently, however, there has been movement toward establishing one: On February 3, 2025, President Donald Trump issued an executive order directing the Treasury and Commerce departments to develop a plan for a United States sovereign wealth fund, with recommendations for funding, investment strategies, and governance to be submitted within 90 days. As of June 2025, this fund is still in the planning stage and does not yet exist.

In summary:
No federal U.S. sovereign wealth fund currently exists.
Multiple U.S. states have their own sovereign wealth funds.
A federal fund is under consideration and planning, but has not yet been established.

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What's the point of such talk by the administration? The US doesn't have spare cash floating around to create a SWF.

Vambram said:

From my understanding of SWF, they are created based upon the different kinds of quality and quantity of National resources and assets.

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I thought we had a massive debt. You can't open a bank account with debt.

Hans Blaster said:

I thought we had a massive debt. You can't open a bank account with debt.

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You can borrow to fund speculative investing. Its dangerous but people do it all the time. Not sure I want my govt playing that game.

Just like a citizen that has lots of debt, the best advice is to pay off the existing debt before going into investments. However, there are some economists that argue that if the borrowing rate is say 4% for debt a government can invest it and if they can average even 6%, it can reduce their debt. It is risky though to do that. There was some speculation that Trump would put bitcoin in this fund. Instead he is stockpiling the seized bitcoin in a reserve though I am not sure if this reserve will become or can be considered "sovereign fund."

A better example is Norway. Better because it runs a huge surplus and better because retirement monies are placed in the sovereign fund. So the government earns a better return on their investments. "Norway recorded a Government Budget surplus equal to 13.20 percent of the country's Gross Domestic Product in 2024. Government Budget in Norway averaged 10.29 percent of GDP from 1995 until 2024"

Norway is the exact opposite of the USA. The USA accumulates massive debt per person while Norway has massive savings. "The Government Pension Fund Global (Statens pensjonsfond utland), also known as the Oil Fund (Oljefondet), was established in 1990 to invest the surplus revenues of the Norwegian petroleum sector. As of March 2025, it had over US$1.738 trillion in assets,[2] and held on average 1.5% of all of the world's listed companies, making it the world's largest single sovereign wealth fund in terms of total assets under management.[3][4] This translates to over US$325,000 per Norwegian citizen.[5]"

Norway's second wealth fund is "The Government Pension Fund Norway is smaller and was established in 1967 as a type of national insurance fund. It is managed separately from the Oil Fund and is limited to domestic and Nordic investments and is therefore a key stock holder in many large Norwegian companies, predominantly via the Oslo Stock Exchange."

The trust fund of USA social security in a sense is a sovereign wealth fund. However, since the government has taken all the surplus and spent it, the trust fund can only invest in USA debt on paper. It is given IOU's that will allegedly support social security until the surplus runs out. The IOU's are now starting to be cashed putting another strain on the USA budget.

"The effective interest rate earned on all obligations held by the (USA SS) trust funds in 2022 was 2.4%; the average interest rate on new special issues was 3.0%."

Imagine how big the USA SS trust fund would be if they actually invested even half of it in stocks. I would guess that the SS payments could have been doubled for every American. While risk should be frowned upon, there is not much risk if you invest for the long-term. The surplus social security has been running for decades sop this was a bad choice to raid those funds and give IOU's.

durangodawood said:

You can borrow to fund speculative investing. Its dangerous but people do it all the time. Not sure I want my govt playing that game.

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Yikes. I've also heard some chatter about the gold deposit or the SS Trust fund or a crypto "currency" reserve..

I'll be honest. I don't think there's anything wrong with a SWF in most sanely and responsibly governed countries. However, when you factor in a 34 time convicted felon and adjudicated rapist as the arbiter of that fund I think it will probably just be a slush fund for the convicted felon to dip into with impunity for his own personal gain.