According to President Trump, a sovereign wealth fund has been established under an executive order that could allow it to buy the short video app TikTok.
Trump provided little in the way of specifics on Monday, and how a wealth fund would operate was unknowable. Typically such funds rely on a country’s budget surplus to make investments, but the US government operates at a deficit. Additionally, Congress would likely need to approve its creation.
“We’re going to create a lot of wealth for the fund”, Trump told reporters. And I believe a sovereign wealth fund is in order for this nation to exist.
Trump had previously suggested using a government investment vehicle as a presidential candidate, claiming it could fund “great national endeavors” like highway and airport construction, manufacturing, and medical research.
Trump has previously stated that the fund could be funded by “tariffs and other intelligent things” despite administration officials’ failure to specify how the fund would operate or how it would be managed.
Within the next 12 months, the fund would be established, according to Treasury Secretary Scott Bessent.
Bessent stated that “we’re going to monetize the US balance sheet’s asset side” for the benefit of Americans. There will be a mix of liquid assets and assets that we will have to market to Americans.
According to The New York Times and Financial Times, Joe Biden’s administration also considered starting a fund for this type of fund prior to Trump’s victory in November.
Economics ‘ don’t add up ‘
Wall Street investors claimed the announcement surprised them.
According to Colin Graham, head of multiasset strategies at Robeco in London, “establishing a sovereign wealth fund suggests that a country has savings that will go up and can be allocated to this.” “The economic rules of thumb don’t add up”.
The International Forum of Sovereign Wealth Funds estimates that there are more than 90 such funds in the world, with assets totaling over $ 8 trillion.
Trump made a surprise purchase suggestion for the wealth fund of TikTok, whose fate in the US has been in dispute since a law mandating its Chinese owner, ByteDance, on January 19 required him to either sell it on national security grounds or face a ban.
Following his election on January 20, Trump issued an executive order requesting a 75-day delay in the law’s enforcement.
Trump has stated that he is in discussions with a number of people regarding the purchase of TikTok and that this month he will likely make a decision regarding the app’s future. About 170 million Americans use the well-known app.
Source: Aljazeera
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