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Why doesn't the US have a national sovereign wealth fund?!

Discussion in 'Off Topic' started by nwdiver, Aug 13, 2018.

  1. nwdiver

    nwdiver Active Member

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    There are pockets of what could be considered a 'sovereign wealth fund' in the US but so far as I'm aware there's no national fund. Norway has a Sovereign Wealth fund ~3x its GDP. If the US had a similar fund it would be $54T! A properly managed fund could reduce the need for taxes and eventually fund a basic income for the millions of people too 'scared?' to invest on their own....
     
  2. S'toon

    S'toon Knows where his towel is

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    Because "communism!"

    What?! The government having a surplus of money?! That's stealing from worthy rich people! Money is to be taken from the poor and middle class, and be given to the rich, that's what a government is for after all!

    In a more serious tone, remember when the US government did run a surplus? It was at the tail end of the Clinton administration. The very first thing Bush did was give out tax cuts, the vast majority of which went to rich people. Alan Greenspan approved of it saying that Clinton's surpluses were paying off the national debt too quickly and the modest taxes on the rich which provided for that surplus were hurting rich people.
     
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  3. GWord

    GWord Member

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    We have the inverse of a wealth fund.
     
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  4. VT_EE

    VT_EE Member

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    We only know how to spend money.
     
  5. TaoJones

    TaoJones Beyond Driven

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    Would that not be the (treasury) bond market?

    Point taken, however... Norway's sitting on a trillion dollars from their oil revenue and leads the world in per-capita EV ownership. The Kingdom of Saud is about to fund a $25B-$30B chunk of Tesla's forward momentum. A smaller but attention-getting effort.

    Hmmmmmmmmmm...

    On the other hand, we do have California, which is what, the 7th largest economy in the world? It was 5th, then 8th... who can keep track anymore. Anyway, I guess we'd have to see what CALPERS is invested in, as I'd imagine it would dwarf multiple countries' SWFs.
     
  6. AudubonB

    AudubonB Mild-mannered Moderator Lord Vetinari*

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    The state of Alaska has a fund very similar to Norway’s in that it is derived, initially, from oil production royalties. It’s informally known as The Permanent Fund and its assets are around $85 billion. Outside Alaska, it is notorious as being the provider of annual checks to all Alaskans (fide Homer Simpson. Or is it Bart?).

    The reality, as always, is more complicated. It does invest primarily in equities, but also in bonds, real estate and on occasion modestly exotic fare. The yearly payout is a function of the realized gains smoothed out over the prior five years, and also of the number of eligible residents. Each resident’s check is known as the “PFD”, because it helps keep one afloat. No...seriously it stands for Permanent Fund Dividend.

    A source of intense embarrassment for me is that both Alaska’s and Norway’s programs originated about the same time and each entity produces about the same amount of oil....and Norway’s fund is 12X the size. So, while Alaskans spend their PFD each year on a new snowmachine or big screen tv, Norway keeps investing and investing and investing.....
    Other than the job provided to that apocryphal store clerk at the Anchorage Best Buy, the massive spending spree Alaska embarks on each autumn does diddly-squat for the state’s well-being. China is not complaining, however.
     
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  7. eye.surgeon

    eye.surgeon Active Member

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    Might have something to do with the fact that we have 10 times more people on welfare assistance than Norway has people.
     
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  8. nwdiver

    nwdiver Active Member

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    So we spend ~$350B on social safety net programs including welfare and disability, ~$624 on the Military and >$1T for more tax cuts but it's the $350B/yr that's the reason?
     
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  9. AudubonB

    AudubonB Mild-mannered Moderator Lord Vetinari*

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    The state of Alaska has a fund very similar to Norway’s in that it is derived, initially, from oil production royalties. It’s informally known as The Permanent Fund and its assets are around $85 billion. Outside Alaska, it is notorious as being the provider of annual checks to all Alaskans (fide Homer Simpson. Or is it Bart?).

    The reality, as always, is more complicated. It does invest primarily in equities, but also in bonds, real estate and on occasion modestly exotic fare. The yearly payout is a function of the realized gains smoothed out over the prior five years, and also of the number of eligible residents. Each resident’s check is known as the “PFD”, because it helps keep one afloat. No...seriously it stands for Permanent Fund Dividend.

    A source of intense embarrassment for me is that both Alaska’s and Norway’s programs originated about the same time and each entity produces about the same amount of oil....and Norway’s fund is 12X the size. So, while Alaskans spend their PFD each year on a new snowmachine or big screen tv, Norway keeps investing and investing and investing.....
    Other than the store clerk at the Anchorage Best Buy, that massive spending spree Alaska embarks on each autumn does diddly-squat for the state’s well-being. China is not complaining...
     
  10. Lasairfion

    Lasairfion Member

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    #10 Lasairfion, Aug 15, 2018
    Last edited: Aug 15, 2018
    Here are the percentage spending stats*:
    [​IMG]

    KEY:
    Red is spending on services required to run the government, and interest on debt spending
    Black is spending on entitlements

    HHS = Health & Human Services
    HUD = Housing and Urban Development
    EPA = Environmental Protection Agency
    GSA = General Service Administration (ie cars/buildings)
    OCO = Overseas Contingency Operations (ie foreign wars)
    Interest = Federal debt interest

    Note that entitlement spending is mandatory and set by law. It cannot be cut without legal changes.

    Other Mandatory = other mandatory entitlement spending (ie unemployment benefit, food stamps)

    ---

    And here are the percentages for governmental income (through taxation and borrowing). Red is annual taxation income, black is annual borrowing.

    Note that the black section amount will be added each year on top of the previous year's borrowing, affecting interest payments for the following year.

    [​IMG]

    *statistics based on 2011 governmental spending and income figures
     
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