Sovereign Wealth Fund 101

Chris breaks down Trump’s executive order to study a sovereign wealth fund aimed at promoting fiscal sustainability and funding future generations—potentially even Social Security. He contrasts the Scandinavian model and Bowie bonds with America’s massive deficits, warning that government must never have voting rights in private investments. www.watchdogonwallstreet.com

Episode Transcript

Speaker 1 (00:00):
The Watchdog on Wall Street podcast explaining the news coming
out of the complex worlds of finance, economics, and politics
and the impact it will have on everyday Americans. Author,
investment banker, consumer advocate, analyst, and trader Chris Markowski.

Speaker 2 (00:16):
There's been so many things going on and so many
things that I have to cover that some stuff kind
of slips through the cracks or sits on my desk
and I don't get to here in the podcast. I
want to talk a little bit about the sovereign wealth
fund that Trump announced. Well, they're studying it to some degree.
Basically what I said. When you think of sovereign wealth funds,

(00:36):
most people are saying, oh, that's something that you know,
no Scandinavian countries do with their oil revenue, or something
that the emirs and princes in the Middle East will do.
And you'd be right, that is something that they do.
And again, difference between those countries and ours is those

(00:57):
countries ay out running massive deficits or have your thirty
something trillion dollars in debt. Donald Trump signed an executive
order and it doesn't have a lot in regards to detail.
Talks about promoting fiscal sustainability, establishing economic security for future generations,

(01:21):
and promoting the United States economic and strategic leadership internationally. Okay,
that's all well and good sounds good, sounds good, But
I want people to think this through. What's going to
happen is that they have to come up with a

(01:42):
plan within ninety days, how it's going to be funded,
what various different investment strategy is going to have, the structure,
and how they would set it up. Now Here, this
is where again we're getting into some of the issues.
First and foremost, it would have been wonderful. It would

(02:02):
have been wonderful if back in the you know, back
in the day when Social Security was running surpluses, they
took the extra Social Security dollars and they invested them instead.
What they did is they just let Congress spend it
and then you know, issue a bond and put it

(02:23):
into the look box. As al Gore would say that
the type of returns that people would be getting via
the Social Security just say, it would have been massive,
been extraordinary. Wouldn't even be discussing at this point in
time the solvency of Social Security. But no, no, no, no,
we can't have that. I mean, it was actually a

(02:44):
Democrat was Daniel Patrick moynihan was centered from the state
of York. Was actually asked about that when it comes
to social security, investing it and you know, getting private
accounts to some degree, and he's like, no, no, no,
you know, not going to happen, because then people would
become wealthy. He was honest. He said, too many people
become Republicans. And he was a Democrat. Anyway, anyway, and

(03:06):
I'm paraphrasing, he didn't say those exact words, but round
about anyway, neither here nor there, how do we go about?
There's some the Treasury Secretary talked about monetizing assets. What
is monetizing and I'm gonna explain what that is. David Bowie,
he really kicked off. David Bowie. I love David Bowie.

(03:30):
Kicked off the whole monetized securitization craze he did. I mean,
we're talking about what a trend center he was, trend
center on Wall Street. Bowie bonds. I'm trying to remember
when they it was nineteen ninety seven, ninety eight in
and around there. David Bowie securitized his entire library with

(03:55):
Bowie bonds. So they issued bonds David Bowie got a
ton of money based upon his catalog and the revenues
that his music catalog put off. Securitize it, Well, what
assets do we have as a nation they would consider,

(04:15):
they would actually consider loan portfolios as an asset. Well,
you mean to tell me that the student loan portfolios
and asset. We're right? And shit down, left, right and
all over the place. What else disaster loans? Again, we
have you know, various different leases to oil companies and

(04:40):
various you know, different things, and that's revenue. But Congress
spends that already. So I don't know what types of
assets you could securitize. Howard Lutnik mentioned, he said, well, listen,
we're going to sign big contracts with certain businesses to
provide things. And he gave I think they gave the

(05:00):
example of the COVID vaccines. So you're gonna buy billions
of dollars billions of COVID vaccines and send billions of
dollars to these pharmaceutical companies. You know, maybe these pharmaceutical
companies might want to kick in some shares of stock
or some warrants. And that now here comes another issue

(05:24):
and another problem. And again this can be worked out.
It can be worked out, but it's also it's this
is dangerous. This is dangerous. I don't I don't want.
I have no problem to sovereign wealth fund investing in
private companies. My problem is, My problem is is I
don't want the government. It should be. I mean, this

(05:45):
has to be no gray areas, rock solid, black and white.
Thou shall not have voting rights. No, I don't want.
I don't want Congress. I don't want to present these
people to say, oh, okay, we're gonna work. You know,
we're we're shareholders here, we control the votes, the proxy,

(06:09):
and we're gonna force you all to go Psychodi Wolke,
and you gotta have fifty trans members on every board.
No frickin way, no way, no how not to mention
the fact these members of Congress, most of them are
dumb as a box of rocks. So no, they can't
have any voting rights at all in any private companies.

(06:31):
The way to do it, the right way, and this
is the only way I'm gonna support, is if you
set up an investment strategy where you have it has
to be again, hyper diversified in various different indices. I
don't mind that various you have you put it into indexes,

(06:52):
you could put it into you know, various different things,
certain commodities. You want to do that, do a basket
of those things as vanilla as vanilla, kid be, and
you set it and you forget it, and that's the strategy,
and you let compounding work its magic over time. I
would love and also to have a purpose for this,

(07:13):
have a purpose for this where this could be utilized
to fund social security if you want to keep it
solvent over a period of time. I don't have a
problem with that. But what you have politicians tinkering around
and being able to vote, and they want to act
like activist investors or they're going to say no no,
you can't invest in oil companies, and you can no, no, no,

(07:34):
no no no no no no no no. That doesn't
work that way. Okay. Do you take all the thought
process out of it. You set up a system and
you let it go sovereign wilflin. That's it. That's the
only way I could support something like this. Watchdog on
Wall Street dot Com