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trump, who is running for the us presidency, has just announced plans to launch a us sovereign wealth fund, and it has been revealed that the current president biden is also considering launching such a fund.

on friday, september 6, eastern time, bloomberg reported, citing people familiar with the matter, that biden's senior aides, us national security advisor jake sullivan and his deputy daleep singh, have been drafting a proposal to establish a sovereign wealth fund that would allow the us government to invest in areas of national security interests, including technology, energy, and key links in the supply chain.

sullivan and singer have been working on the fund for months, holding a series of weekly brainstorming sessions and meeting with economic experts from the national security council to discuss the size, structure, funding, leadership and potential protections of the proposed fund, according to people familiar with the matter. the work has progressed to the point where planning documents are circulated among white house staff and key government agencies. key details, including the fund's structure, financing model and investment strategy, are still unclear.

coincidentally, just one day before the news broke that biden's aides were studying the establishment of a sovereign wealth fund, trump called for the establishment of a government-owned investment fund to finance "great national causes" in a speech at the new york economic club on thursday, promising to use the proceeds from tariffs to launch such a fund. trump said that day:

“why don’t we (the united states) have a wealth fund? other countries have wealth funds. we have nothing. we will have a sovereign wealth fund, or we can give it a different name.”

bloomberg reported that sullivan and singer's behind-the-scenes work at least in spirit reflects the same idea as trump's call on thursday. trump's public support for the establishment of a sovereign wealth fund may provide support for the initiative from both the democratic and republican sides. for the biden administration, the main motivation for establishing a sovereign wealth fund is to compete with other countries in key materials and emerging technologies. biden's aides are particularly concerned about whether they can use capital at the same speed and scale as other countries.

after trump's speech, john paulson, a wall street hedge fund tycoon who financed his presidential campaign, said on thursday that he and trump had not yet discussed the details of the sovereign wealth fund plan. he said that over time, the size of the fund "will be larger than any fund in existence."

however, some commentators later said that there is a key problem in setting up the large sovereign wealth fund mentioned by trump and paulson: where does the money come from? the us government's annual budget deficit has exceeded 1 trillion us dollars. the government deficit is huge and has long been issued bonds to maintain government spending. currently, almost all countries with sovereign wealth funds have huge budget surpluses, including trade surpluses, government-owned natural resource income, foreign exchange business and government transfer payments.

the fortune report also said it is unclear how trump's proposed u.s. sovereign wealth fund will work, especially without a clear source of funds.

justin wolfers, professor of economics at the university of michigan and senior fellow at the peterson institute for international economics (piie), commented on trump's call, saying that operating a sovereign wealth fund is equivalent to the government investing extra cash in financial and other assets, usually overseas assets. sovereign wealth funds are useful when a country has extra cash to reserve for future needs. but the us government still owes people money, and trump's call is to call for borrowing money to buy stocks/bonds/cryptocurrencies/real estate.

the fund is currently a relatively rare proposal for other countries, except for countries with large commodity exports and budget surpluses, such as oil-rich middle eastern oil producers. supporters of the fund believe that it can be used to support emerging technologies with high barriers to entry, including shipbuilding, emerging geothermal and nuclear fusion projects, and quantum cryptography. bloomberg reported on friday that biden's aides have similar ideas and believe that the fund can create synthetic reserves of key minerals by purchasing futures contracts.