Trump could very well create something horrible, I'm sure he's capable of that lol But as a principle, sovereign wealth funds are awesome.
Plus, they can also be used to pay off debt, by using the interests to make payments instead of taxes or other revenues, without reducing services.
Plus, they can also be used to pay off debt, by using the interests to make payments instead of taxes or other revenues, without reducing services.
Comments
Debt is usually financed at extremely low rates for governments, like 0.25% sometimes.
Borrowing at that rate, and then investing in, say, the S&P 500, yields ([investment rate]-[debt rate])%, so, say, (10%-0.25%)=9.75%, which can then be used or compound.
The investments ALWAYS grow faster than the consolidated debt, so it's ALWAYS a positive result over time.
It's counterintuitive in personal finance, but it's the best solution in terms of public finance.
So not only does the fund grow and return interests,
There's honestly almost no way to screw that up (unless you're Trump and Musk).
https://www.investopedia.com/terms/l/leverage.asp