WEBVTT - Larry Summers' Tariff Analysis, a US Sovereign Wealth Fund, Air Traffic control 0:00:12.480 --> 0:00:15.319 This is Wall Street Week. I'm David Weston bringing you 0:00:15.440 --> 0:00:18.400 stories of capitalism. This week, we take a look at 0:00:18.400 --> 0:00:21.720 the Trump administration's creativity in finding the cash for that 0:00:21.920 --> 0:00:26.040 sovereign wealth fund the President wants so badly, plus national 0:00:26.079 --> 0:00:29.840 security rubs up against economic policy and the art of 0:00:29.880 --> 0:00:34.879 the deal in the saga of TikTok and getting the 0:00:34.880 --> 0:00:37.800 planes to run on time, the state of the US 0:00:37.880 --> 0:00:41.519 air traffic control system, and rival competing solutions for how 0:00:41.560 --> 0:00:45.280 to make it better. But we start with President Trump's 0:00:45.280 --> 0:00:46.479 big tariff announcement. 0:00:46.560 --> 0:00:49.920 My fellow Americans, this is Liberation. 0:00:49.520 --> 0:00:52.279 Day and what it may mean for the US economy. 0:00:52.760 --> 0:00:56.400 Our special contributor Larry Summers of Harvard tells us the story. 0:00:58.200 --> 0:01:04.720 I think that we basically have a moment when we're 0:01:04.800 --> 0:01:14.160 discussing whether the existing system of global economic integration, where 0:01:14.640 --> 0:01:20.880 products are produced in supply chains across multiple countries, is 0:01:20.959 --> 0:01:24.000 going to be something we're going to preserve with all 0:01:24.040 --> 0:01:28.720 the efficiencies, all the benefits to consumers, all the increase 0:01:28.959 --> 0:01:33.600 in their purchasing power that has brought, or. 0:01:33.520 --> 0:01:37.000 Whether we're going to try to turn the clock back 0:01:37.480 --> 0:01:40.800 to where it was before the Second World War. And 0:01:41.520 --> 0:01:43.319 if we turn it back. 0:01:44.680 --> 0:01:48.600 I think that's going to be enormously costly for the 0:01:48.680 --> 0:01:51.120 United States and for the world economy. 0:01:51.800 --> 0:01:56.200 I think people may not just because there's always. 0:01:55.880 --> 0:02:02.400 A clamor about something, appreciate just how sweeping the proposals 0:02:02.440 --> 0:02:06.280 the United States has made are. The United States has 0:02:06.480 --> 0:02:11.840 traditionally been the world's leading advocate of open markets, to 0:02:12.040 --> 0:02:19.399 keep our alliances together, to help the best American companies 0:02:19.440 --> 0:02:24.279 and workers be able to export, to help American consumers 0:02:24.320 --> 0:02:29.000 buy goods at low costs. We're talking now about the 0:02:29.080 --> 0:02:34.919 United States imposing by far the highest tariffs of any 0:02:35.000 --> 0:02:39.560 reasonable sized economy in the world. We're talking about the 0:02:39.680 --> 0:02:44.560 United States having tariffs that are well above the level 0:02:44.639 --> 0:02:48.440 of the Smooth Hawley tariffs that made the depression great. 0:02:49.240 --> 0:02:54.200 And markets are processing that, and they're seeing. 0:02:55.639 --> 0:02:57.320 A big. 0:02:59.040 --> 0:03:03.799 Set of problems, a big set of reductions in economic 0:03:03.960 --> 0:03:05.720 activity ahead. 0:03:05.960 --> 0:03:07.359 And the stock market. 0:03:07.040 --> 0:03:11.000 Only measures a very small fraction of the losses to 0:03:11.040 --> 0:03:15.440 the economy from policies of this kind. There are also 0:03:15.560 --> 0:03:24.239 big losses to workers, to consumers, and that's spread more broadly. 0:03:24.760 --> 0:03:28.840 So we're going to make very important choices in the 0:03:28.840 --> 0:03:34.320 weeks ahead. I hope we make them wisely, which will 0:03:34.360 --> 0:03:40.800 involve back in off of the policies that have been announced. 0:03:40.720 --> 0:03:44.080 And that's what happened on Wednesday when President Trump announced 0:03:44.080 --> 0:03:47.040 the ninety day suspension of most of the tariffs, with 0:03:47.120 --> 0:03:50.360 the notable exception of China. You referred to history a 0:03:50.440 --> 0:03:53.160 couple times before the World War Two, Smooth Holly, back 0:03:53.200 --> 0:03:56.760 in nineteen thirty Does history give us any guidance about 0:03:56.760 --> 0:04:00.000 where we might go? For example, Richard Nixon, who's president, 0:04:00.080 --> 0:04:01.720 did take us off the gold standard, and there was 0:04:01.760 --> 0:04:05.640 a fairly abrupt change in global economics as a result 0:04:05.680 --> 0:04:08.040 of what President Nixon did. Have we had this sort 0:04:08.080 --> 0:04:11.240 of abrupt departure from what has been before an economic 0:04:11.240 --> 0:04:12.120 policy before. 0:04:12.680 --> 0:04:16.120 This is a much more abrupt change than when Richard 0:04:16.200 --> 0:04:20.400 Nixon took us off the gold standard. Then there were 0:04:20.600 --> 0:04:25.320 ten percent tariffs and those were just the Those were 0:04:25.400 --> 0:04:30.679 the policy. Now the ten percent tariffs are treated as 0:04:30.760 --> 0:04:37.600 some kind of base. The efforts of the United States 0:04:37.640 --> 0:04:41.320 in the aftermath of what President Nixon did were to 0:04:41.480 --> 0:04:48.600 cooperate with other countries, not to coerce other countries. So 0:04:49.000 --> 0:04:53.120 I don't know that there really is a historical precedent 0:04:53.760 --> 0:05:00.640 for what's being done now. And marcuts are speaking with 0:05:00.960 --> 0:05:05.800 incredible clarity. Sometimes markets are hard to interpret, but this 0:05:05.880 --> 0:05:07.400 is not one of those times. 0:05:07.480 --> 0:05:10.720 You have handled your fair share of crises, both of 0:05:10.760 --> 0:05:12.640 the Treasure Department and Secretary, but also in the White 0:05:12.680 --> 0:05:15.720 House during the Great Financial Crisis. From your experience, if 0:05:15.720 --> 0:05:18.560 you were back in the White House or Treasure Department, 0:05:18.600 --> 0:05:21.320 what would you be looking at as perhaps the next 0:05:21.320 --> 0:05:23.560 shoe to drop? What would you be most concerned about 0:05:23.640 --> 0:05:24.000 right now? 0:05:24.080 --> 0:05:28.599 I'd be I would have one concern if I was 0:05:28.640 --> 0:05:31.760 in the White House or in the Treasury, and that 0:05:31.920 --> 0:05:34.240 was my boss, the President of the United States. 0:05:35.080 --> 0:05:39.800 The main shoe that will drop or will not drop. 0:05:40.040 --> 0:05:44.440 Is the next thing the President says and the next. 0:05:44.240 --> 0:05:45.720 Order that he gives. 0:05:46.480 --> 0:05:51.159 And so I would be telling his political advisors that 0:05:51.240 --> 0:05:54.119 this had nothing to do with what was being said 0:05:54.160 --> 0:05:58.200 in other countries, this had nothing important to do with 0:05:59.000 --> 0:06:04.800 business executives' actions in the United States, that if the 0:06:04.839 --> 0:06:08.920 president was on this course, there would not be confidence, 0:06:09.440 --> 0:06:13.159 and if the President signaled a willingness to adjust his course, 0:06:13.720 --> 0:06:14.920 there would be. 0:06:15.839 --> 0:06:17.520 Confidence and show. 0:06:17.760 --> 0:06:23.280 The sole preoccupation that I would have if I were 0:06:23.520 --> 0:06:29.840 in the government, would be with what the President was saying, 0:06:29.960 --> 0:06:36.560 and frankly, As I've said before, David, there are a 0:06:36.960 --> 0:06:41.800 very limited number of issues, and it has to be 0:06:41.960 --> 0:06:46.880 immensely significant. That makes it the right and moral thing 0:06:47.800 --> 0:06:52.320 for a senior official to resign because he is not 0:06:52.480 --> 0:06:57.800 comfortable with the direction that the president is setting. And 0:06:58.200 --> 0:07:03.440 the president is titled to have advisors who believe in 0:07:03.480 --> 0:07:09.680 his policies, and individuals are entitled to follow their conscience, 0:07:10.240 --> 0:07:12.960 and so there are moments when the right thing to 0:07:13.040 --> 0:07:18.920 do is for a senior official to resign. When Elliott 0:07:19.000 --> 0:07:23.040 Richardson resigned when given what he found to be an 0:07:23.160 --> 0:07:28.080 unacceptable order from Richard Nixon, that was such an example. 0:07:28.600 --> 0:07:33.360 When Cyrus Vance resigned because he didn't support what the 0:07:33.400 --> 0:07:36.360 Carter administration was doing in Iran. 0:07:37.040 --> 0:07:39.560 That was an example. 0:07:40.200 --> 0:07:46.120 When a number of officials in President Clinton's administration were 0:07:46.120 --> 0:07:50.480 not able to support his welfare reform bill, they chose 0:07:51.800 --> 0:07:53.840 to resign. 0:07:54.480 --> 0:07:56.640 Frankly, if I were in an. 0:07:56.640 --> 0:08:02.320 Administration that we're pursuing policies as dangerous as these, I 0:08:02.360 --> 0:08:07.080 would be thinking very carefully about whether I had the 0:08:07.120 --> 0:08:13.480 ability to influence policies in a positive direction, or whether. 0:08:13.480 --> 0:08:15.880 The right thing for me to do is to resign. 0:08:16.200 --> 0:08:17.840 So, Larry, you and I have talked in the past 0:08:17.960 --> 0:08:22.600 about the question whether, in fact various people into enemies 0:08:22.600 --> 0:08:25.560 will absorb the increased terriffs so it won't actually to 0:08:25.600 --> 0:08:28.720 a largerie fall in the consumer. What do you make 0:08:28.760 --> 0:08:33.280 of the arguments that producers intermediaries may well absorb a 0:08:33.320 --> 0:08:33.959 lot of the pain. 0:08:34.360 --> 0:08:42.720 I think they're unquestionably wrong. Economists have studied very carefully 0:08:43.160 --> 0:08:47.559 the experience of the previous Trump tariff increases. For example, 0:08:47.600 --> 0:08:52.239 they looked at washing machines that were tariffed versus dryers 0:08:52.600 --> 0:08:58.040 that were not tarffed. They used a variety of different methodologies. 0:08:58.520 --> 0:09:06.000 Essentially all the study concluded that prices go up with tariffs. 0:09:06.480 --> 0:09:10.800 I've had the opportunity now to speak with senior executives 0:09:10.800 --> 0:09:13.080 at a range of major retailers. 0:09:13.760 --> 0:09:15.320 That is certainly their view. 0:09:15.440 --> 0:09:20.000 I suspect when you start getting earnings calls and business 0:09:20.080 --> 0:09:25.240 leaders are asked, will they absorb tariffs, will they be 0:09:25.280 --> 0:09:29.040 able to push tariffs back on to their suppliers, or 0:09:29.120 --> 0:09:33.520 do they expect tariffs to raise consumer prices? I suspect 0:09:33.559 --> 0:09:37.880 they will acknowledge that the dominant effect will be on 0:09:40.160 --> 0:09:46.480 consumer prices. And the important thing for people to understand 0:09:46.679 --> 0:09:51.520 is that this moment is very different than the previous. 0:09:51.160 --> 0:09:52.360 Trump tariff moment. 0:09:52.960 --> 0:09:55.160 It comes at a moment when we already have some 0:09:55.280 --> 0:09:59.400 inflation psychology, It comes at a moment when the economy 0:09:59.480 --> 0:10:04.400 is pretty close to full employment. And most importantly, these 0:10:04.440 --> 0:10:08.160 tariffs are more than ten times as large as the 0:10:08.200 --> 0:10:11.360 tariffs that were put in place in twenty eighteen, and 0:10:11.400 --> 0:10:15.760 therefore there's far less room for them to be absorbed 0:10:16.360 --> 0:10:24.040 in the traditional margin of distributors or suppliers. So I 0:10:24.080 --> 0:10:30.480 think it's fundamentally dishonest to make any claim that these 0:10:31.040 --> 0:10:34.640 tariffs are going to do anything other than be passed 0:10:34.679 --> 0:10:36.160 on in the form of higher. 0:10:35.840 --> 0:10:38.280 Prices coming up. 0:10:38.520 --> 0:10:41.520 President Trump wants a sovereign wealth fun of his very own, 0:10:42.000 --> 0:10:43.600 but to get there, he's going to have to come 0:10:43.679 --> 0:10:47.040 up with some cold, hard cash. We suggest where he 0:10:47.120 --> 0:11:01.000 might look for it. This is a story about creative solutions. 0:11:01.440 --> 0:11:04.120 What happens when a country wants a sovereign wealth fund 0:11:04.200 --> 0:11:06.960 but doesn't have ready cash to put into it. The 0:11:07.000 --> 0:11:10.600 Trump administration is willing to get creative to answer that question, 0:11:10.920 --> 0:11:13.679 and our colleague Michael McKee brings us the story. 0:11:15.040 --> 0:11:18.480 We are going to monetize the asset side of the 0:11:18.559 --> 0:11:20.960 US balance sheet for the American people. 0:11:21.160 --> 0:11:24.440 President Trump's executive order for a US sovereign wealth fund 0:11:24.520 --> 0:11:28.280 will require the country to raise trillions of dollars and fast. 0:11:28.800 --> 0:11:31.280 The biggest sovereign wealth fund in the world is Norway's 0:11:31.320 --> 0:11:34.800 worth one point eight trillion. It's run by Nikolai Tangan. 0:11:35.160 --> 0:11:37.640 We have invested in nine thousand companies around the world. 0:11:38.120 --> 0:11:40.440 We own one and a half percent of all the 0:11:40.440 --> 0:11:42.360 equities in the world. I think you need money to 0:11:42.400 --> 0:11:44.360 set it up. I don't think it makes sense to 0:11:44.400 --> 0:11:45.640 borrow money to set it up. 0:11:45.880 --> 0:11:48.800 It's mostly countries that run a surplus, that have access 0:11:48.800 --> 0:11:51.800 cash to spend, that don't need to deficit finance or 0:11:52.400 --> 0:11:55.600 debt issue to finance their deficits. 0:11:55.920 --> 0:11:58.600 MC Command is the head of US rate strategy at 0:11:58.600 --> 0:12:00.320 Bank of America. 0:12:00.000 --> 0:12:02.480 And the US does not meet any of those categories, 0:12:02.559 --> 0:12:06.400 so it would be fairly non traditional across the countries 0:12:06.440 --> 0:12:09.240 who are utilizing sovereign wealth funds today. 0:12:09.920 --> 0:12:13.600 Former tech investment banker from Morgan Stanley Michael Grimes is 0:12:13.640 --> 0:12:16.680 tasked with setting up the new sovereign wealth fund. One 0:12:16.679 --> 0:12:19.760 of the administration's suggestions to raise the money needed is 0:12:19.840 --> 0:12:24.400 by monetizing the country's balance sheet. So what is on 0:12:24.520 --> 0:12:25.520 that balance sheet? 0:12:25.880 --> 0:12:28.720 Well, the Treasury Secretary has talked about this certainly said 0:12:28.760 --> 0:12:31.520 that they do. The current administration does want to try 0:12:31.520 --> 0:12:36.240 and monetize the balance sheet to use all available financial resources. However, 0:12:36.400 --> 0:12:39.800 we struggle to understand exactly what would want to be 0:12:39.880 --> 0:12:41.800 monetized on the balance sheet. 0:12:42.000 --> 0:12:44.680 As of the fiscal year ending September twenty twenty four, 0:12:45.080 --> 0:12:48.160 the US balance sheet shows total assets of five point 0:12:48.200 --> 0:12:53.080 six trillion dollars coming from cash, property, investments, and inventory. 0:12:53.800 --> 0:12:57.440 Also on that balance sheet two hundred metric tons of 0:12:57.480 --> 0:13:01.520 gold valued at about seven hundred and sixty five billion dollars. 0:13:02.160 --> 0:13:04.560 So there is a relationship between the Treasury and FED 0:13:04.920 --> 0:13:08.120 that has set the price of gold essentially nine times 0:13:08.160 --> 0:13:11.680 lower than where the market is today, and there is 0:13:12.080 --> 0:13:15.840 discussion out there about the possibility of remarking gold to 0:13:15.960 --> 0:13:20.680 current value to then generate additional resources that the government 0:13:20.760 --> 0:13:26.840 could utilize. Seems pretty easy and clean in one respect. However, 0:13:26.880 --> 0:13:28.679 we believe it's going to be a bit more complicated 0:13:28.679 --> 0:13:33.520 in practice. Current law suggests that Congress actually sets the 0:13:33.640 --> 0:13:37.320 statutory rate on gold, So Congress would have to be 0:13:37.320 --> 0:13:41.160 the ones who decide to accept a remarking of gold, 0:13:41.679 --> 0:13:43.920 and we are not sure that Congress would necessarily want 0:13:43.960 --> 0:13:46.840 to do that in order to allow the government to 0:13:46.880 --> 0:13:50.360 have more resources that essentially don't need to be paid 0:13:50.360 --> 0:13:53.640 for with deficits or higher treasury issuance that would free 0:13:53.720 --> 0:13:57.040 up It would essentially create money to be spent in 0:13:57.080 --> 0:14:02.000 the economy, almost in ways similar to QE, and in 0:14:02.040 --> 0:14:05.200 an environment with still elevated inflation and some signs that 0:14:05.200 --> 0:14:08.200 inflation expectations are ticking up, we are not so sure 0:14:08.200 --> 0:14:11.319 Congress would want to move in that direction. Now, if 0:14:11.320 --> 0:14:15.400 they choose not to monetize gold on the government's balance sheet, 0:14:15.880 --> 0:14:19.200 then if you look at what other assets could be monetized, 0:14:19.560 --> 0:14:24.600 they generally take you mostly to land, property, and other 0:14:24.920 --> 0:14:26.000 natural resources. 0:14:26.160 --> 0:14:29.760 Plus, if you're talking about remarking gold, the technical way 0:14:29.760 --> 0:14:32.280 of getting that money to the treasury. 0:14:32.320 --> 0:14:33.600 Goes through the Federal Reserve. 0:14:34.240 --> 0:14:37.680 You raise the risk of the FED seeing being seen 0:14:37.720 --> 0:14:40.880 as politicized, and you raise the risk possibly of inflation. 0:14:41.240 --> 0:14:46.040 Absolutely, it would essentially impact the Fed's balance sheet in 0:14:46.320 --> 0:14:51.600 very similar ways to how QE impacts the Fed's balance sheet. However, 0:14:51.840 --> 0:14:55.840 in contrast to QE, you would have the asset that's changing, 0:14:56.000 --> 0:14:58.400 not be securities holdings on the asset side of the 0:14:58.400 --> 0:15:01.040 Fed's balance sheet, but you would have it be gold 0:15:01.240 --> 0:15:04.080 that is increasing. And then if gold does increase, then 0:15:04.200 --> 0:15:07.200 other liabilities on the Fed's balat sheet would naturally need 0:15:07.200 --> 0:15:11.000 to grow. Those would presumably be commercial bank reserves, cash 0:15:11.040 --> 0:15:14.800 that commercial banks hold, or cash in money markets in 0:15:14.840 --> 0:15:18.920 the overnight reverse repo facility. Either way, it essentially grows 0:15:18.960 --> 0:15:20.920 the size of the Fed's balance sheet. It grows the 0:15:20.960 --> 0:15:23.560 money supply, and then that does mean that there are 0:15:23.640 --> 0:15:26.240 greater risks that it could stoke inflation. It certainly gives 0:15:26.240 --> 0:15:30.320 the government more resources to go out and spend on 0:15:30.360 --> 0:15:33.120 whatever it might want to spend on, or to help 0:15:33.240 --> 0:15:36.480 finance the deficit if there's lower revenue growth due to 0:15:36.600 --> 0:15:39.520 a reduction in taxes. So yes, it runs the risk 0:15:39.560 --> 0:15:42.160 of being inflationary, and we doubt that the FED would 0:15:42.160 --> 0:15:45.120 be terribly comfortable with that, given where inflation is today 0:15:45.480 --> 0:15:48.360 and where some measures of inflation expectations are going. 0:15:48.920 --> 0:15:52.160 President Trump has another idea to monetize the ballot sheet. 0:15:52.600 --> 0:15:55.600 He's suggesting the government can sell off its federal buildings 0:15:55.760 --> 0:15:59.440 and properties which fall under property, plant and equipment, coming 0:15:59.480 --> 0:16:02.200 in at around one trillion dollars on the balance sheet. 0:16:03.080 --> 0:16:05.560 We could see a case where they might sell some 0:16:05.600 --> 0:16:09.080 government buildings that are not being utilized, especially with some 0:16:09.120 --> 0:16:12.120 of the other changes taking place in federal employment right now, 0:16:13.040 --> 0:16:15.200 But it's hard for us to envision what else could 0:16:15.200 --> 0:16:18.040 be monetized beyond that. Might they sell land that the 0:16:18.040 --> 0:16:21.680 military is using, possibly, but presumably the military is using 0:16:21.720 --> 0:16:25.280 that for good reason. Could they sell other natural resources 0:16:25.360 --> 0:16:28.120 or treasures like the Statue of Liberty? I hope not, 0:16:29.040 --> 0:16:33.240 but that is a theoretical possibility. So we're just not 0:16:33.480 --> 0:16:36.160 really certain what else they would sell. But if you're 0:16:36.160 --> 0:16:38.640 not going to remark gold, then there are very few 0:16:38.640 --> 0:16:42.880 other options, we think, for them to monetize the asset 0:16:43.000 --> 0:16:46.080 side of the government's balance sheet outside of maybe selling 0:16:46.120 --> 0:16:46.840 some buildings. 0:16:47.080 --> 0:16:50.480 Is there a reason we would necessarily want to run 0:16:50.880 --> 0:16:53.880 a sovereign wealth fund to do these kind of investments 0:16:53.920 --> 0:16:57.560 instead of just doing the investments, say through the International 0:16:57.640 --> 0:17:00.160 Development Bank or something like that. They've been taught for 0:17:00.240 --> 0:17:02.280 years about an infrastructure bank that. 0:17:02.280 --> 0:17:05.080 Sort of thing, sure, or doing them through Congress having 0:17:05.160 --> 0:17:09.480 Congress appropriate funds for these types of purposes. Why would 0:17:09.560 --> 0:17:12.320 you utilize a sovereign wealth fund for that well, presumably 0:17:12.359 --> 0:17:16.080 because it gives the individuals who are overseeing the sovereign 0:17:16.080 --> 0:17:19.480 wealth fund more flexibility as to where investments can be made, 0:17:20.240 --> 0:17:22.399 and presumably it would be done in a way that 0:17:22.440 --> 0:17:27.960 does not require as much congressional authorization or potentially oversight. 0:17:28.080 --> 0:17:31.000 So it's just a more degrees of flexibility I think 0:17:31.080 --> 0:17:32.960 for those who would be overseeing that fund. 0:17:33.359 --> 0:17:36.920 Salar Garamoni is a professor at Penn State University who's 0:17:36.960 --> 0:17:39.840 done some research on what a US sovereign wealth fund 0:17:39.880 --> 0:17:43.320 would mean for the US. Well, the sovereign wealth funds 0:17:43.400 --> 0:17:47.800 we hear about all have wealth. They come from locations 0:17:47.880 --> 0:17:50.880 where there is mineral wealth or something that adds to 0:17:50.920 --> 0:17:53.880 the treasury. The US has a big deficit. We don't 0:17:53.880 --> 0:17:55.879 have sovereign wealth at this point. 0:17:56.160 --> 0:17:59.480 Yeah, it's interesting. There have been very very few, if 0:17:59.600 --> 0:18:02.720 in fact, there may not have been any sovereign wealth 0:18:02.720 --> 0:18:06.119 funds that were not created by some sort of a surplus. 0:18:06.200 --> 0:18:09.320 And as you just noted, we have a deficit and 0:18:09.359 --> 0:18:13.000 we have a national debt and no surplus. There might 0:18:13.040 --> 0:18:19.520 be creative ways to gather assets and put it into 0:18:19.560 --> 0:18:22.800 the portfolio of a sovereign wealth fund. But again I 0:18:22.840 --> 0:18:27.879 would venture out and underline that work creative. So it 0:18:28.000 --> 0:18:30.320 may not be intuitive, but I think there are ways. 0:18:31.320 --> 0:18:33.520 One major challenge that stands in the way of a 0:18:33.640 --> 0:18:37.000 US sovereign wealth fund is the issue of the national debt, 0:18:37.200 --> 0:18:39.639 which runs thirty six trillion dollars deep. 0:18:40.040 --> 0:18:42.600 One of the concerns about the proposed US Sovereign Wealth 0:18:42.600 --> 0:18:46.000 Fund is that is it the most efficient way to 0:18:46.359 --> 0:18:50.280 address the specific reasons for the creation of the sovereign 0:18:50.359 --> 0:18:53.679 wealth fund. For instance, if the reason is to be 0:18:54.720 --> 0:19:00.280 infrastructure spending, Congress has already allocated billions of dollars toward 0:19:00.600 --> 0:19:04.200 trillions of dollars in fact, toward infrastructure spending. So yeah, 0:19:04.200 --> 0:19:07.880 there is a concern that creating a brand new bureaucracy 0:19:07.920 --> 0:19:11.639 to answer whatever the question might be, whether it's potential 0:19:11.680 --> 0:19:15.720 social security shortfalls down the road, whether it's infrastructure projects, 0:19:16.680 --> 0:19:22.359 would it make sense to divert the attention from paying 0:19:22.359 --> 0:19:26.240 for those specific projects and going through a brand new 0:19:26.280 --> 0:19:28.720 bureaucracy to address those issues. 0:19:29.160 --> 0:19:32.120 But there might be some benefits to a potential US 0:19:32.160 --> 0:19:33.040 Sovereign Wealth fund. 0:19:33.640 --> 0:19:37.280 Ideally, if the long term interests financial interests of the 0:19:37.400 --> 0:19:40.840 United States is the primary concern and not so much 0:19:40.960 --> 0:19:48.760 driving geopolitical interests, and that can have legitimacy too. Infrastructure 0:19:48.760 --> 0:19:54.119 projects potentially addressing potential shortcomings of social security and so 0:19:54.160 --> 0:19:58.560 on could potentially be looked at a legitimate usage of 0:19:58.600 --> 0:20:01.560 the Solemn Law Fund. However, there could also be the 0:20:01.600 --> 0:20:05.320 possibility that the Solemn Wealth Fund's primary purpose it's not 0:20:05.400 --> 0:20:08.840 so much the long term financial interests and the financial 0:20:08.880 --> 0:20:12.880 outcomes of the fund itself, but being in line with 0:20:12.920 --> 0:20:17.480 some other national interests, whether it's related to foreign policy 0:20:18.119 --> 0:20:19.200 or whatever else. 0:20:20.560 --> 0:20:21.360 The case might be. 0:20:21.920 --> 0:20:24.840 Where could a fund like that invest, Would it work 0:20:24.920 --> 0:20:28.000 to have it invest in the US, or would it 0:20:28.080 --> 0:20:30.639 need to go overseas to avoid conflicts of interest. 0:20:30.840 --> 0:20:34.240 There are Solemn well funds that are created with specific 0:20:34.400 --> 0:20:40.679 legal mandates of asset allocation strategies and even the asset 0:20:40.720 --> 0:20:44.800 classes in which they can invest. Norwegian legal mandate, for instance, 0:20:44.800 --> 0:20:48.600 for the Norwegian Solemn Well Fund is as specific as 0:20:48.640 --> 0:20:52.280 saying that no more than five percent of the fund's 0:20:52.359 --> 0:20:57.639 assets can be invested in asset class X, and there 0:20:57.640 --> 0:21:02.680 are also percentages specifically these around areas of geography. So 0:21:03.280 --> 0:21:07.960 ideally there should be a legal mandate transparently discussed that 0:21:08.280 --> 0:21:13.359 limits that puts at least constraints on what the solemn 0:21:13.400 --> 0:21:16.760 wealth fund can invest in. Ideally, a good solemn wealth 0:21:16.800 --> 0:21:24.960 fund would be diversified across geographies, across asset classes, across 0:21:25.000 --> 0:21:28.760 even etterteral asset managers, which is something that many solemn 0:21:28.840 --> 0:21:30.440 wealth funds employ. 0:21:31.240 --> 0:21:34.080 The idea of a sovereign wealth fund is not new 0:21:34.160 --> 0:21:37.480 to the twenty US states that have sovereign wealth funds, 0:21:37.840 --> 0:21:38.919 including Alaska. 0:21:39.359 --> 0:21:44.399 It's a way for Alaskans to store their non renewable resource, 0:21:44.480 --> 0:21:48.280 especially oil, mining, minerals, etc. So in nineteen seventy six, 0:21:49.200 --> 0:21:52.560 the state legislature sent to the people of Alaska a 0:21:52.600 --> 0:21:57.000 constitution resolution to constitutionalize the concept of a permanent fund 0:21:57.080 --> 0:22:00.680 in our constitution, and that was successful. Fund was born 0:22:00.720 --> 0:22:04.600 in seventy six. Nineteen eighty the Permanent Fund Dividend came 0:22:04.640 --> 0:22:06.960 into being. This is all as a result of oil 0:22:06.960 --> 0:22:09.520 that was discovered in Alaska and some really really smart 0:22:09.560 --> 0:22:13.280 people that had a lot of foresight. The fear was 0:22:13.320 --> 0:22:15.520 that we would spend all of our oil money and 0:22:15.840 --> 0:22:19.000 we wouldn't have anything for future generations. What the permanent 0:22:19.040 --> 0:22:22.320 Fund does is it captures the woryalties of oil and 0:22:22.400 --> 0:22:27.840 minerals and puts them into a constitutionally protected fund. That 0:22:27.880 --> 0:22:32.800 fund is called the CORPUS. It is invested into equities, private, 0:22:33.240 --> 0:22:36.520 public equities, real estate, et cetera. And the idea is 0:22:36.520 --> 0:22:40.000 to continually grow the fund so that over time we 0:22:40.040 --> 0:22:42.040 will have we will have a fund that can help 0:22:42.080 --> 0:22:45.199 future generations of Alaskans at the same time paying out 0:22:45.200 --> 0:22:48.040 a dividend every year to Cerne Alaskans. About six hundred 0:22:48.040 --> 0:22:50.480 and forty thousand Alaskans would receive a dividend this coming year. 0:22:51.359 --> 0:22:53.840 Just because it's a good idea for his state, that 0:22:53.840 --> 0:22:56.959 doesn't mean Governor Dudley V sees a similar path forward 0:22:57.040 --> 0:22:58.640 for the federal Sovereign Wealth Fund. 0:22:59.119 --> 0:23:01.080 I don't know if it makes sense to borrow money 0:23:01.119 --> 0:23:03.439 to put into the fund, but I think what the 0:23:03.600 --> 0:23:05.920 federal government can do is something similar with you know 0:23:06.000 --> 0:23:09.199 what Alaska has done, and that is royalties on federal lands, 0:23:09.440 --> 0:23:14.040 whether it's oil, whether it's gas, possibly timber mining. Any 0:23:14.080 --> 0:23:17.240 income that's produced on federal lands could actually have some 0:23:17.320 --> 0:23:19.119 of that go into a permanitive fund and grow a 0:23:19.160 --> 0:23:22.120 permit fund, just like Alaska has. So, especially when you're 0:23:22.119 --> 0:23:25.160 looking at non renewable resources oil and gas, it may 0:23:25.200 --> 0:23:27.280 make sense and there is a lot of federal land. 0:23:27.840 --> 0:23:30.680 There are a lot of offshore leases, on shore leases potentially, 0:23:31.160 --> 0:23:33.240 and so you know, it is something to think about. 0:23:33.920 --> 0:23:36.880 We're proud of the Permanive Fund because once again we 0:23:36.920 --> 0:23:39.040 know that we have saved a considerable amount of money 0:23:39.240 --> 0:23:40.399 for future generations. 0:23:41.880 --> 0:23:45.919 Coming up, the strange twisted tale of TikTok and President 0:23:45.920 --> 0:23:49.560 Trump's version of the art of the deal national security style. 0:23:50.160 --> 0:24:02.200 That's next on Wall Street Week. This is a story 0:24:02.240 --> 0:24:06.760 where let's make a deal meets national security. TikTok has 0:24:06.800 --> 0:24:09.600 been something of a pinata, caught between its appeal to 0:24:09.640 --> 0:24:12.600 some one hundred and seventy million Americans and the US 0:24:12.680 --> 0:24:16.199 government that has founded a national security risk. The question 0:24:16.440 --> 0:24:20.280 is whether President Trump's deal making skills can reconcile the two. 0:24:20.520 --> 0:24:23.600 Richard has A's centerview partner, spent over twenty years as 0:24:23.640 --> 0:24:25.879 head of the Council of Foreign Relations and has seen 0:24:26.080 --> 0:24:31.440 his fair share of wheeling and dealing over national security. 0:24:31.920 --> 0:24:34.359 What is the intersection between national security in one hand 0:24:34.680 --> 0:24:37.480 and commercial transactions such as TikTok on the other. 0:24:37.840 --> 0:24:40.800 Well, TikTok's a special one in part because of the 0:24:40.920 --> 0:24:44.040 data that could be captured and transferred. Also the content. 0:24:44.160 --> 0:24:46.760 I'm always struck by the difference between TikTok China and 0:24:46.760 --> 0:24:50.440 TikTok America. Let me just say, TikTok America is the 0:24:50.480 --> 0:24:53.199 equivalent of drinking several cans of soda to day and 0:24:53.240 --> 0:24:55.960 eating an awful lot of candy, whereas TikTok China is 0:24:56.040 --> 0:25:00.320 much more spinach and educational. Plus is the potential obviously 0:25:00.440 --> 0:25:03.840 for political bias and the rest. So I think that's 0:25:04.080 --> 0:25:07.679 influence of security, both in the data transfer way potentially 0:25:07.760 --> 0:25:11.400 as well as in the content way, and I think 0:25:11.400 --> 0:25:14.360 it makes the larger point than in many cases, economic 0:25:14.400 --> 0:25:18.200 transactions do have a national security dimension, whether it's direct 0:25:18.280 --> 0:25:18.800 or indirectly. 0:25:18.880 --> 0:25:23.200 Given that dimension of national security in normal commercial transactions, 0:25:23.520 --> 0:25:25.920 where should the line be, I mean, how far should 0:25:26.000 --> 0:25:28.760 the government go and really interfering with commerce. 0:25:29.280 --> 0:25:31.080 It's a good question. It's hard to give you a 0:25:31.160 --> 0:25:33.440