So, maybe a strategic Bitcoin reserve is retarded, who knows (#850724)... but Sovereign Wealth Funds have been around forever.
The most publicized and well-regarded example might be the Norwegian one, a ginormous pot of assets owning something like 1% of every listed company on the planet (plus a bunch of fancy houses here and there, plus all manner of stuff.)
History and rationale? Tl;dr = avoid Dutch disease, pressure currency down.
What the fund owns are foreign assets, such that the oil revenue that flows into the fund (taxed in NOK) also flow out of the currency and into EUR-, USD-, JPN-denominated assets. Hence, avoiding the Dutch disease, because the oil sector doesn't crowd out (at least via the route of currency appreciation) other economic sectors.
It was decided early on that revenue from oil and gas should be used cautiously in order to avoid imbalances in the economy. it was decided that the fund should only be invested abroad. Oil revenue has been very important for Norway, but one day the oil will run out. The aim of the fund is to ensure that we use this money responsibly, think long-term and so safeguard the future of the Norwegian economy.
Now, we all know the U.S. government owns a ton of land, especially out West. So, wth would a SWF in the U.S. involve?
Ignoring the land, Alphaville presented us with this lovely fellow:
Much of that seems... unimpressive. (What, the U.S. gov owns furniture worth 500bn?!). And the gold stock is severely undervalued (at $42/oz instead of today's market north of $2,800).
Chucking all your office furniture into a Sovereign Wealth Fund to raise the potential asset value may strike some as a little preposterous.
Also, fucking sell your chairs, bro.
...to forestall the common criticism that countries need to run budget surpluses if they want to build sovereign wealth funds. We actually agree they don’t. Sovereign Wealth Funds tend to be canonically divided into savings funds (piggy banks for the distant future), stabilisation funds (piggy banks for rainy days), and strategic funds (special purpose vehicles into which state assets can be thrown and managed). Turkey, for example, has run a SWF despite a persistent budget deficit and current account deficit over the past decade.
Again, what would be the point of all this?
Maybe divert tariff revenue into this and use it for strategic investments but that seems to be a Congress-type decision plus would only make the budget situation worse. Maybe revenue suitably invested can outrun the debt, Sinking Fund style, but does anyone believe the government be a good, responsible, sharp investor?!
The issuer of the world's reserve currency has no currency against which to hedge. It does have a money printer and exports, you know, not oil but little green papers called dollars. For that, the U.S. gets a certain amount of financialized benefits (monetary premium, #830458), but hedging those out in a SWF undermines the purpose.
Plus, like the FT piece mentions, most SWF have government surpluses to look after; the U.S. doesn't, and for as long as it keeps issuing the world's money the U.S. almost automatically runs a trade deficit. (It's baked into the cake already.)
And aside from that, from which pot of savings money would this be funded? The Treasury is broke, in over its head to the tune of a trillion or so in interest payments a year... unless the SWF is selling off assets, it doesn't seem to have much reason for existing.
I think Alphaville is available without subscription, but in case not: https://archive.md/F22TK