This interview was sparked by my Quartz column “Why the US Needs Its Own Sovereign Wealth Fund.”
The primary motivation for having a US Sovereign Wealth Fund is to give the Fed running room for monetary policy. (Its establishment is a powerful balance sheet operation—more powerful than quantitative easing with long-term government bonds or mortgage backed securities.) But I think there are other benefits of a sovereign wealth fund as wealth fund:
- making money for the taxpayer,
- contributing to financial stability both directly by a contrarian investment strategy and indirectly through the financial expertise of its staff, and
- serving as a political lightning rod to draw political controversy away from the Fed.