Trump and Paulson’s Proposal: U.S. Sovereign Wealth Fund (or Another Grifter Bailout)
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Trump teams up with pickup artist for new crypto scheme
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Last Thursday, Republican presidential candidate Donald Trump spoke before the Economic Club of New York. During the speech, Trump revealed that if he wins the election he will create a U.S. Sovereign Wealth Fund.
Sovereign Wealth Funds are what countries that are rich from oil exports create with their surplus budget balances in order to diversify their nation’s investments. (Countries such as Norway, Saudi Arabia, Abu Dhabi, Kuwait, and numerous other countries have Sovereign Wealth Funds.) Not only does the U.S. not have any budget surpluses to invest but it is projected to have a $1.9 trillion budget deficit this fiscal year as well as having an existing national debt of $35.4 trillion.
Trump explained his plan as follows in his speech at the Economic Club of New York:
“We’ll create America’s own sovereign wealth fund to invest in great national endeavors for the benefit of all of the American people. Why don’t we have a wealth fund? Other countries have wealth funds. We have nothing. We have nothing.
“We’re going to have a sovereign wealth fund, or we can name it something different. I’ll talk about it with Mr. Paulson, who’s in the audience, and a lot of other friends of mine. And we’ll name it something that’s appropriate. Perhaps sovereign wealth fund wouldn’t be appropriate, but it’s going to be the same thing. We’ll put tremendous amounts of money through all this money that will be taken in through tariffs and other intelligent things, and we’ll have the greatest sovereign wealth fund of them all. And we should have.
“And that will be used to do things that will be great for our country, including to invest and wisely invest and build it up bigger and stronger and better than any place on earth. We will build extraordinary national development projects, and everything from highways to airports and to transportation, infrastructure, all of the future. We’ll be able to invest in state-of-the-art manufacturing hubs, advanced defense capabilities, cutting-edge medical research, and help save billions of dollars in preventing disease in the first place…
“And it is many of the people in this room who will be helping to advise and recommend investments for this fund….”
Not to put too fine a point on it, but most people who believe in capitalism also believe that it’s the job of efficient markets to allocate capital to the most critical areas — not the job of government.
The “Mr. Paulson” that Trump referred to in his speech is the billionaire hedge fund titan, John Paulson. Bloomberg News reported that Paulson is advising Trump on the Sovereign Wealth Fund plan and his name is being floated as Trump’s Treasury Secretary should Trump win in the November election. Paulson has hosted multiple fundraising events for Trump in the current election cycle and in Trump’s failed run for reelection in 2020.
John Paulson became infamous for his role in the Goldman Sachs’ ripoff known as Abacus, where he was allowed by Goldman to pick subprime debt he thought would default in order for him to take short bets. The SEC charged that Paulson made $1 billion on the deal while defrauded investors to whom Goldman Sachs sold the deal as a good investment lost an equal amount.
The Securities and Exchange Commission failed to bring charges against Paulson. On July 15, 2010, the SEC announced that Goldman Sachs would pay $550 million to settle its Abacus charges. Fabrice Tourre, a young Goldman investment banker involved in the deal, was the only person to face a civil trial. No one was criminally prosecuted in the matter.
More recently, Paulson has been making salacious headlines for being engaged to another woman who is pregnant with his child while he is still legally married. He and his wife, Jenny Paulson, have been engaged in a high profile, nasty divorce for three years, where she has charged that he hid billions of dollars from her in trusts.
In addition, Mnuchin battled the media for months in an effort to keep secret the names of the businesses that received funds under the Paycheck Protection Program (PPP), a Trump administration program ostensibly to help small businesses survive during the economic downturn caused by the COVID-19 pandemic. ProPublica reported the following when the Trump administration finally relented and released some of the details:
“Businesses tied to President Donald Trump’s family and associates stand to receive as much as $21 million in government loans designed to shore up payroll expenses for companies struggling amid the coronavirus pandemic, according to federal data released Monday…
“Several companies connected to the president’s son-in-law and White House adviser, Jared Kushner, could get upward of $6 million…
“Monday’s list included a Manhattan law firm whose marquee attorney has fiercely defended Trump for almost two decades. Kasowitz Benson Torres LLP — whose managing partner, Marc Kasowitz, was at one point the president’s top lawyer in the special counsel’s Russia investigation — was set to receive between $5 million and $10 million….”
During his speech last Thursday, Trump kept to his trademark brand of grossly distorting facts in favor of his imaginary alternative reality. Paulson was one of only four people allowed to ask questions of Trump during the Q&A that followed his speech at the Economic Club last Thursday. Paulson asked him about the $2 trillion deficit under President Biden. Trump answered as follows:
“Well, we just hit record highs at numbers that nobody ever thought possible. You’re right, over $2 trillion. Nobody thought that was a number that was – I mean, you could go back four years. Nobody thought a number like that would be possible. It’s crazy. It’s like – it’s just horrible, actually.”
According to the U.S. Treasury’s data, the budget deficit in Trump’s fourth year in office, 2020, was $3.13 trillion.
As for allowing Donald Trump to get anywhere near investing large sums of money for the future of the United States of America, this is what Trump said during his speech last Thursday regarding the impact of climate change: (You can hear the remark at 1:08 on the C-SPAN video here.)
“When people talk about global warming, I say the ocean is going to go down one hundredth of an inch within the next 400 years. That’s not our problem. Our problem is nuclear warming.”
Trump has used the phrase “nuclear warming” in previous interviews. Scientists have no clue as to what he is talking about. Credible climate change scientists also do not believe the ocean “is going to go down.” They have concluded that “Global warming is causing global mean sea level to rise in two ways. First, glaciers and ice sheets worldwide are melting and adding water to the ocean. Second, the volume of the ocean is expanding as the water warms….”
The Economic Club of New York did its own reputation no favors by hosting Trump at last Thursday’s event.
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Donald Trump is not just running for president; he's also launching a new crypto company.
Trump, according to reports, is the "Chief Crypto Advocate" for the nascent venture, known as World Liberty Financial. Trump's three sons also have roles. Donald Trump Jr. and Eric Trump, in addition to being co-chairs of the Trump 2024 transition team, are "Web 3 Ambassadors" for World Liberty Financial. Both have been promoting the company through their social media accounts. 18-year-old Barron Trump is World Liberty Financial's official "DeFi Visionary."
Trump has already blurred the line between World Liberty Financial and his presidential campaign. In an August 29 post on X, Trump used an excerpt from his July campaign speech at the BitCoin Conference in Nashville, Tennessee, to promote the new company. In the speech, Trump pledged to make the United States "the crypto capital of the planet."
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What will World Liberty Financial do, exactly? Neither Trump nor his business partners have released many details. Broadly, World Liberty Financial will be involved in "DiFi" or decentralized finance. DiFi companies offer financial services outside of the traditional banking system, typically allowing peer-to-peer lending, borrowing, savings, and other services. World Liberty Financial also says it wants to facilitate "mass adoption of stablecoins," crypto tokens pegged to the value of the U.S. dollar, "securing America’s financial leadership and influence on the global stage." It's unclear how the company will accomplish those goals.
If Trump wins in November, he would be in a position to dramatically increase the value of his family's stake in World Liberty Financial. Indeed, the company appears to be structured to take maximum advantage of a second Trump term.
A white paper laying out the details of World Liberty Financial's ownership structure was obtained by the industry publication Coinbase. Ownership in the company will be established through the issuance of a "governance" token. Notably, 70% of these tokens are allocated to "insiders" like Trump and his sons. Coinbase reports that this is "a significantly higher-than-normal allocation."
Typically, most of these kinds of tokens are offered for public sale because "proceeds have historically been largely invested back into projects, to grow them." (The company is reportedly planning on valuing the company at $1.8 billion.) Reserving most of the tokens for insiders "raises the question of whether the project is an attempt to cash in on the Trump family's fame rather than build a novel DeFi platform." The industry term for this is a "rug pull," where "founding teams hype up a project only to dump their own tokens once retail traders begin buying."
Another complicating factor is that, currently, the Securities and Exchange Commission treats most new crypto tokens as securities, particularly when marketed as investment opportunities. This means that absent complying with the SEC's regulations on issuing securities, World Liberty Financial's governance token could be illegal.
The company appears to be getting around this problem by making its governance tokens non-transferable at the outset. According to the white paper, the tokens will be "locked indefinitely in a wallet or smart contract until such time, if ever, [the tokens] are unlocked through protocol governance procedures in a manner that does not contravene applicable law." In other words, a future Trump administration could unlock the value of World Liberty Financial's tokens by appointing an SEC chair who is friendly to the crypto industry.
Notably, Trump has publicly pledged to immediately "fire" SEC Chair Gary Gensler, who has sought to rein in the crypto industry. That decision could be worth hundreds of millions of dollars for Trump and his family.
Trump's business partner is a professional pickup artist
World Liberty Financial is not owned by Trump or his family. The company is registered to Zak Folkman. Previously, "Folkman previously registered a company called Date Hotter Girls LLC and posted seminars on YouTube on how to pick up women." One of Folkman's "masterclasses" provided instruction on how to "Become the Ultimate Alpha Male." Folkman also partnered with Logan Paul to create Subify, a "censorship-free" competitor to OnlyFans, which sells subscriptions to explicit content, and Patreon.
Folkman, World Liberty Financial's head of operations, also has a checkered history in the crypto industry. Folkman previously co-founded Dough Finance, which lost more than $2 million of customer funds in a July 2024 hack. Early code from World Liberty Financial appears to be lifted "directly from Dough Finance." It is unknown if that code will be used in the final product or if that code contains the vulnerability exploited in the Dough Finance hack.
Trump fans already scammed
Last year, Americans "were duped out of more than $5.6 billion last year through fraud schemes involving cryptocurrency," according to an FBI report released on Monday. World Liberty Financial has not even launched yet, and it has already unwittingly facilitated two scams.
World Liberty Financial has built a large community on Telegram, a popular messaging service, attracting more than 200,000 users. But a "rival channel operated by cyber criminals has managed to place ads on the official channel." The rogue channel, called "World Liberty Financial Airdrop" offers users "up to $15,000 worth of cryptocurrency for anyone who 'connects' their crypto wallet." 70,000 users have joined the fraudulent channel, although it is unclear how many have been taken in by the scam.
Separately, "the X accounts of Republican National Committee Co-Chair Lara Trump and Tiffany Trump were compromised" and "unauthorized users posted links to a hoax website" which purported to sell World Liberty Financial tokens. The posts "were viewed by at least 200,000 people" and "around 2,000 people collectively purchased $1.8 million worth of the fake token."
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