oligarchs can wend their way through the morass of government-protected bureaucracies by greasing palms and offering sinecures, the dreams of progress are crushed.
EB5: A recent letter to Congress from the U. S. Chamber of Commerce and other organizations estimated the EB-5 program generated over $ 15 billion from 2005-2015 and created more than 100,000 jobs in America – becoming“ an essential economic development financing tool in post- Great Recession capital markets.” What is your reaction?
Dr. ABL: EB-5’ s greatest attribute is as an example of what can be done, what should be done and how to do it. I have no idea whether the numbers are correct. The effects could be much greater. What I do know is that the success of the program seems to be ever-increasing.
“ In response to the financial crisis, the world’ s major central banks essentially all reacted in the same way: loosen monetary policy as much as possible by buying as many bonds as possible.”
EB5: You’ re known as“ The Father of Supply-Side Economics” for the role you played in the global taxcutting movement of the 1980s. You’ ve served as a professor of economics at Pepperdine University, the University of Southern California and the University of Chicago over the decades. What do you foresee in terms of the future economic and job creation impact of the EB-5 program?
Dr. ABL: Today, EB-5’ s effects are small, but they are growing because of the continuous success of the program. EB-5 and its descendants are the wave of the future. I think the program should be massively expanded.
EB-5 will likely be seen many years from now as the catalyst for a great deal of economic growth and prosperity. The reason I’ m so confident in EB-5’ s success is that all of the program’ s incentives are correctly aligned. There’ s nothing better for America than people wanting to come here to work, invest and produce. And there are many foreigners who want resident status in the U. S. The beautiful thing about EB-5 is that is marries both foreigners’ desires to live in the U. S. and our desire to bring some of the world’ s most productive people to our country. EB-5 is a win-win.
EB5: Let’ s switch to some big picture economic issues. Where do you think interest rates are going and what do you foresee in terms of the overall economy going forward?
Dr. ABL: Since the onset of the Great Recession, central banks have been intervening heavily in bond markets to set interest rates at different levels than they would be in a free market. The point here is simply that the bond market no longer reflects an equal market supply and market demand. Now total bond demand, including the artificial demand by government, greatly exceeds the private demand for bonds, leaving interest rates far below their appropriate market levels. Bond market yields, as a result, have lost much of their information content. Central bankers have, through the use of unconventional monetary tools such as quantitative easing( QE), Operation Twist and negative interest rates, forced interest rates lower than they otherwise would be in a free market. For years, bond yields have not reflected the prices market buyers and sellers would be willing to pay for bonds when supply has to equal demand. Instead, bond yields reflect the size of the monetary tools employed by the world’ s central bankers to force rates lower.
In response to the financial crisis, the world’ s major central banks essentially all reacted in the same way: loosen monetary policy as much as possible by buying as many bonds as possible. The U. S. Federal Reserve( Fed), European Central Bank( ECB), Bank of England( BoE) and Bank of Japan( BoJ) all pushed interest rates down and engaged in quantitative easing.
The irony in today’ s world is that U. S. Fed policy is now relatively tight— the idea that one drunk is soberer than the other lushes— when compared
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