Princes of the Yen: Central Bank Truth Documentary
Published on Nov 4, 2014
This is film about the power of central banks.
Economist Richard Werner's book 'Princes of the Yen' was a number one general bestseller in Japan in 2001. The book covers the monetary policy of the Bank of Japan specifically and central bank informal guidance of bank credit in general.
The Japanese version of 'Princes of the Yen' was released in 2001 and the English version in 2003. The film itself is 80% based on this book, but also contains additional research and sources, including discussion of contemporary EU monetary policy.
Richard Werner http://en.wikipedia.org/wiki/Richard_Werner has viewed and approved this documentary rendition of his work.
'While the Bank of Japan adopted the precise name of Prof Werner's policy, it was somewhat less accurate when interpreting his actual proposal.
Incredibly, the Japanese version of QE that was eventually implemented was a policy Prof Werner had specifically ruled-out.
Prof Werner's argument was that, because more than 95% of the money supply in a modern economy is derived not from cash or reserves, but from private bank lending, it is essential to get banks to lend.
So he urged the Japanese government to enter into private long-term agreements to borrow from commercial banks, instead of issuing government debt.
The Bank of Japan's version of QE, in contrast, involved creating money out of nothing at the central bank.
"That's absolutely not what my policy was about," says Prof Werner. "In my original article, I specifically argued against either lowering interest rates or expanding central bank reserves. That was my whole point - traditional solutions weren't going to work. Actually, it was a bit upsetting."
Then, in an additional twist, the Bank of England also later adopted Prof Werner's QE label - but, again, to describe a policy with which he didn't agree.
He maintains, though, that the "best way to boost the economy is to increase bank credit", and that can only be guaranteed by governments borrowing from banks directly.
"That creates new credit," says Prof Werner. "The money supply then expands, transactions increase, there's more demand, more employment, more tax revenues and suddenly you have a virtuous circle." '