(Please note: As always, opinions expressed in this post are my own and do not reflect the views of the Mega Foundation.)
Princes of the Yen: Japan's Central Bankers and the Transformation of the Economy by Richard A. Werner chronicles how Japanese society was transformed by the economic manipulations of powerful interest groups.
The book description from Amazon.com follows:
This eye-opening book offers a disturbing new look at Japan's post-war economy and the key factors that shaped it. It gives special emphasis to the 1980s and 1990s when Japan's economy experienced vast swings in activity. According to the author, the most recent upheaval in the Japanese economy is the result of the policies of a central bank less concerned with stimulating the economy than with its own turf battles and its ideological agenda to change Japan's economic structure. The book combines new historical research with an in-depth behind-the-scenes account of the bureaucratic competition between Japan's most important institutions: the Ministry of Finance and the Bank of Japan. Drawing on new economic data and first-hand eyewitness accounts, it reveals little known monetary policy tools at the core of Japan's business cycle, identifies the key figures behind Japan's economy, and discusses their agenda. The book also highlights the implications for the rest of the world, and raises important questions about the concentration of power within central banks.
Richard A. Werner's experiences in Japan gave him the information and insights needed to write Princes Of The Yen...,
Werner is currently teaching at the University of Southampton. He has developed a theory of money creation called the Quantity Theory of Credit, which is in line with Schumpeter's credit theory of money . Werner has argued since 1992 that the banking sector needs to be reflected appropriately in macroeconomic models since it is the main creator and allocator of the money supply, through the process of credit creation by individual banks.
He is the founding director of the university's Centre for Banking, Finance and Sustainable Development and organiser of the European Conference on Banking and the Economy (ECOBATE), first held on 29 September 2011 in Winchester Guildhall, with Lord Adair Turner, FSA Chairman, as keynote speaker. Since 2011, Werner has been a member of the ECB Shadow Council.
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.
Werner proposed a policy he called "quantitative easing" in Japan in 1994 and 1995. At the time working as chief economist of Jardine Fleming Securities (Asia) Ltd. in Tokyo, he used this expression during presentations to institutional investors in Tokyo. It is also, among others, in the title of an article he published on September 2, 1995, in the Nihon Keizai Shinbun (Nikkei). According to Werner, he used this phrase in order to propose a new form of monetary stimulation policy by the central bank that relied neither on interest rate reductions (which Werner claimed in his Nikkei article would be ineffective) nor on the conventional monetarist policy prescription of expanding the money supply (e.g. through "printing money", expanding high powered money, expanding bank reserves or boosting deposit aggregates such as M2 –all of which Werner also claimed would be ineffective). Instead, Werner argued, it was necessary and sufficient for an economic recovery to boost "credit creation", through a number of measures. He also suggested direct purchases of non-performing assets from the banks by the central bank; direct lending to companies and the government by the central bank; purchases of commercial paper, other debt, and equity instruments from companies by the central bank; and stopping the issuance of government bonds to fund the public sector borrowing requirement, instead having the government borrow directly from banks through a standard loan contract.
Queuepolitely and Hushhushvideo have produced a movie based on Princes Of The Yen....
The website for the movie is:
From the synopsis at:
...“Princes of the Yen” is an independent, self-funded documentary. It was made as a sequel to 97% Owned, a film about how money is created and the impact its creation has. We realized after making that film that we did not understand how central banks fitted into the picture. “Princes of the Yen” fills that gap, shining a light on a world hidden behind closed doors and obscured by complex jargon, a world which would much rather stay out of sight. And when all the layers are peeled away, what remains, is the understanding of the role central banks play, in inducing and directing change. Change, for which they have no mandate.
“Because only power that is hidden, is power that endures.”
The "Princes of the Yen" website includes information on terms used in the movie such as central bank money creation, reserve creation, credit creation and window guidance at:
The movie has been made available for viewing at Vimeo.com and YouTube.com. Both links are provided so you may choose your preferred venue:
“Princes of the Yen” reveals how Japanese society was transformed to suit the agenda and desire of powerful interest groups, and how citizens were kept entirely in the dark about this.
Based on a book by Professor Richard Werner, a visiting researcher at the Bank of Japan during the 90s crash, during which the stock market dropped by 80% and house prices by up to 84%. The film uncovers the real cause of this extraordinary period in recent Japanese history.
Making extensive use of archival footage and TV appearances of Richard Werner from the time, the viewer is guided to a new understanding of what makes the world tick. And discovers that what happened in Japan almost 25 years ago is again repeating itself in Europe. To understand how, why and by whom, watch this film.
“Princes of the Yen” is an unprecedented challenge to today’s dominant ideological belief system, and the control levers that underpin it. Piece by piece, reality is deconstructed to reveal the world as it is, not as those in power would like us to believe that it is.
“Because only power that is hidden is power that endures.”
A film by Michael Oswald.
Follow Richard Werner (Author of the book) on twitter at @ProfessorWerner
“Mastery of filmmaking. An engaging and dynamic narrative supported by visual aesthetics” - Simeon C. Roberts - Film Critic, http://filmgods.co.uk/
“Blows open the widely held consensus that ‘independent’ central banks are a force for economic good." - Josh Ryan-Collins - New Economics Foundation and author of “Where Does Money Come From?"
"Essential viewing if you've any interest at all in economics or politics" - Steve Morrissey
Film Reviewer & Critic,moviesteve.com/
"A fascinating look at the need for better public understanding of just how much money can affect the world we live in.” Ben Dyson - Founder Positive Money & co-author of ‘Modernising Money’
Richard A. Werner's paper "Can banks individually create money out of nothing? — The theories and the empirical evidence" is available at:
For more information about credit creation and monetary systems, several lectures by and interviews with Richard A. Werner are available at youtube.com and can be easily found by a search using his name.
A brief presentation by Richard A. Werner titled "Privatised gains and socialised losses" follows. The title is particularly apt for those of us who were dismayed at the massive bailouts of banks in the U.S.A. after credit creation went to derivatives, real estate speculation and asset bubbles instead of being used to increase gross domestic product and desirable jobs creation.