intro’d to Richard here:
@davidgraeber: does anyone know anything about Richard Werner the economist? He’s the fellow who wrote this excellent essay establishing empirically that banks do indeed create money out of nothing. I suddenly notice he’s also the guy who came up with the idea of “Quantitative Easing”
taking him in here – convo w richard oct 2018 – 1 hr 20 min: [https://www.youtube.com/watch?v=8FT-zyTX2nE]
34 min – it’s a game of musical chairs – this is the credit creation for financial transactions
35 min – banks are part of the allocation of resources and they can determine by their decision of who to lend to
36 min – because the bank regulators have not asked the banks to create credit for productive purposes.. it’s quite extraordinary
37 min – there’s no limit to growth.. because the limit is the tech.. the idea coming from humans.. as long as we have humans.. and we can have more humans.. all these things are possible once you understand credit creation.. all the problems we have to do w the econ.. including demographic can be solved
39 min – not sure what value the banks add
Cynical Sceptic (@CynicalSceptic_) tweeted at 8:45 PM – 5 Aug 2019 :
@davidgraeber @scientificecon Documentary
Princes of the Yen: Central Bank Truth Documentary – based on book by Richard – 1hr 30 min
starts w pearl harbor.. and americans teaching that japanese are like 1 yr old boys brain wise..
12 min – ministry of finance (in japan) had control/allegience of everyone.. except in credit allocation which was decided by the japanese central bank.. so bank of japan told banks who/what they could lend to .. credit allocation/control
13 min – bank of japan gave quarterly instructions.. could decide which projects/sectors could be encouraged/discouraged.. by dictating issuance of loans.. this was the war econ system.. adapted to the production of consumer goods
14 min – not a good system for capitalists and shareholders.. but for the population it was.. created even income.. wealth distribution.. very rapidly raised quality of life
but result (of war system) was that competition became.. not for market.. but for market share.. co’s would fight until bankruptcy .. so gain market share.. solution was cartels.. window guidance acted as cartel control system
15 min – while cartels controlled competition in japan.. there were no limits in international markets/trade.. japanese corps soon became dominate in many markets in the world
16 min – in america: japanese productivity lessons for america..
japan rose w/in decades to becoming 2nd largest econ in world.. w/o relying on invisible hand of free markets.. japan’s post war econ was a fully mobilized war econ w production shifted from weapons to consumer goods
22 min – on wanting system change.. only if crisis.. commission proposed that monetary policy should be used to pose a crisis.. it is the crisis that convinces citizens of the need for change.. best way to create crisis is to create a bubble
24 min – credit boom – 85-89 – people able to buy more..
25 min – although japan 1/6 size of us.. it’s value (of land) valued 4x us..
shiny new hq’s ..everything booming ‘everyday seemed like a festival’
27 min – nissan made more money thru speculative investments than in manufacturing cars.. new japanese miracle econ.. reasonings were – ie: high productivity of people .. so books on like strategies..
28 min – in reality.. stellar performance had little to do w management techniques.. instead.. window guidance was used to create a giant bubble
29 min – bank of japan knew only way to fulfill loan quotas was to expand non productive lending.. banks increase lending even when no loan demand..
bubble created by creation of new funding by banking system..
31 min – 1987 on tables turned.. bankers now pursuing customers.. ie: couple wants to buy a house.. gave them twice the loan they asked for
33 min – high profile purchases (by japan) rockefeller center.. pebble beach golf course
34 min – japan pulled off same trick us had used on 50s-60s.. when us banks excessively created dollars.. us cover – gold standard.. japan’s cover – trade service.. same as us in 2000s and 20s..
37 min – guy who stops it.. hero.. but.. he was in charge of creating the bubble
38 min – 90 – prices stop rising.. window guidance abolished.. bankers left helpless.. banks fearful and restricted loans..
40 min – more than 5 million japanese lost their jobs and did not find employment elsewhere.. suicide became the leading cause of death in men between ages of 20 and 44.. going missing on almost a daily basis
41 min – some relieved.. that japan bank not so successful after all.. required everyone to get to econ transformation.. ie: lower interest rates
44 min – govt does 10 stimulation packages.. govt spending money.. but doesn’t help when (musical chairing it)
46 min – richard: one thing that can break thru this central argument that’s the central bank.. the job of the central bank in this situation is to print money.. could buy all buy debts at face value
47 min – other suggestions
48 min – japan argued that tax payers should foot the bill.. tax money have been used to revitalize banks.. however no evidence that taxpayers are responsible for banks problems.. therefore such policies likely create a moral hazard
central bank can increase amount of money at any time w/o lending.. buying and paying w/o credit
49 min – richard: opportunity here – bank print money.. buy land from bank..
another option for injecting into econ – quantitive easing
50 min – richard: in 92-93 .. i kept asking.. why aren’t you printing more money.. at that time i didn’t believe that bank of japan was seriously prolonging the recession on purpose in order to get structure changes.. that just seemed too wild
52 min – bank of japan always blamed the banking structure..
unwilling to tell the truth .. the early post war leaders.. took their intimate knowledge about the origins of japans miracle econ with them to their grave
53 min – a whole generation of japan’s economists had been sent to the us to receive phd’s and mba’s.. in us style econ – unmitigated free markets
54 min – werner: ‘dereg needed’ and ministry of finance was resisting
55 min – now most observers could see that ministry of finance had created the situation.. frequent demonstrations held.. banks and admin highly criticized.. many arrested.. several committed suicide
90s on – govt dismantles ministry of finance.. and bank of japan grow in independence.. to full legal independence – 98
59 min – werner – what we need is to intervene in central banks
1:00 – in 97 for first time all policies originated from politicians not bureaucrats
in 2001 – new type of politician swept power – no recovery w/o structural reform.. if econ recovers.. will to reform disappears..
1:02 – richard: now everyone believes we need structural change.. scrap japanese style econ.. so japan shifts to us econ.. from banks to stock markets.. un employment and wealth disparity and suicides .. grow
1:05 – richard: princes of yen created the crisis.. succeeded on all accounts
1:15 – imf to (asian) rescue.. policies to change the systems.. making crisis worse.. and a not very hidden agenda.. ie: change laws to foreigns can buy anything.. crack open asia for foreign interest.. often to large us investment banks
1:21 – fed reserve leans on wall street for cartel to avoid default.. why would us make demands on foreign nations pertaining on market.. but not to self
1:23 – richard (on solution): have to focus more on quantity of credit creation rather than interest rates
1:28 – central banks operate in shadows.. but effect us all.. central bank deception – creating a crisis for change
his site: https://professorwerner.org/
Richard Andreas Werner (born January 5, 1967) is a German development economist and banking expert who is a university professor at De Montfort University.
Werner proposed the term quantitative easing, as well as the expression “QE2” in 2009 to refer to the need to implement true quantitative easing as an expansion in credit creation. He has also proposed the “Quantity Theory of Credit”, or “Quantity Theory of Disaggregated Credit”, which disaggregates credit creation used for GDP transactions on the one hand, and financial transactions on the other hand.
Professor Werner published the first empirical test of the three theories of banking (the financial intermediation theory, the fractional reserve theory and the credit creation theory) in an internationally reputed academic journal and thus demonstrated for the first time in the likely 5000-year history of banking that a bank is not a financial intermediary, but the creator of credit-money: The three theories differ concerning their explanation of where the money comes from when a bank extends a loan. Werner proved empirically that the money for a new loan is not transferred away from any other account inside or outside the bank. Instead, each bank has the power to create money newly. When we take out a loan from a bank, the money will be newly created and added to the money supply. This has important implications, which are shown in the Quantity Theory of Disaggregated Credit published earlier by Professor Werner.