Written by John Lounsbury
Over 18 months ago we posted a Documentary of the Week, a film based on the book of the same name by Richard A. Werner, covering the post World War II history of Japan. The emphasis of the narrative is the Japanese economy and especially the role of the Bank of Japan. The period was a revolutionary one, creating changes seldom seen over even much longer times in the history of the world. Prof. Werner was a key participant in this history when he was in Japan in the 1990s.
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As western financial systems, and especially the US Federal Reserve, continue to follow along the road traveled over the last 30 years by the Bank of Japan, it is particularly important that we hear this story again.
From Wikipedia:
Richard Andreas Werner (born January 5, 1967) is a German banking and development economist who is a university professor at De Montfort University.
He has proposed the “Quantity Theory of Credit”, or “Quantity Theory of Disaggregated Credit”, which disaggregates credit creation used for the real economy (GDP transactions) on the one hand, and financial transactions on the other hand.[1] In 1995, he proposed a new monetary policy to swiftly deal with banking crises, which he called ‘Quantitative Easing‘, published in the Nikkei. [2] He also first used the expression “QE2” in public, referring to the need to implement ‘true quantitative easing’ as an expansion in credit creation.[3] His 2001 book ‘Princes of the Yen’ was a number one general bestseller in Japan. In 2014 he published the first empirical evidence that each bank creates credit when it issues a new loan. [4]
Here is Prof. Werner’s bio which he supplied to GEI:
Professor Richard A. Werner, born in Germany in 1967, holds a First Class Honours B.Sc. in Economics from the London School of Economics and a doctorate in Economics from the University of Oxford. He has also studied at the University of Tokyo.
Richard is a Member of Linacre College, Oxford, and holds professorships at universities in banking and finance. He is also a member of the ECB Shadow Council and founding chair of Local First, a community interest company establishing not-for-profit community banks in the UK (including the Hampshire Community Bank). His recommended charity is the Association for Research on Banking and the Economy (www.arbe.org.uk).
In the past, Richard was Professor of International Banking at the University of Southampton (until July 2018, having joined in April 2004). In 2008 he founded, and has been director of the Centre for Banking, Finance and Sustainable Development – the first research centre to focus on the link between the financial sector and sustainability issues. Between 2009 and 2012 for five semesters he was also full-time professor of monetary, macro and development economics (W3) at Goethe-University Frankfurt.
In 1992, while European Commission Fellow at Oxford University’s Institute for Economics and Statistics, Richard proposed the disaggregation of credit and its impact on asset markets and growth with his ‘Quantity Theory of Credit’ (see here). In 1995, he advanced the concept of ‘quantitative easing’ in Japan (defined as an expansion in credit creation, published in the leading daily newspaper, the Nikkei, on 2 September 1995). His book ‘Princes of the Yen’ was a No. 1 bestseller in Japan, beating Harry Potter for six weeks. In its English edition of 2003, he warned of the coming creation of credit bubbles and banking crises in the eurozone. So did his 2005 book ‘New Paradigm in Macroeconomics’ (Palgrave Macmillan). In 2014, Richard published the first empirical proof of the fact that banks create money when they grant loans. The World Economic Forum, Davos, selected him as “Global Leader for Tomorrow” in 2003.
From the original post for this documentary:
Among the questions addressed are the following:
- How were Japan’s war criminals treated following WW II?
- What was Japan’s post-war experience when compared to Germany and Italy?
- How did Japan’s economic power rise so rapidly following WW II?
- What was the Japanese economic miracle?
- What were the characteristics of the Japanese Economic Bubble of the 1980s?
- How has the Bank of Japan compared to other central banks?
- How has the Bank oif Japan responded to the collapse of the Japanese bubble of the 1980s?
- And much more.
Source: YouTube
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