Princes of The Yen

“Princes of the Yen” 

Central Banks are some of the most secretive and misunderstood institutions in the world. 

• What powers do they wield? 
• Whose interests do they serve? 
• How do their actions affect our everyday lives?

Princes of the Yen: Central Banks and the Transformation of the Economy 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.

It is better not to attract attention and remain as quiet as the forest of a rural shrine.

“Because only power that is hidden, is the power that endures.”

Central banks have the power to create
economic, political, and social change.

Crisis 

History teaches a system only changes fundamentally if there is a crisis. 

Every system has groups that benefit from it and hence have no desire to change it. 

There is probably no country in the world that has changed its economic, social, and political system in a significant way without a crisis. 

It is the crisis that convinces citizens and interest groups of the need for change.

You need a crisis, and the best way to create it is to have a bubble because that is how nobody stops you.

Prolonging Crisis

To solve three problems in one stroke:

1. The economy needs money creation,
2. the banks need to get rid of their bad debt, and 
3. the real estate sector needs some transactions.

Solution: Have the central bank print money, buy the land from the banks, turn it into parks, and you solve another problem: quality of life in a country.

It costs a central bank nothing to create the money in the first place.

"Sure we could have printed more money, we could've created a recovery, but then nothing would have changed, the economic structure would not have changed."

... prolonging the recession on purpose in order to get structural changes that just seemed a bit too wild.

... significant monetary easing “could cause harm” by inducing “a further delay in the progress of structural adjustment”.

Neoclassical economics assumes that there is only one type of economic system, namely, unmitigated free markets, where shareholders and central bankers rule supreme.

“It is not easy to change the institutional framework and promote structural reform, since it necessarily involves the vested interests of all the related individual economic agents.” ~ central banker Masaaki Shirakawa

The big dilemma that monetary easing would produce the mitigation of immediate risks, which in turn would result in delaying of adopting ultimate solutions. ~ Yutaka Yamaguchi, a deputy governor of the Bank of Japan

No recovery without structural reform.

"Some say recovery comes first, without reforms, but if the economy recovers, the will to reform will disappear." ~ Junichiro Koizumi, Geneva summit in July 2001

Structural Reform

What is the goal of monetary policy?

It is to change the economic structure.

How do you do that? 

Well, you need a crisis.

Why would the United States make demands on foreign nations in the name of the free market, when it has no intention of enforcing the same rules within its own borders?

The examples of the Japanese and Asian crises illustrate how crises can be engineered to facilitate the redistribution of economic ownership, and to implement legal, structural and political change.

Central Bank Deception

To create a public consensus 

for the need for structural reform

by purposefully creating a recession 

and then needlessly prolonging it, 

must constitute an abuse of power.

Do citizens really want to be manipulated in such a costly and dishonest manner?

   

Notes:

Vulture Fund specialized in the purchase of distressed assets.

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