Ep 216 | What You Know About Money Is All Wrong | The Glenn Beck Podcast

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If I made an offer to you, how would you like to never lose your wallet again?

You don't have to search for your wife's purse.

There's no credit card that you have to worry about because I have this great new digital currency.

And if you play your cards right, you could get it implanted under your skin.

What's the catch, you ask?

Oh, I don't know.

Just turning over your free will to the Fed.

But don't worry, you get this nifty new thing called online banking.

Wait, we already have online banking.

But on the bright side, you can have programmable money.

And of course, the programmers all work for the Fed and the government.

So it's actually a pretty bad idea, especially if I've ever read the book of Revelation.

I'm just saying.

The name sounds a little boring.

What could possibly be scary about a central bank digital currency?

Well, today, I'm a very credentialed guest.

It's not just some whack job like me.

This is the guy who's actually the father of quantitative easing, but don't let that fool you.

That's not the quantitative easing that he suggested.

He's going to introduce you to the mutant cousin of the creature of

Jekyll Island, CBDC, hidden underneath layers of lifeless economic jargon that maybe is the scariest dragon you've ever seen.

But don't worry, I brought one of the best trained dragon slayers in the world.

He is a world-renowned economist, graduate of the London School of Economics,

with a

doctorate in economics from Oxford.

He's a former senior managing director at Bear Stearns and the creator of the term quantitative easing.

We brought him in from Germany to talk to you.

Welcome to the podcast, Richard Werner.

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Thank you for coming in.

I appreciate it.

You're welcome.

It's a pleasure.

It's a delight.

Thank you for having me.

You bet.

I have been talking about these things for a long time, and I've always felt like an outcast,

mainly because people in your position that really, really know,

A,

just keep talking about, well, you don't understand the system.

And I think that's actually a good thing because

the system, if you just trust the system, the system has so many flaws and so many things seem to be going wrong and they come up with a new system to fix it and things are just getting worse and worse and worse.

And we're listening to the same people over and over and over again and it just keeps getting worse.

Absolutely.

It's been one of the techniques to say that, well, these topics, you're talking about money and banking and the economy and central banking.

Well, you have to leave that to the experts.

Right.

But

it's completely wrong and false.

And in fact, it's been one of the mechanisms to hide the truth.

But you are one of the experts.

What happened to you?

Why?

We'll get to that in a little while.

First,

let me ask you a few questions.

I'm so glad that you're here.

You are called the father of quantitative easing, but it's not what we think it is.

And I want to get to that.

But I think everything

I know may be wrong.

So

let me just start with inflation.

Inflation is a real problem in the United States and the rest of the Western world.

My understanding of it is it's too many dollars chasing too few products.

And

that is because at times a central bank will make money so cheap, everybody will go out and borrow money.

And so everybody has a lot of money.

That causes inflation.

When you have the inflation, then you have to bring the interest rate up to try to pull that money back in to destroy it so you can get inflation under control is that correct or all wrong

well some parts are true the the beginning certainly where uh you know if too much too much money is chasing a fixed or limited amount of goods and services we will get inflation

One has to realize, though, that that's only one of three possibilities.

When you have money creation, there's three possible scenarios and that's been one of the secrets.

You're not supposed to be aware of that.

But

before I explain these three possibilities and one of them is the you know

money creation chasing consumer goods and you know therefore consumer price inflation.

That's one of the three.

So it's under particular circumstances.

But before

I need to explain where money comes from

because there's a lot of misinformation about that.

Most people think, well, the money supply comes from the government or from the central bank.

From the Fed.

Which is a reasonable argument because most people would argue, well, that's what it's supposed to be, isn't it?

That says Federal Reserve note right at the top.

Yes.

Of course, these Federal Reserve notes,

the paper money, is only around 3% of the money supply.

Which begs the question,

where do the 97% of the money supply come from, which is of course digital money, which we've been using for many decades.

They're now trying to tell us, and I'm sure we'll come to that, that

the central banks need to issue central bank digital currency.

It's a new age.

Well, hang on.

We've been using digital money, bank digital money, for decades.

Right.

B D C's.

Exactly.

Okay.

B D C.

I never heard that before.

Well,

because they want to sell these C B D C's is something new.

But the new thing is the C, the centralization.

And that's the thing that we don't want and we don't need so okay so let's just start with the b c d's exactly um the central i mean the the bank digital currency this is where the experts have always told me um glenn we're not going to have weimar situations because we digitize the money we're not physically printing it

but i don't care because it's used in the same way right you're absolutely right it doesn't matter whether it's paper money or digital money you could even argue the more it's become digital money, the easier it is to create inflation because transactions

can be faster, the volume can be massive, and you can do more of the

sort of speculative transactions that create many of the problems.

So let's step back.

Where does the money supply come from?

The 97% of the money is created not by the government, which

doesn't create any money.

In fact, you know, being here in Dallas,

in 1963,

John F.

Kennedy issued United States notes.

That was government money.

And that wasn't an idea that was very popular with some circles.

And it was the last year of his life.

Since then, we have not had governments issuing state money.

So the money.

Oh, yes.

I've got one of those notes, actually.

Really?

No, just

it's in my book.

I've never heard of him.

That's right.

Well,

of course, by doing that, in many ways, John F.

Kennedy was doing what most people would have thought is normal.

The government is issuing money.

But of course, since the creation of the Federal Reserve system in 1913,

that's become the essentially monopoly

to lend to the government

was meant to be done via the banking system headed by the Federal Reserve, the central bank.

Because if the government issues United States notes, then it can create money and doesn't have to pay interest.

You see?

But of course, the moment you say, okay, well,

the banking system, the Federal Reserve will create money and we'll lend it to the government at interest.

who's gaining, of course,

it's the financial system and the smaller number of people benefiting from that.

And you get a transfer from the many

to the few which is why when they create central banks they at the same time always introduce new taxes.

Why?

How is this interest from the government going to be paid?

Well from the taxpayer.

So when the Fed was created that's

the same time when they introduced for the first time the federal income tax.

And of course you go...

So they actually go hand in hand.

They do, they do.

And we know this from history.

It's always the same.

So when one of the oldest central banks was created, the Bank Bank of England, as 100% privately owned

bank,

essentially a central bank, although it was privately owned,

they did this through a law which was about imposing taxes.

It mentioned, and we'll create this entity.

They sort of kept that hidden in the law.

But

the first part, the front of the law, was mostly about all these new taxes which will be introduced in order to then actually raise the money to pay the interest that the state would then pay to the Bank of England, you see.

Wow.

So,

well, we can come back to this.

So the governments don't create money anymore.

They've outsourced this.

And

funny enough, though, the central banks only create a tiny part of the money supply, usually around 3-4%.

And the majority of the money supply is actually created by banks.

Now, before the introduction of central banks, it was

depending on the country and the time period, but it was mainly also the banks that were creating money.

And in many ways, I mean, you know, there's also advantages of the system because it's decentralized.

And in the US, for many decades, there'd been free banking.

Everyone could set up a bank.

And if you do a good job and you've got good credit, your bank notes, because all these banks were issuing paper money, the bank notes.

And if somebody borrows, they get bank notes, you see, and that's how money is created.

If you do a good job, then this bank would thrive.

And so it was free market competition.

But the central planners got in on this, and they wanted to control this, consolidate, concentrate,

and that's where the central banks came in.

And of course, the Federal Reserve has overseen the

closure of many banks.

Congress, when they talked about setting up the Federal Reserve, was quite reluctant, so they had to play tricks to actually get it through.

Like they had the famous vote on the 23rd of December 1913, when everyone had left, and it wasn't normally announced.

It was announced, so it was technically correct, but nobody had seen the vote.

And then only the insiders were there, and they just, you know, they passed it.

But tricks like that.

Because most congressmen were saying, well, hang on.

If we create such a privileged institution, you know,

there's many risks and dangers, there's too much power.

but the one argument that convinced you know quite a few of them was well if you have a good bank a solid bank well run

but there's a there is a run on the bank now suddenly and it could be entirely just rumors panic you know no good reason but it's a solid bank

If there's a run, even a solid, good bank will be in trouble.

And that's where a central bank can actually be helpful as this lender of last resort to step in, provide liquidity.

So when a bank has lots of assets, but in the short term there can be a liquidity squeeze.

And so that's...

You're asset rich, cash poor.

Yes, exactly.

And so, and you know, that is one good argument, but you see, when the Fed then needed to do this, they didn't.

In the 1930s, more than 10,000 American banks were allowed to fail and there was no deposit insurance.

So ordinary people, a lot of farmers farmers and families across the US lost their livelihoods.

All their savings were gone when the Fed sat on its hands, didn't provide the liquidity when the run was created on these banks.

Instead, those banks that were closer to the Fed then took over those banks.

And so the banking sector consolidated.

10,000 small banks disappeared.

A lot of depositors lost their money.

And those who'd borrowed money from the banks that went under, which is a lot of farmers for the new fangled farming equipment, you know, mechanization tractors and so on, which the loans had been pushed by the banks in the 1920s.

Well, the loans were not forgiven, so they still had to repay them and they couldn't.

The farms were the collateral, and then you had thousands and thousands of American farming families losing their farms and becoming destitute.

Even starvation became an issue.

So this is the really desperate times of the 1930s.

Did the Federal Reserve help with with this, help ordinary people?

No, of course not.

And just, you know, wind fast forward to, wind forward to Silicon Valley Bank.

Now, that's a very strange story because none of that was necessary.

The bank behaved in a very strange way for a bank.

But even without going into detail, where was the Federal Reserve?

There was a run on the bank.

In fact, it was the biggest run ever.

$41 billion leaving the bank in one day, which is the biggest sum from one bank in one day on record.

And the bank was actually prevented from closing the gate by the Fed because it joined this Fed now system as a pilot.

And what did the Fed do?

It didn't prevent this either, and it didn't step in either.

And so the bank failed.

Once it was taken over, Then the Fed provided liquidity.

Well, that's not exactly what they promised, is it?

That's too late.

So

just but just back to the basics.

So the government doesn't create money.

Central banks only create a small amount of money and they wriggled themselves into the game because before they didn't exist.

I mean banking does perfectly fine without a central bank.

What the central bankers do though is they consolidate banks, they reduce the number of banks.

So when you say the banks

like local banks,

actually create money,

do you mean mean that

they're either promoting people to come in or people just come in and say, hey, I want a loan, and they're not actually taking the deposits.

They're getting the money they send out and say, I need the central bank to provide this amount of money for me for a loan.

And then they're paying the central bank a fee for that, right?

But

the central bank would be printing it at request of the banks.

Well,

these are very valid questions.

And in fact, you have now referred to

the three theories of banking.

You see, and the experts, the scholars have argued for a whole century.

I wrote a paper called Lost Century in Economics, where I review the three theories of banking.

And it provides an empirical test.

And the second paper called, Can Banks Individually Create Money Out of Nothing?

the theories and the evidence.

You see, the three theories of banking are the following.

The currently dominant one, which if you study economics, business, finance,

you will learn it's in the textbooks.

It is in the leading finance journals.

Central banks promote it.

Most financial journalists use it.

It's the financial intermediation theory.

And that says banks are simply gathering deposits and then they do their analysis, credit risk analysis, and then they lend out the money.

So they're just an intermediary.

They're not actually that important.

And that's why, by the way, you may be surprised to hear this, economists have dropped banks entirely from their economic models.

They haven't been in there since roughly the 1980s.

No banks in their models.

So when the 2000, exactly, I mean, this is astonishing.

It's breathtaking.

So when the 2008 banking crisis happened and banks went under, and this had serious ramifications, okay?

When the journalists went and said, well, we need to interview some experts.

Let's interview this professor at Harvard, this professor at MIT, professor of economics.

What's your comment?

All the banks, you know, failing.

The honest answer would have been, or even economists interviewing economists at the central banks, it's the same.

The answer would have been, well, sorry, I cannot comment at all.

Why, sir?

You're the expert.

Surely, please comment, you know, give us your wisdom.

No, I cannot comment because our economic models, my economic models, don't include any banks at all.

That would have been the honest answer.

Did they admit that?

Did they say that?

No, I've never even heard that.

That is the truth.

Even the models, the cutting-edge latest theories and financial models used at central banks, the so-called DSGE dynamic stochastic general equilibrium models,

include absolutely no banks, no financial sector.

Many models don't even include money.

Because you see, they argue that it doesn't matter because this financial intermediation theory is dominant.

But, you know, that's back to your first.

What is the theory?

Exactly.

I mean, this is like

common sense.

It defies common sense.

The first time I read modern monetary theory, I'm like, who believes this?

Who believes this?

Well,

economists have certainly created a whole confusion of theories.

But this has been the dominant argument in the mainstream theories that banks don't matter.

We can drop them from models because they're just intermediaries and therefore there shouldn't be banking crises.

If a banking crisis happens, it shouldn't matter because the banks are not so important.

They're just intermediaries.

But you see, there's two other theories and

you referred to

at least one of them.

The next one is the fractional reserve theory.

And that's where somehow there's the banks and there's the central bank also involved.

It argues that individually each bank is an intermediary.

taking deposits, lending out money, but as banks interact, including with the central bank, there is money creation going on.

And let's not go into details of this theory

because I'll tell you the empirical test I did of these three theories.

And, you know, let's focus on the one that was empirically proven to be true, which is the last one.

Now, this one is

the most shocking of the three theories.

It's the oldest.

It was dominant until they came out with this fractional reserve theory around 1920.

So before then, so more than 100 years ago,

quite a few scholars were aware of this, and it's called the credit creation theory.

Now, this one says, no, banks are not intermediaries.

They don't just

gather deposits and lend out money.

In fact, the truth is a bank is not a deposit-taking institution that lends money at all.

I'll explain that in a moment.

But this theory says that

what a bank does is it creates money.

It's not an intermediary.

It's a creator of

the money supply.

And each individual bank has this power, even a small local bank.

You may not notice it, may not see it, but economically this is what happens.

And so these three theories, they differ in the one question, which is when a bank gives out a loan,

Where does the money come from for that loan?

Correct.

And so the financial intermediation theory says, oh, it comes from deposits.

The fractional reserve theory says, no, there needs to be excess reserves, and they can be provided by the central bank.

That's the one that's the same.

Well, that's what I talked about.

Indeed, indeed.

And so that's where the money for the loan comes from.

But the credit creation theory, the oldest, says,

no, neither of that.

The money for the new loan that a bank is providing comes from nowhere.

It's newly created by the bank.

And empirically, I did the test.

Is that because of digitalization?

No, actually, because digital, switching from analog to digital is a technology, but it doesn't change the content.

And the content is actually a legal process.

And at law, it's very clear, banks don't take deposits and banks don't lend money.

Why?

At law, there's no such thing as a deposit.

It's very clear in English law where modern banking was created with the Bank of England and also that the law, legal system came into play at the same time to suit the system.

And it turns out that there's no such thing as a bank deposit.

At law, it's simply a loan that you're giving to the bank.

Correct.

So you're lending money to the bank.

That's why if they default, that deposit doesn't come back to you.

That's right.

That's right.

Exactly.

Exactly.

It's not protected.

If you put your money into a non-bank institution, a stockbroker that doesn't have a banking license, then when they go under, it's troublesome, but your money will be safe.

Ultimately, it may take time, you know, go through the rigmarole, but it's never encumbered because they never owned it.

But when you lend your money, like to a bank, it's on their balance sheet, they own it,

and it's gone.

Of course, we have deposit insurance.

So until that amount, it will be replaced by the government, by the insurance system.

But

technically, you know.

What about private banks that are fiduciaries?

They can't.

That's not their money, right?

Well, that is a type of business that banks also do, the trust business, the fiduciary business.

and technically that works a bit different, but every bank that has a banking license,

while some may focus on the trust business and do more of that,

where there is technically a different process and we don't get this money creation, they also have the power to create money by giving a loan.

or by purchasing assets, which is the same thing actually.

Because let me just actually finish the explanation.

So banks don't take deposits because there's no such thing as a deposit at law.

But surely they lend money?

No.

They're in the business of purchasing securities

such as government bonds.

But also,

you see, if you take a loan, a mortgage, that

mortgage document, the loan agreement, that is a promissory note that you issue.

Now, at law, the paper money is also a promissory note, of course.

And I mean, it has particular features.

I mean, I've got one here from

that grand old institution, the Bank of England.

And it says, I promise to pay the bearer on demand the sum of £50.

So that is, at law, a bill of exchange of a particular type called promissory note.

And it's the particular subset called bearer promissory note, because, you know, anyone who holds this can demand the money.

Obviously if you go to the Bank of England, they'll just say, okay, fine, we'll just turn it into you know £220 and one temporary note.

So they'll issue other promissory notes.

But so so banks

are in the business of purchasing securities and the loan contract is also a security.

It's a promissory note.

No, no, the bearer one, it's very clearly identified.

you know,

all the parties are named and so on.

But at law, it is a debt instrument.

And that's what banks do.

And you say, okay, interesting detail, but as long as I get the money, you know,

how does the bank give me the money?

Well, the banker will say, you'll find it in your account with us.

If he's careful, he or she's careful.

If they're a little bit less careful, they might say, well, transfer it to your account.

And that would be incorrect, because no money is transferred.

Why?

Because actually what we call bank deposits is simply the bank's liability to us, to the public.

And all the deposits are created at one stage originally through some lending when they purchased a promissory note.

And then they also had to record

their debt.

Because remember, it's what we call a deposit is our loan to the bank.

And their record of what they owe us is what we call deposits.

So when the bank gives a a loan, it purchases the loan contract and then the account's payable liability arising from the loan contract is recorded and this is where banking is still technically slightly illegal as I showed in one of my papers.

How do banks create money out of nothing is another paper.

Because they

slightly incorrectly then present this as another type of liability called customer deposit.

But clearly no customer has deposited it, you see.

Wow.

That is bad.

I think I've learned more about the banking system in the last few minutes than I've learned in my entire life.

Did you

back in the 80s, I believe it was, when Japan was,

I mean, everybody thought Japan was going to control the world, and then it just stopped and folded.

Is this when you, because I think you were the guy over in Japan that recognized the problem and the possible solution,

which hasn't worked out real well, but you say they're not doing what you suggested.

Yes.

You figured this out that the money wasn't coming from the central bank.

It wasn't that they were printing about it.

It was coming from the local banks, right?

Yes.

Because of the history of Japan being destroyed and needing to be rebuilt.

Yes.

And of course, the high growth period that Japan enjoyed and experienced in the 1950s 1950s and 60s, double-digit economic growth.

What is called by some an economic miracle.

And the same system, by the way, has been implemented in Korea,

in Taiwan.

And then, of course, from 1978 under the leader Deng Xiaoping, also in China.

It's the same system that is centered on an understanding of the banking system.

Because if you understand

what you can do with a banking system and America has a great banking system and the greatness is that it has thousands of banks a decentralized system many small local banks community banks that is the best system of all

and that's what also China realized they used to have one bank a Soviet-style Stalinist economy under Mao then

Deng Xiaoping came to power and he realized, well, this is not the best system.

And he traveled to Japan.

He wanted to find out, how did you guys do it?

I want this high growth.

We want to have prosperity.

He was very open about it.

He said, I'm not really an ideological, you know, ideological person, this whole communist stuff, you know, let's just deliver for the people.

He said that in speeches, you know, literally, which is quite radical.

It remains revolutionary in the West because our economists are still completely beholden to their ideology.

And they have not switched to the empirical scientific approach.

Because Deng Xiaoping said, let's just do what works, what empirically is shown to work.

And what you guys have done in Japan, you know, they've done in Korea.

And why does it work?

What's different?

Well, it recognizes what banks can do when you run the banking system properly.

So he came back from Japan in 78 and he created thousands of banks.

Very much like in the U.S., small banks, local banks, village banks, town banks, savings banks, rural banks, agricultural banks, provincial banks, you know, thousands and thousands.

Now, China has as many banks as the U.S., around 5,000 banks from, you know, just from just one bank, the central bank.

That's the right direction.

But in the West, in the US, in Europe, they're all moving in the opposite direction.

Under the ECB, the European Central Bank, and this is the youngest major central bank, already more than 5,000, it's closer to 6,000 banks have now disappeared in these 24 years under ECB policies.

And they make no secret out of it.

They say, we believe Europe is overbanked.

There's too many banks.

That's, you know, for example, Draghi Mario Draghi, when he headed the ECB, he said that.

He comes from Goldman Sachs, and he never had in mind closing down the big banks or Goldman Sachs, did he?

It's the small local banks that were, you know, being put under pressure by his policies and they were forced to merge and disappear.

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the way we're headed it looks like we're headed towards what china was why exactly big bank exactly absolutely in fact that process has been accelerated by the central planners at the central banks through a number of policies such as their

excessive bank regulation, burdening even the small banks with huge amounts of regulation that were designed for very big banks.

But in Europe, the small banks have to do the same, follow the same regulations, have the same very voluminous reporting, and they just can't do it.

You have to hire too many compliance people.

You know, nobody has time for banking anymore.

They have to give up.

And secondly, this crazy interest rate policy they introduced, you know, flattening the yield curve, pushing interest rates to zero and driving the banks that do the proper productive business lending out of business, leaving the banks that do the speculative lending.

And that's actually where I come back to I mentioned there's three scenarios.

And the inflation, consumer price inflation is only one scenario.

Now we're clear who creates the money.

It's created by banks when they give out a loan.

But also likewise, we should now look at every loan differently because loans,

they're not just a sort of transaction money moving from A to B.

No, this is new money creation.

Every loan is new money creation.

Therefore, it will have consequences.

So, when banks create money

for transactions that don't actually contribute to national income,

namely

purchasing assets, that's not part of GDP or national income.

Purchasing ownership rights.

Because you're just changing the owner.

There's no value added, therefore it's not in GDP, it's not in national income.

But this is funded by bank credit.

In fact, the bigger transactions, which the big banks want to do and focus on,

you know, lending to the big private equity funds, the hedge funds and the big speculators, it's almost entirely, exactly, it's almost entirely

bank credit to purchase assets and change the ownership of assets, property, real estate, all the real estate loans and

speculative loans, leverage management buyouts and company takeovers, all that.

You're just changing ownership, but you're creating money.

So you're creating money, pumping it into these asset markets, property markets, asset markets.

What's going to happen with asset prices?

Because it's new money creation, you see, being pumped into asset markets.

You don't need to study economics to know the answer.

Of course, you're pushing up the asset prices.

And that's always unsustainable, but it's a game of musical chairs.

and everyone makes money so everyone likes this game and the music keeps playing the music is and sometimes the bankers you know have used this phrase you know we're still dancing because they're still playing the music what is that music it's the continuation of bank credit for asset purchases while banks keep doing that asset prices keep rising everyone makes money but the moment the music stops Because it's a Ponzi scheme.

It's a Ponzi scheme.

You know, while you keep doing it, you create new money, you're pushing up asset prices even more.

But the moment it stops, the music stops, like the game of musical chairs.

Music stops, not enough chairs.

That's the whole point of that, you know, children's game.

Because then asset prices won't rise anymore.

But the late coming speculators, they're bought at the peak.

They need further rises to, you know, to make it work.

It's not happening anymore.

So they default.

You get the first non-performing loans.

And when the banks get non-performing loans, they get risk averse.

They reduce lending.

They really reduce lending for asset purchases.

Asset prices are going to really go down.

And then the whole thing goes into

a deflationary spiral quite quickly.

And you quickly have a bust banking system.

That explains why we always have these boom-bust cycles and banking crises.

Because from the peak, asset prices only need to drop by 15%, and

you've wiped out bank equity, you see.

Is this why,

like in the 40s and 50s, and

I'm just guessing here, just based on the prosperity of America, Because we weren't selling ideas, we weren't selling property rights, et cetera, et cetera.

We were going to the bank for money to build factories.

We were building things, right?

Is that why it was more stable and growth was real?

Exactly.

Exactly.

In fact, now you've put together the three cases.

We started with the first one.

If bank credit is used for

just consumption, because it's money creation, you create more money, therefore you create more demand for goods and services, but the amount of goods and services is the same.

Therefore, you get consumer price inflation.

That's what we've had actually in 2020.

We should come back to this when the Federal Reserve forced the banks to massively increase credit creation under some excuses to do with some, you know, talking about viruses and things like that.

And as a result,

And there's various other policies, making sure this goes into consumption.

We had to get inflation 18 months later, as I warned, you know, in May 2020, when i saw these figures huge massive

and i i wrote on on twitter well 18 months later we're likely to get significant inflation but that's only one scenario so the second scenario is when bank credit is used for asset purchases you will get asset inflation and that's that's that starts this whole game of asset inflation boom bust cycles and banking crises and then you could have like japan experienced they had a huge asset bubble in the 80s that peaked around 89 90

and then credit crunch for 20 years that can go on for 20 years you can also quickly end it and that's where QE comes in if you do this cleverly you can solve the problem before it really starts because it's only a numerical problem in the banking system it's crazy to have any recession any unemployment because of some accounting problem the banking system you know non-performing loans in the banking system you can quite legally get rid of that if you're interested we'll come back to that but the third scenario is and this is really the redeeming feature of the banking system.

And if you do it right, that's exactly as you say.

That's when we have these periods of stable, high growth and prosperity.

It's when banks lend, i.e.

create money, for productive business investment in the creation of new goods and services, implementing new technologies, increasing productivity, and then you will get growth without inflation, without asset inflation, without consumer price inflation, without banking crisis.

And the best way to do this is to have many, many banks

because that's a decentralized system.

And it's been shown in many other disciplines, whether it's the military, you know, decentralized

structure of giving orders or versus a centralized structure.

You know, decentralization...

is a superior principle when humans are involved because you're giving people a bit more autonomy,

they're more motivated and also people on the ground have better information than the central planner.

And that's what Deng Xiaoping immediately understood.

If you think about it, if you've got a central bank that creates all the money supply, like in the Stalinist Soviet type economies,

maybe you've got a committee of five people, okay, or whatever.

It's a small number.

They decide the whole money creation allocation versus what Deng Xiaoping introduced.

You know, you've got 5,000 banks.

Each will have, say, 50 branches.

Each branch will have another several dozen loan offices lending to literally millions of small firms.

Because with small banks, you get the advantage they lend to small firms.

And that's a very decentralized system locally.

Local banks lending to small, local firms.

And they're checking all these loan applications.

Each one has to be checked.

It's a lot of work for the bankers, but that's their job.

The big banks don't want to do the hard work.

They want to do big deals with the big speculators.

They don't lend to small firms anymore.

But you've got many, many

small banks lending to small firms, then you get the productive business investment.

The loan officers are really going around kicking the tires of these companies, and they make the decision of how much money to create and who to give it to, which is a very powerful decision.

It will reshape the economic landscape.

Therefore, if you can make sure that banks mainly lend for productive business investment,

and And the way to do this is to make sure you have many banks, particularly local small banks, lending to small firms.

Then you will get high growth without inflation, without the asset inflation and banking crises.

And you get stability, also get a more egalitarian system where, you know, if you work hard, you can work your way up, be successful.

That's the American way, really.

And that's why America has had a strong economy because it's been decentralized, all the states and these thousands of banks.

But of course the Fed has worked against that.

I mean the Fed killed more than 10,000 banks, we said already in the 1930s.

And even in the last 35 years they killed another almost 10,000 banks through their policies.

And they're proud of this because we're making the banking system more efficient.

It doesn't make sense.

In 2008 they told us these banks were too big to fail and we have to stop these huge banks because when they fail they'll take everything down and then all they did was make these banks bigger.

Precisely and the regulation introduced has only helped the big banks.

And in fact, we've now got a system.

It's internationally accepted now under the leadership of the Federal Reserve and then the BIS.

It's the Basel Bank of Central Banks and the ECB.

And, you know, they've put the system in place where they say, oh, the big banks.

They will be bailed out.

Because they're too big to fail.

Well, we'll always bail them out.

The small banks, oh, well they're the ones that we're gonna close down literally right when the problems are caused by the big banks but they actually they turn this around they use this as an excuse to further consolidate the banking system why because it increases their power ultimately they're central planners and they want more power

And their absolute power will be reached when they've driven out all the small banks out of business.

They only deal with a small number of big banks.

And essentially, you can consolidate into one bank and you're back in you know with the the soviet style system did you know that the the the

marx and lenin's communist manifesto has one of the points is to

centralize the monetary system into one bank

one central bank that's centrally controlled and of course if you introduce measures such as central bank digital currency, you're really accelerating this consolidation process because the difference, as we said, is the the centralization.

We've been using BDC, bank digital currency for decades.

So what is really new about this is that the central planners having failed, because they're really responsible for all the crises we've had.

It's not the local banks.

They're not to blame for all this.

You know, each bank doesn't have the information and can't influence other banks.

It's the central planners.

They're in charge.

So whenever we have a banking crisis, they're the ones that should be called to account.

But each crisis, they're given more powers because they always say, oh, it's because we didn't have enough powers.

Give us more powers.

And the politicians do it.

I mean, I've said this already more than 20 years ago before the 2008 crisis.

I want, well,

the next banking crisis is happening.

And

they will, you know, inevitably reward the central planners.

I want that.

It's the central planners doing this because they create the next asset bubble.

When it bursts, then you get the banking crisis.

They get more power.

We've got regulatory moral hazard.

So the central planners love crisis and they just create more and more.

And the CBDC, you see, the central bank digital currency

is really, so what is it?

I mean, so it's not new.

We've had digital money.

The banking system works fine.

We don't really need it.

There's no need for CBDCs except for the sake of the central planners.

They wanted to have more power.

And

the main description of what it is is really the central bank saying to the public, you can now open an account with us at the central bank.

So it's the bank regulator, because at the same time, bank regulators stepping into the arena, competing against ordinary banks.

Who's going to win this game?

When the umpire suddenly says, Well, I'm going to score myself now.

I'm going to use all my powers to whistle and give red cards, and the umpire is going to win the game.

It's a pretty boring game, to be honest.

Right.

So, so let's

I've talked about the dangers of CBDCs for a long time.

Most Americans still don't really know what it is.

And I think, and I think you do too, it's going to come down the pike fast.

And it's going to come with a crisis.

And they're going to say, look at all of the advantages.

You got to get into this now.

And I think the vast majority of people will go right along with it.

It's a terrifying end of freedom.

end of free choice kind of stuff.

Absolutely.

And, you know, if you've ever read the book of Revelation,

it is that system or could be used as that system.

Indeed, indeed.

It is a totalitarian control tool of historically unprecedented proportions, giving so much power to the central planners, a small number of central planners at the central banks, that is so unprecedented, even that the famous dictators or infamous dictators of past days past, you know, could have only dreamt about this.

They didn't have the technology.

And as the central planners admit themselves, well, with the CBDC, we can then decide what you can buy, where and when, and depending on who you are, we will have the technology and the power to enforce that.

Literally, they've said this.

It's all programmable.

Exactly.

The programmability.

And you don't actually own it because you can't take it out.

Right?

So you don't own it.

It's property of the bank

or the central bank.

And if they want you to buy something

because there's a problem in the economy, they want you to buy a certain product.

They can make it

advantageous to you to spend that.

on this product.

They can even say, this amount of money is going away.

If you don't buy this product, you're going to lose this money, correct?

Yes, indeed, of course.

Right.

And you won't be able to actually buy the things you want to buy.

Because

and that's where they're working at the same time with AI

to put the system in place where they can literally, as you want to pay, it'd be quickly checked who you are, where you are, what time it is, and if it doesn't meet the parameters, for example, I mean, it could be any excuse like this there's too much carbon footprint here or you know, you're not outside the area that's allowed for you, and this is again a carbon footprint excuse, or whatever the reason, you know,

you're not allowed.

Then you notice, oh, it doesn't work.

I can't actually use the money.

So the money becomes, it's not your money, as you say, it is just conditional money.

It's permit money.

And each time, essentially,

you're submitting

an application to the central banker, please, may I now do this transaction?

And they can make the decision, which of course usurps fiscal powers it usurps the power that in the past is only in the hands of elected parliaments and you know yeah elected representative assemblies so it's an extraordinary coup d'etat by the central planners to have absolute power and of course they will say oh your privacy is confirmed and and we will not look at what you're doing and these are concerned

exactly and actually there is no reason as some of them like neil kashkari who's head of one of the federal reserve banks has admitted, there's actually no reason for this.

It's a solution without a problem, except, of course, the power, the control.

So I've heard

modern monetary theory, which is

basically

we can have as much money supply out there as we deem, and we don't even have to tax people to get them to raise the money if we're the government.

And we won't have any problems as long as we have instant information on what is being purchased and sold and so if inflation starts to go up we can just shut the money off and so the price will come back up

shut our money off right so

like in like during covid if you weren't an essential employee you may not be able to buy gas exactly is that right yep absolutely that's the idea that's the programmability feature um and of course um

you know, several schools of thought and economics have been pushed in the media very much

as a justification, you know, provide the argument.

But of course, this MMT has a number of serious flaws.

There's a number of assumptions which are plain wrong.

For instance, it always argues that the government equals the central bank.

It's the same thing.

And that's not true.

Because in many countries, the central banks are privately owned.

The Federal Reserve banks are all 100% privately owned.

We don't even know who they are.

Exactly.

They have not published that, and we should insist.

We're going to find out eventually because there's only going to be about eight of them left, and then they'll all go into one.

The idea that we're printing or borrowing a trillion dollars every 100 days scares the living daylights out of me.

And, you know, I said to somebody the other day,

we should be able to go, yeah,

but we bought this.

We built this factory.

We did this.

I can't point to anything.

A trillion dollars is a lot of money.

And I can't point to anything that we have made

other than more work and paperwork and more attorney work for everybody.

Yes.

If we were borrowing that money and we were actually

saying we're going to be competitive with Taiwan for chips

right now,

it would be like the small bank, right?

Yes, and that would justify it.

And you're absolutely right.

So that is the big

flaw

in these policies of outsourcing everything and deindustrializing, because they're doing it to Germany now and other European countries, de-industrializing, very artificial, you know, pushing out all these companies, when really that is the value added,

that creates jobs.

And

if you don't have that at home anymore, you lose all the know-how with that, all the processes, which is why the Chinese were very happy when the Western companies said, you want us to do it?

We'll do it, we'll do it.

Keep coming, keep coming.

So

when you, I mean, you were, when was it, 2003, you were named global leader of tomorrow by the World Economic Forum.

Now, I know you don't have to apply for that.

They just kind of name you.

But

the World Economic Forum,

everybody says, oh, they don't have any power.

They have extraordinary power because of the people that go there.

They choose to do the things that they're all agreeing to.

But they're changing everything and they're dismantling the West.

We see this

struggle as Trump versus Biden.

It's not Trump versus Biden, because where's Trump and Biden in Germany, in Italy, in Sweden, in England?

We're all arguing over the same things and we're arguing over a little stage show, but the effects of it are exactly the same in every country.

That's right.

Right.

And of course, they're moving the puppets

on stage.

Yes.

And, you know, when I was there, so I was there twice, 2003 and 2004, I was supposed to be invited five times, but they changed their mind.

They even scrapped this entire Global Leader for Tomorrow program.

I asked too many critical questions, it turns out.

Then they introduced this

young global leader program

where they took the ones they wanted.

And I, of course, was no longer invited.

That's how they did it.

But when I was there, you know, I met President Clinton, I met Angela Merkel, the German, well, future chancellor.

She wasn't chancellor.

She was a nobody, basically.

But somebody said, oh, Richard, you should meet this lady.

Very important.

Okay.

And there she was.

And, you know, got her card and had, you know, did some small talk, although I didn't find it very charismatic at all.

And it's just a mystery how these people then become the leaders.

But, you know, some people already knew that.

She was clearly being groomed.

So these things are happening.

Of course, if you look into the history of the World Economic Forum,

Klaus Schwab was apparently handpicked by Henry Kissinger, who was at the time at Harvard running a CIA-funded program, and the documents are available.

So, you know, it's part of this game plan to move, you know, the chess pieces on the global stage.

And, you know,

that's what they're doing.

And of course, they have enormous

real influence.

It's one of the channels in which these policies are being disseminated.

And we saw it in 2020 under these COVID

policies, just how coordinated they were.

Because if they were sensible policies, you could say, oh, it's because it's sensible that we're all doing it.

Well, they were not sensible.

Some of them were the most ridiculous policies, but they were just enforced and pushed through and identical nonsense policies in all these countries.

That was really scary and revealed the concentration of power that is the reality today already.

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So, what is the solution to this?

Because 50,000 people worldwide already have a chip implanted under their skin.

Is it 50,000 already?

Well, I know in Sweden it's more than 5,000, probably close to 10,000.

Worldwide is 50,000.

That's what they say.

Yeah, yeah.

It could be true, yeah.

Which is just terrifying.

But

they're moving towards what is it?

Swift just said they're coming out with a central bank digital currency.

We already have Bitcoin.

You want this?

Bitcoin's out there.

But you say, if I'm not mistaken, that the history of Bitcoin's kind of nefarious too.

Yes, I mean, it suddenly came out at that time with

the so-called global financial crisis and also at a time when I started to publish about the truth about money and the money creation process.

And that's when

basically Plan B was put in place.

Because once the truth is out and people start to realize, well, banks create money for for the

sort of small elite that wants to manipulate things, the risk is that we ordinary people will use this knowledge and power to make sure that we have local banks, community banks, and we can actually have a decentralized system.

with a lot of job creation, high growth and prosperity.

There's no reason why we can't have abundance.

We can have 10% growth, even 15% growth in virtually any country in the world, non-stop.

If you just make sure bank credit creation is given by many small local banks to local firms that implement the new technologies and new ideas, because the only limit to growth that we actually have is human ingenuity.

And we haven't,

we've never really pushed that limit.

So it's not insight.

It's not in sight.

So when a bank offers you a loan or you get a loan,

they shouldn't just be looking at,

can he pay me back?

Exactly.

It should be,

is this going to create more wealth and he can pay me back?

Yes.

Right.

They should be looking for investment opportunities.

Exactly.

So I mean, the bank regulations put in place by the Basel, you know, BIS, essentially, is the secretariat for these international bank regulators, it have encouraged property lending.

real estate lending by the banks by essentially giving them a discount on the capital required by the regulations.

banks have gone out and done a whole lot of property lending, where that creates these asset inflation, boom-bust cycles, and banking crises.

Instead, that should be totally scrapped.

We should just have a simple rule, which, in fact, most of the bank regulations you can just scrap, just have some basic core.

I mean, they've become so complex, totally unnecessary, only serves the concentration because small banks can't keep up with this.

So, simplify,

and essentially, one key rule will do: that banks are only allowed to lend if

the money for the loan is used for

activities that contribute to GDP.

That would take out all the asset transactions.

Now you may say, well hang on, but here's this family, they want to buy a house, an apartment, and of course they need a loan.

True, but Actually, to be fair, they should be using existing money and they should borrow existing money, which is what economists have told us is actually happening when that's not true because banks create money, right?

And they're not financial intermediaries.

So how can we do that?

Well, we need to establish non-bank housing loan companies and they issue bonds, which banks are not allowed to buy.

And thereby you soak up existing money, some of that, and you fund the mortgages and property loans.

But banks must be kept out of this because they're very privileged organizations.

The banks have the power to create money and that must be linked to something productive.

You're contributing to society because you are creating money and it will have consequences.

And only when it's contributing by

adding value, creating goods and services, implementing new technologies, will there be no negative consequences.

And also then it will be sustainable because only those loans, the productive business loans, will generate income streams to service and repay the loan and they become self-liquidating.

And then there's never been a banking crisis.

There's never been a banking crisis based on too much bank lending to small firms, has there?

But if you have the property lending and also obviously the consumer lending as well, these other two possibilities, they create the problems.

And so you see that, I mean, it's very simple.

And, you know, you immediately got it.

Of course, the key regulators, they know this.

So why have they given us regulations which encourage the asset inflation lending, the property lending, the boom-bust cycles and and banking crises.

And why do they drive out the small banks, which do the productive, stable lending, which gives us prosperity?

Well, it reveals, as Paul Samuelson said, that's a revealed preference.

It reveals what they really want.

They've been wanting to drive down economic growth rates, deindustrialize, and then create these crises which increase the central planner's powers.

So that's why they've encouraged

the property lending and the asset inflation, speculative lending and consumer lending.

How much longer can this game go on?

Certainly

it is getting long in the tooth.

It is getting late, late stage game.

But I mean, the structures are quite robust despite all that and despite the repeated, I mean, they're just repeating the same game over and over.

Somebody told me once, People don't realize they're in Vegas and the house always wins.

And

it's just clearing the table.

And then you play a new game and they'll clear the table.

Yes, yeah, yeah.

So of course there will be

new details, new financial instruments, new ways of clearing the table and

starting again.

But

the game is continuing.

I think

what's different now is that more people are realizing what's going on.

And when they pushed these digital IDs under the COVID pretense,

a lot of people started to realize.

you have a crisis.

I mean, you can't shut down America.

Can you imagine?

I said this three weeks before.

I'm looking at China and I said on the air, can you imagine if they tried to do that to Americans?

Well, they did it.

They did it.

And we all lined up for it.

It's shocking.

It is really shocking.

You know, if your dollar goes down and they say, you know what?

We'll give you $1.20 right now.

You just bring your money in.

You just show it.

And we'll give you $1.20 right now, and we'll give you 50 cents later, or 30 cents, or

you take this central bank digital currency, and all good things are going to happen to you.

And, you know, you could even retire.

You could, you'll have a,

what do they call it, a minimum,

a basic minimum wage.

Yes, yeah.

People will take that.

Yes, or universal basic income.

That's what it is.

These are basic.

Exactly.

And I've said this this actually since 2015, 2016,

because suddenly all these billionaires came out and they said, oh, we need universal basic income.

Now, that's an old idea.

It was actually first formulated in the 1920s and it was considered sort of socialist, almost communist idea.

Well, how come

now all the billionaires are endorsing this?

Well, because now we have the technology for what?

Well, for central bank digital currencies.

And when you introduce that, you need a carrot to get people to take the chip implant.

You see?

One of the central bankers

in Europe told me that he was shown a prototype.

It was already ready in 2015, 2016.

That's when I decided, okay, one has to now speak up more explicitly about this.

But at the time, just like you mentioned, people just didn't know what I was talking about.

And it seemed very strange

and not really likely to ever happen.

But that fortunately changed with the COVID operation.

And I think we mustn't forget that the central bankers are, they're not politicians, they don't have a thick skin, they're very thin-skinned.

So, I started to

give speeches and talked about

this plan to introduce central bank digital currencies, and we must oppose it.

And, you know, I guess some other people too, but it must have been enough for them to to say, okay, let's first do some other operation.

Let's do the COVID operation, which has also been long in preparation, because then we can push the digital ID.

That's precondition for CBDCs.

Then it's a better position to do it.

But I think it was a strategic mistake because so many people realized this control.

And then suddenly all the central banks were saying, oh, now cash is dangerous.

There could be a virus on this.

Right.

Or some ridiculous story.

Literally in March 2020, they immediately say, oh, and now we need to really push hard to have digital currencies.

That's what I love about

Bitcoin.

Bitcoin can be used for nefarious purposes.

Well, yeah, so can cash.

Of course it can.

Everything can be used for nefarious purposes.

And if you think that you're controlling

the digital currency, it's going to be an end to crime.

You're out of your mind.

Exactly.

That's just an excuse.

It's a very lousy excuse.

And so then with the COVID operation, more people realized.

And now, when I talk about central bank digital currencies, there's so many people who understand, yes, it's a threat.

And yes, we have to stop it.

And that's really true.

So I'm hopeful that we can actually stop it.

Well, having somebody with your credentials, I think, means a lot.

I mean, you know, I talk about it and people are like, oh, it's Glenn Beck.

He's crazy.

But having somebody of your credentials stepping up and saying this is,

A, very brave of you

and gives it new life.

I hope you're speaking all over the world.

Thank you.

Yes.

Yes.

And I'd be glad to

continue to talk to you and to your listeners about this and give you updates

on this because, of course,

they are continuing to roll out this agenda.

There's now the

tokenization of assets is already on the agenda in Basel.

Just this week again,

they're doing a new pilot project linking CBDCs to tokenization and the idea is very obvious they want all assets ultimately to be tokenized i.e digitalized because then they can also be subject to the central planners veto and programmability that's of course the goal but they will sell it as oh it'd be so convenient you know to do real estate transaction because we'll digitalize it and you can just press the button you don't need all the the legal you know oh my gosh going to notaries and all these things.

We can just make it more efficient.

Well, we don't really have a problem with it.

So is that really so necessary?

Well, for the central planners, it seems very important because of the power, the control.

Let me ask you one more question.

We're so over time right now, but I can't let you leave without this.

You said something to me that was

more shocking than what you've just done, at least to me.

I mean,

my eyes eyes are like wide open.

It feels like

I have a completely new understanding.

Thank you.

But when you sat down right before we started, you said, do you normally say a prayer before?

And

yes, but I didn't expect that question from you.

Just being who you are, you know,

London School of Economics, you know, Oxford, all credentialed.

How, what, can you just quickly give me a God story here on how that plays a role in your life?

Is that new?

Is that always been that way?

Well, actually, it's very closely connected to what we've been discussing.

I mean, I'd always believed in God, but I wasn't

until a certain point, I wasn't probably what you'd call a committed, dedicated Christian who reads the Bible, goes to church, and works for God.

That happened at a particular turning point when I was, you know, I was a postgraduate researcher in Tokyo and I was given a, well, I selected the task, you know, I had to write a research report.

It was actually my first piece of research.

I was at the Development Bank of Japan, which is a government bank in Otimachi in central Tokyo in the business district there and they had the research department and I was the first Shimomura Fellow, which is quite an honor.

Shimomura is an interesting character who

was an expert on the high-growth system, you see.

Anyway, but

they sort of keep that secret.

You have to discover that yourself.

And I chosen the research topic of explaining Japanese capital flows, which in the 1980s were just buying up the world.

Everything.

All this Japanese money, real estate companies,

setting up factories, you name it, Columbia Pictures, Pebble Speech Golf Course, Rockefeller Center, all sorts.

Australia, Hawaii, you know,

Europe.

And

there was a puzzle in economics because nobody could explain these capital flows.

They were so huge.

And

so

I thought it had to do with these extremely high real estate prices, which happened at the same time, also the 1980s and sort of peak in the second half of the 80s.

The property prices in Tokyo was in Japan in general, but particularly in Tokyo were so high that in the center of Tokyo, if you look at the Imperial Palace and there's a garden there, which is like a public park.

It's very nice, but it's not that huge.

That had the same market value, just take the center of Tokyo market prices, as the entire state of California, including LA, San Francisco, you name it, everything in there.

I remember this coming out.

Which is complete nonsense.

I was a graduate student and I thought, okay, well, this this is crazy stuff.

And that, of course, has to have implications.

And to me, then it seems sensible from a Japanese perspective that

if that's the market, so-called market value, well, obviously you want to diversify because this is not the real value, but you want to take advantage.

So you want to invest abroad.

So there had to be a link to those capital flows.

I thought it's just, that's the explanation.

Of course, I still need to discover why actually we had this property bubble.

But, you know, you know, just it would have been enough just to prove that link between asset prices and capital flows.

So I went through, this is pre-internet, through all the libraries and checking all the journals.

I was in Tokyo, I only had six months' time.

And the data work, my professors at Oxford and Tokyo University already said, oh, data work alone will take six months, so you better start immediately.

But I needed to have a framework and what actually is that link.

Did lots of interviews, speaking to people.

All the experts said to me, me, give up, Richard.

There's no way you can have this explanation of Japanese capital flows.

No answer exists.

Impossible.

Then,

the clock was ticking.

Time was going by.

I was under pressure.

Somebody said, oh, there's the famous professor

Jeffrey Sachs in the US.

He wrote on this topic with his PhD student.

And they did a discussion paper at METI.

Okay, so I went to this Ministry of International Trade and Industry.

They're all very friendly and helpful.

Oh, yes, yeah, yeah, we had uh, Sak Sensei was here, and yes, he did a study.

Uh, here it is.

Great, fantastic.

You know, I was just a graduate student, so just having his study on this topic, and sure enough, he was talking about real estate bubble and capital flows.

There must be a link.

Same idea.

And if I just have a slight modification, that'd be enough for my research institute.

Everyone's happy.

I don't have to discover the wheel, rediscover the oils, have anything dramatic new.

But then going through this, first, you know, explained why there there should be a link, and then conclusion.

And therefore, we conclude there is no link.

So back to square one.

It was a big shock.

So conclusion was I'd spent one, three months, and I had not made any progress at all.

I had nothing to show for.

And they've been really nice to me, giving me this, you know, as the first Jimumura fellow, which is really for a young scholar already, you know, like assistant professor, associate professor.

I was, you know, and so they give me this big apartment in central Tokyo, treated me really well.

And I would have to soon announce my results, which were nil.

So it was pretty bad.

And in my career, which had been fairly smooth until then, this looked like a major disaster in the making.

So I was under a lot of pressure.

And on a Sunday, because you know, next Monday morning, go back to Otemachi, Central Tokyo, the Development Bank of Japan, go to your desk, your research institute, nothing to offer.

So

I had a pretty bad feeling Sunday afternoon and

I thought about this rationally.

Okay, well, all the experts have said it's impossible.

All the economic models,

you know, and economists concluded there is no link.

There was no explanation.

So I had an impossible task.

But I still and with the Japanese, you see, you can't change your topic.

That would have been the easy cop-out.

Okay, give me a different topic.

This one is impossible.

It would have been truthful, but was not an option.

So actually, logically, the only thing that could help was a miracle.

Right?

I needed a miracle.

Well, how do you do that?

Well, we can't do it, but God can do that.

So I actually laid down on the ground and

prayed.

And of course, you realize, okay, I'm in trouble, so I'm praying.

That's the usual stuff, isn't it?

It's not ideal.

So you sort of confess, okay, I haven't been a good boy and I should actually

change.

And

I really wanted to have the solution because I had all these plans, what I was going to do as a, you know, if I continue this as researcher scholar, I wanted to continue with my doctorate.

All that was in danger because my Oxford professor had recommended me for this position, all that, you know.

So I thought, okay,

I...

God, please give me this miracle.

I don't know what it is.

I don't know what the solution is, but I need this miracle.

I will read the Bible.

I'll go to church.

And I suppose, as an economist, you know, maybe you need an economist.

I'll work for you.

There's much you can do as a Christian economist.

I thought, okay.

So that's what I offered.

And, well, there's more details.

And I fear we don't have time, but I was given some signs and symbols.

I'll show you later.

And the conclusion is, so next morning I went to my desk.

And the moment I sat down, I had the answer.

It was literally put into my head.

And it was, of course, simple.

The truth is always simple.

What the famous professor Jeffrey Sachs hadn't considered was,

his argument was this.

If the Japanese want to cash in on this massively overpriced real estate, they'd have to sell it.

But the foreigners weren't buying it because it's crazy prices.

So they were selling it to other Japanese.

And therefore, the money was staying in Japan.

Therefore, there's no link, you see.

But I suddenly, immediately, instantly realized, no, the solution is banking.

They're not selling the real estate.

They're using it as collateral for a loan.

And when, and the next point is though, which I also immediately knew, I just knew, When banks give loans, they create new money.

This is new money creation.

Therefore, it's not pushing around existing money.

It's new money creation on the back of this real estate, and some of it spills over, spills abroad as capital flows.

So now I knew exactly what I needed, what data.

Oh, it's bank lending to the real estate sector.

There was an assistant.

Give me this data, please.

And

you look at capital flows, real estate lending, perfect match.

And then it was easy.

I was ahead of schedule as a result.

Because, yeah, and it's the only paper that could explain Japanese capital flows, perfect match.

It's a great chart.

You should look up the paper.

And that led you to where you are today.

Well, exactly, because then I realized, wow, what is this about banks?

They create money out of nothing.

Well, that's tremendously

momentous information.

But I mean, that affects everything.

That led to affecting.

Everything else to nothing else.

And led me to God as well, indeed.

So I suppose, you know, God took

my proposal.

And that's how I have have continued to work against enormous resistance.

You know, that continues to drive me out of universities where, you know, the pressure

builds if you speak

truthfully about the banking system and the economy, because you don't fit into the mainstream fake economics, which makes them look bad very quickly because it's not based on empirical evidence.

I work very empirically, scientifically.

So that's not appreciated, as you can imagine.

And of course, then I moved into setting up community banks in the UK, and that really

caused a lot of resistance in the UK.

It's not a supportive environment for setting up community banks.

Oh, I know.

Thank you.

Please come back again.

Thank you very much.

I'd love to.

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