Princes of the Yen: Japan's Central Bankers and the Transformation of the Economy

Rating:
Summary: To be approached with caution
Review: "Princes of the Yen" is not a book that a reader with a casual interest in Japan should contemplate. This is not because the writing style is inaccessible - tabloid economics sums it up. Nor is it because the topic is obscure (though, frankly, central banking is not normally a mainstream subject). The risk is that a casual reader might think that Mr Werner has some credibility, or that his arguments are in anyway plausible.

The central tenet of Mr Werner's thesis is that something akin to a giant conspiracy has been worked on the world, orchestrated by a small group within the Bank of Japan (the eponymous "princes" of the title). This group does not include all of the governors of the BoJ (for that would be far to obvious). In the shady twilight of Japanese economics, as constructed in Mr Werner's active imagination, any BoJ governor who is not a "prince" is automatically a puppet. The purpose of this group of "princes" is simple; they wish to achieve BoJ independence (what they do with that independence, or why they have so burning and destructive a desire for independence, is not explained). Everything in Japan can be rationalised by this, according to Mr Werner. The lost decade of the 1990s? A deliberate attempt to undermine the Ministry of Finance, orchestrated by the "Princes". The preceding boom? Part of the master plan, to create the recession of the 1990s, orchestrated by the "Princes". To be fair, Mr Werner does not go so far as to accuse the "Princes" of being linked to the Knights Templar, or concealing the Holy Grail, but this is a rare moment of restraint on his part. Virtually every other aspect of a good fictional conspiracy theory is in this tome.

The reader gets some warning of the nature of this theory, of course. Fully 10% of the bibliography is Mr Werner's own works (if you are going to be this outrageous, it is hard to find supporting evidence other than that which you yourself have manufactured). Other authors cited would doubtless recoil in horror at the suggestion that their analysis ever lent credence to the theory. Conjecture forms a large part of Mr Werner's evidence - "perhaps" the Ministry of Finance thought that foreign exchange intervention in the mid 1990s would be left unsterilised, for instance (when it never had been in the preceding fifty years. If the Ministry of Finace really thought that, it would have to be staffed by a remarkably stupid group of individuals). Where official statistics do not support the evidence (the money supply just will not co-operate), Mr Werner comes up with the neat trick of disregarding them and offering his own proxies. Other objections to the central theory are ignored. Just how did the "Princes" managed to conceal their true intent from generations of academics, journalists, financial analysts, politicians, and not a few governors of the BoJ? Where they all that stupid? Has the world really had to wait for someone of Mr Werner's intellectual prowess before the veil of ignorance can lift?

Mr Werner has a simple solution to the problem of an all-powerful BoJ ("simple" being used in the most disparaging of contexts here). Nominal GDP targets will solve everything. Never mind that the quality of Japanese statistics is so poor even their own statisticians do not trust them. Never mind the fact that GDP is published with an impossibly long lag, and that monetary policy leads economic activity. Never mind that GDP is so frequently revised that what initially looks like strong growth can easily morph into recession when the statisticians have had a chance to review everything from a couple of years perspective. This, Mr Werner believes, will solve everything. The solution is as ludicrous as the premise on which the problem is constructed.

So why should this book be given shelf space in any library? It serves one useful purpose that I can think of. Japanese political and economic analysis has always been tainted by a certain extremism - fringe views that strive to exaggerate the uniqueness of Japan (to make Japan "more unique" than other countries). This work serves to remind seasoned Japanese observers of just how lunatic the "lunatic fringe" of Japanese analysis can be, when it sets its mind to it.



Rating:
Summary: My professor
Review: As a student of Richard Werner's while he was teaching at Sophia University in Tokyo, I more than once had my eyes opened on the reality of economics and towards the end of my class, the banking sector. I recommend this book to anyone who has an interest in banking, credit, and the truth about the Japanese economy.

Rating:
Summary: Unique and perceptive explanation of Japan's long recession
Review: Having heard about the publication of this book for some time, I was excited to see it available on Amazon. And the book did not disappoint!

Werner takes an unconventional view of the causes of the recession in Japan--at least to those of us who were educated in the US and taught that the lack of US style free market capitalism was the principal cause. He suggests very convincingly that the extraordinary Japanese stock market and real-estate bubble and subsequent long-term recession were in part caused and created by certain institutions and individuals, namely the Bank of Japan, and discusses the motives of the behavior of those institutions.

The book is a great read with clear and concise explanations of difficult concepts (economics, finance, banking, central banks and financial institutions, etc.) and extensive footnoting of research, quotes and facts (even many of the footnotes are a great read!). I'm sure many will find his claims controversial but any reader will have to admit the arguments are compelling.

Whether you agree with his premise or not (I happen to agree), this book is a great read for anybody interested in Japan, economics, policy making, or even just the stock market.

Rating:
Summary: Unique and perceptive explanation of Japan's long recession
Review: Having heard about the publication of this book for some time, I was excited to see it available on Amazon. And the book did not disappoint!

Werner takes an unconventional view of the causes of the recession in Japan--at least to those of us who were educated in the US and taught that the lack of US style free market capitalism was the principal cause. He suggests very convincingly that the extraordinary Japanese stock market and real-estate bubble and subsequent long-term recession were in part caused and created by certain institutions and individuals, namely the Bank of Japan, and discusses the motives of the behavior of those institutions.

The book is a great read with clear and concise explanations of difficult concepts (economics, finance, banking, central banks and financial institutions, etc.) and extensive footnoting of research, quotes and facts (even many of the footnotes are a great read!). I'm sure many will find his claims controversial but any reader will have to admit the arguments are compelling.

Whether you agree with his premise or not (I happen to agree), this book is a great read for anybody interested in Japan, economics, policy making, or even just the stock market.

Rating:
Summary: Globally relevant
Review: Having heard Richard speak in Tokyo I realized that my neoclassical views of economic and monetary policy was in need of urgent updating. The facts, observations and political elements involved in central banking policy and how this is ultimately controlled by the "Princes" in Japan provides the context for a great leap of understanding in the prolonged recession of the lost decade and the perceived need for crisis to create change. Richard also provide invaluable historical insight to the economy of Japan, which will aid understanding the present day culture, salary men and what happens when incentives are correctly employed. He also explores the reasoning behind the Asian crisis and this flows well having built up solid illustrations of US cronyism.

Richard also provides a gem of last chapter in exploring the actual versus perceived independence of the Bundesbank, the European Central Bank and the need for extreme caution in creating truly independent, un accountable ECB, which does not guarantee good policies. This chapter has led to a much clearer understanding of a single European currency, bank and policy and has helped form what I feel is a much more accurate opinion.

Very good research and observations through out and employing evidence on trial approach with Dr Watson showing up makes the central theme very compelling. This also makes the book easy to digest.


Rating:
Summary: Lucid and eye opening, a life changing book
Review: I was a student of economics and until reading this book I was wondering why I ever entered the disipline in the first place; after I read Princes of the Yen I finally felt that someone had given me that reason.

Princes explains the rise and fall of the Japanese economic and political system and dares to explore areas that historians and economists alike have failed to address. While almost all the information I have read on the Japanese economy focuses on the miracle growth and the recent bubble collapse, Professor Richard Werner goes even further back to WWII to uncover the uniqueness of the Japanese economy. He argues convincingly, through statistics, extensive research and personal interviews, that a purposely-designed bank centered version of capitalism has driven the Japanese economic system, and that those who control the creation and allocation of credit, namely the central bank princes, have made the ultimate decisions in Japan's postwar economic history. Thus the current problems in Japan are exposed not in the confused and varied ways that most economists tend to talk about Japan but as part of the actual credit policies and publicly stated (yet little known) goals of Japan's central bank governors.

I loved Japan but couldn't make any sense out of Japanese economics. I am thankful to Professor Werner that I finally have a clear explaination as to what really happened, and a renewed desire to pursue economics as a discipline.

Rating:
Summary: Toto pulls back the curtain on OZ and his cronies!
Review: In "Princes of the Yen", Mr. Werner successfully makes the case that Japan's central bankers are in control of the economy and hence the country. His arguments are backed up substantial research including personal interviews.

In addition, Mr. Werner sheds light on how Japan's economic war continued long after its military war ended (Chapters 2 & 3).

Last but not least, "Princes of the Yen" provides a historical look at the development of money, credit and banking (Chapters 4 & 5).

Understandably, most of the book is devoted to the princes of the yen, and while I enjoyed Mr. Werner's treatment of Japan's central bankers, I also found his historical overview of money, credit, banking and the history of Japan's war economy to be immensely enlightening. In fact, I am still pondering the idea that money is credit, and that credit can be created out of thin air.

I strongly recommend "Princes of the Yen" to those with an open mind who have an interest in banking, money, economics and history. Rest assured that Toto won't fail to amaze you.

Rating:
Summary: A new perspective to the existing literature
Review: This book offers us an alternative perspective to the rise and fall of the Japanese economy. Supported by extensive research, the author has successfully uncovered the reasons behind the Japanese economic growth. Credit creation accounts for at least 90% of the money supply in the market. An uncheck institution such as the Bank of Japan has control over the country¡¦s credit creation and allocation. It is without a doubt that the central bank plays a major part in any country¡¦s economy. This book has also revealed a very essential question of the necessity of the current central banking system. Who has the control over the central banks? Do we really need a central bank?

This book is an excellent reading for anyone who does not want to be conformed by the standard textbook explanation. In a way, this book is probably closer to the reality than most conventional economic readings.

Rating:
Summary: Good Insight
Review: This book sold very well when it came out in Japanese language. Prof Werner was on Japanese TV and Japanese media and he argued his case very well in Japanese. He has studied the Japanese Central Bank for many years and of course Japanese Central Bank is copy of German Central Bank as everyone should know.

Look at the evidence. Japan is a poor country with no resources. How come it could fight the USA, China and many other countries all at the same time? How come Japan's GDP is bigger than the rest of Asia combined? How come Japan had the biggest financial collapse of all time when the Bubble Economy ended? Has the policy of the Central Bank something to do with it? Of course it has. Read Prof Werner's very detailed book to find out how central the Central Bank has been in Japan's success.

Here is another one everyone should know. At the height of the Bubble, Jpaan was worth more than the rest of the world combined. As Prof Werner explains, the Emperor's Palace could buy Canada. How come? Credit creation is the answer. The policy of the Central Bank gave so much credit everyone had money in Japan to buy what they wanted. That pushed up the prices. Then when the Central Bank wanted it to stop, they stopped it. But read Prof Werner's book to find out how credit creation works and how the Bank of Japan has used it for their own reasons. You need not agree with Prof Werner but if you are interested in Japan, you should read this excellent book.