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

Episode Date: April 6, 2024

“Banking is slightly illegal,” says world-renowned economist Richard Werner, who is leading the charge against CBDCs. In this episode of "The Glenn Beck Podcast," Richard teaches Glenn that “banks don’t take deposits, and banks don’t lend money.” That begs the question, “What do banks actually do?” This discussion may make you realize that all you think you know about money is wrong. That’s not all we don’t know about the economy. We also have no clue which banks make up the Federal Reserve, who created Bitcoin, or the real relationship between inflation and interest rates. But we do know that COVID-19 revealed a global concentration of power and probably paved the way for the tool dictators of old could have only dreamt of: CBDC. Before the appeal of Universal Basic Income lures you into implanting a chip under your skin, it may be time to consider whether or not America should follow the China-inspired path to one central bank. Perhaps, it’s time to consider what Glenn says about the central planners of our economy: “You’re in Vegas, and the house always wins.” Learn more about Richard Werner and his book Princes of the Yen: https://richardwerner.org/book/ Sponsors: Relief Factor Relief Factor: See how Relief Factor can help you get out of pain. The three week quick start is only $19.95 and comes with Relief Factor’s “Feel better or your money back” guarantee. Visit https://www.relieffactor.com or call 1-800-4-RELIEF.  Learn more about your ad choices. Visit megaphone.fm/adchoices

And now, a Blaze Media podcast. 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 can 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 them in from Germany to talk to you. Welcome to the podcast, Richard Werner. First, let me ask you, if you're living with pain in your life, have you had just about enough? Because I got to a point in my life where I'm like, I can't, I just, I can't do it anymore. I was tired of trying the next thing. And I was really tired of getting up every morning and just wanting to go back to bed because it hurts so much. you don't want to take drugs that leave you feeling loopy.

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Give ReliefFactor a try. Go to Relieffactor.com or call 800 for relief. 800, the number four relief. When you feel the difference, you'll know it works. Relieffactor.com. 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 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 that's, 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 beginning certainly where if 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 we before I explain these three possibilities and one of them is the you know money creation chasing consumer goods

and 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? It 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, oh, we need, 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. BDCs. Exactly. I had never heard that before. Well, because they want to sell these CBDCs 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 BCDs. Exactly. The central, I mean, the bank digital currency, this is where the experts have always told me, 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? Yeah, 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 speculating.

transactions that create many of the problems. So but 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 know that about oh yes I've got one of those notes actually

really with you no no it's in my book never heard of them 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. Correct. But of course, since the creation of the Federal Reserve system in 1913, that's become the essentially monopoly, you know, 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 the United States notes, then it can create money and doesn't have to pay interest. you see so but of course the moment you say okay well the banks 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 it's the financial system and the you know 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 it's the same time when they introduced for the first time the federal income tax and of course you go back so they actually go hand in hand they do they do we know this from history it's always the same so when one of the the oldest central banks was created the Bank of england as a hundred percent privately owned bank essentially a central bank although it was privately owned um they did this through a law which was about imposing taxes. It mentioned and will 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 in 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 U.S., for many decades, they've 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,

13 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 um 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 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 Your asset rich, cash poor. Yes, exactly. And so, 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 and families across the U.S., lost their livelihoods. All their savings were gone. when the Fed sat on his 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 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 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, 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 they joined this Fed-Nal 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, 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 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, if you study economics, business, finance, you will learn. It's in the textbooks. It is in the leading finance journals. Central banks promoted.

Most financial journalists use it is the financial intermediation theory. And that says banks are simply gathering deposits and then they do their analysis, credit risk, you know, analysis, and 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 as, well, we need to interview, some expert. 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, what is the theory? Exactly. I mean, it's, this is like, I know, it defies common sense. It defies common sense. Right. The first time I read modern monetary theory, I'm like, who believes this? Who believes this? Well, yeah, 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 refer to at least one of them. The next one is the fraction 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 fraction reserve theory around 1920. So before then, so more than 100 years ago, more, you know, 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, you know, gather deposits and lend out money.

In fact, 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 a 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. So 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. And is that because of digitalization? No, actually, because

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 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 stock broker that doesn't have a banking license,

then when they go wonder it's troublesome but your money will be safe ultimately may take time you know go through the rigmarole but it's never encumbered because they never owned it but when you lent 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 until that amount it will be replaced by the government by the insurance system but um technically you know what about private banks that are fiduciaries they can't That's not their money. 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 that 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 pounds.

So that is, at law, a bill of exchange. change 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 two 20 pound and one 10 pound right so they'll issue other promissory notes um but so so banks um are the business of purchasing securities and the loan contract is also a security, it's a promissory note. No, no, the bearer one is 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, we'll 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 loan, it purchases the loan contract, and then the accounts 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? There's 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. I think I've learned more about the banking system in the last few minutes and 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 and 60s, double-digit economic growth. Right. What is called by some, you know, 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 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. Yeah. 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 US, 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 US, around 5,000 banks from, you know, 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 a mind closing down the big banks or Goldman Sachs, did he? It's the small local banks that are being put under pressure by his policies and they were forced to merge and disappear. The way we're headed, it looks like we're headed towards what China was. 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. 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 gets time for banking anymore.

They have to give up. And secondly, there's crazy interest rate policy that they introduced, you know, flattening the yield curve, pushing interest 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, we'll 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 at it, 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.

All right. 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, you know, 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. 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 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're really reduced lending for asset purchases. Asset prices are going to really go down. And then the whole thing goes into, into deflationary spiral quite quickly, and you quickly have a bust banking system. That explains where 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 the 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, there's various other policies, making sure this goes to consumption. We had to get inflation 80 months later,

as I want, you know, May 2020, when I saw these figures, a huge, massive. And I wrote on Twitter, well, 18 months later, we'd like 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 acid inflation, and that starts this whole game of asset inflation, boom-bust cycles, and banking crises. And then you could have, like Japan experience, they had a huge asset buy. 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 in 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 decentralized structure of giving orders

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 officers 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. There's a lot of work for the bankers, but that's their job, you know. 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 firms, small banks lending to small firms, then you get the productive business investment. The loan office are really going around, kicking the ties 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 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. 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 it. 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.

Yeah, but 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 is the Basel Bank of Central Banks. and the ECB. They 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 are, well, they're the ones that we're going to close down, literally. When the problems are caused by the big banks, but actually they turn this around, they use this an excuse to further consolidate the banking system. Why?

Because it increases their power. Ultimately, their central plan. 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 it into one bank and you're back with the Soviet-style system.

Did you know that 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 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 warned, well, the next banking crisis is happening. and they will inevitably reward the central planners. I want that. It's the central planners doing it. 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 crises, 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, at the same time bank regulator, 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 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 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, 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.

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 carbon footprint excuse or whatever the reason you know you're not allowed then you 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, 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 we will not look at what you're doing. And these are conspiracy theories.

Exactly. And actually there is no reason. As some of them, like Neil Kashkari, who's the 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. 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 down. Shut our money off. 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. And of course, you know, several schools of thought and economics have been pushed in the media very much as 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 didn't even know who they are. Exactly. They've not published that, and we should insist. You know, where's the transparency? 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, scarce to live in 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, you know, 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. 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, deindustrializing, very artificial, you know. pushing out all these companies when really that is the value added. Correct. 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 Western companies are, 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 it was 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, 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 the 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, 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. Right.

But when I was there, you know, I met President Clinton. I met Angela Merkel, the German, well, future chance. He 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, you know, these people then become the leaders. But, you know, some people already knew that. She was clearly being groomed. So these things are happening. Because if you look into the history of the World Economic Forum, and 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. 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 Psiop policies, just how coordinated there were. Because if there were sensible policies, you could say, oh, it's because it's sensible, that's what 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. So what is the solution to this? Because 50,000 people worldwide already have a chip implanted under their skin. Is it 50,000 really? Wow. I know Sweden is more than 5,000, probably close to 10,000.

Worldwide is 50,000. That's what they say. Yeah, yeah. 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 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't have abundance. We can have

have 10% growth, even 15% growth in virtually any country in the world, nonstop. If you just make sure bank credit creation is given by many small local banks to local firms that implement the new technologies, 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. Yeah, yeah. So 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, have encouraged property lending, real estate lending by the, banks by essentially giving them a discount on the capital required by the regulations. So banks have gone out and done a whole lot of property lending where that creates these acid 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 those. 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 a family they want to buy a house and 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 it's not true, because banks create money, right? They're not financial intermediary. 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, you know, property loans, but banks must be kept out of this because they're very privileged organizations. They, you know, 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 the, obviously, the consumer lending as well, these other two possibilities, they create the problems. And so you see, 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 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 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, you know, the property lending and the asset inflation, speculative lending, a consumer lending. How much longer can this game go on? Certainly, you know, it is getting long in the tooth. It is getting late, a late stage game. But, I mean, the structures are quite robust. despite all that and despite 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 there will be you know

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 push these digital IDs under the COVID pretense, a lot of people started to realize. Because I 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 said, and I said on the air, can you imagine if they tried to do that to Americans? Well, they did it. And we all lined up for it. Shocking, it is really sure.

You know, if your dollar goes down and they say, you know what, we'll give you a dollar 20 right now, you just bring your money in, you just show it, and we'll give you a dollar 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. Yes, that's what I do. These are basic, exactly. And I've said this actually since 2015, 16, because suddenly all these billionaires came out and they said, oh, we need universal basic income. Yeah. Now, that's an old idea. It was actually first formulated in 1920s, and it was considered sort of socialist, almost communist idea.

Well, how come now all the billionaires 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 the 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. 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 I guess some other people too, but it must have been enough

for them to say, okay, let's first do some other operations. 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 realize this control and then suddenly all the central banks were saying, oh, now cash is dangerous. There could be a virus on this. Right, I know. Or some ridiculous story. Literally in March 2020, they immediately say, oh, and now we need to really push hard

to have digital currency. That's what I love about. Bitcoin. Bitcoin could be used for nefarious purposes. Well, yeah, so can cash. You know, 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, Ah, 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 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 CVDCs 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 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 are like wide open. It feels like I have a completely new understanding. Thank you, glad to. Yeah.

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 would, can you just quickly give me a God story here on how that plays a role in your life? 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 always believed in God, but I wasn't until a certain point, I wasn't probably what would you call a committed, dedicated Christian who, you know, reads the Bible, goes to church and works for God. That happened at a particular turning point

when I was a post-graduate researcher in Tokyo and I was given, well, I selected the task. 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. Shimura is an interesting character who was an expert on the high-growth system. you see. Anyway, but that's, 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, you know, setting up factories, you name it, Columbia Pictures, Pebble speech, golf course, Rockefeller

Center, all sorts. Everything. 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, I thought it had to do with these extremely high real estate prices,

which happened at the same time, also in the 1980s and sort of peak in the second half of the 80s. The property prices in Tokyo was in Japan in general, in Tokyo, we're 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. Very nice, but it's not that huge. That had the same market value, just take the central Tokyo market prices, as the entire state of California, including L.A., San Francisco, you name it, everything in there.

I remember this coming out. Which is complete nonsense. And I was a graduate student, and I thought, okay, well, this is great. student and I thought okay well this is crazy stuff and that of course has to have implications and to me then it seemed 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 you know 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, 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 then what actually is that link? did lots of interviews speaking to people all the expert says said to me give up Richard there's no way you can have this

explanation of Japanese capital flows no answer exists impossible then you know time was clock was ticking time was going by it 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, we had, uh, Saks 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, They'll rediscover the oil, has anything dramatic new.

But then going through this, first, you know, explained why 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 spend more than three months, and I had not made any progress at all, and nothing to show for. And they'd been really nice to me, giving me this, you know, it's the first Jim, a Murrah fellow, which is really for a young scholar already,

you know like an 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 in my career, which had been fairly smooth until then. This looked like a major disaster in the making. So I was on a lot of pressure. And on a Sunday, because, you know, next Monday morning,

go back to Otamachi Central Tokyo, the Development Bank of Japan, to your desk your research institute nothing to offer so i had a pretty bad feeling sunday afternoon and i i thought about this ration okay well all the experts that said is impossible the all the economic models you know and you know economists concluded there is no link there was no explanation so i had an impossible task but i still and with the japanese is you see you can't change your topic. That would be an easy cop-out. Okay, I'll give me a different topic.

This one is impossible. 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.

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 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 wanted to continue with my doctorate all that was in danger because my Oxford professor 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. Okay. And the conclusion is, so next morning I went to my desk. At 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 Because 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 of 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 as collateral for a loan. And the next point is though, which I also immediately knew, just new, 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. 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 exactly because then I realized wow

what is this about banks they create money out of nothing well that's tremendously momentous information that affects everything. That led to everything else. To God. And led me to God as well. Indeed.

So I suppose God took my proposal. And that's how I have continued to work against enormous resistance. You know, they continues to drive me out of universities where you know, the pressure is

builds if you speak about truthfully about the banking system and the economy. Because, you know, 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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