Princes of the Yen

Richard Werner's account of how the Bank of Japan's credit allocation decisions shaped Japan's postwar economic 'miracle' and subsequent decade of stagnation — arguing that central banks wield more autonomous power than standard accounts acknowledge.

The central bank power thesis: Werner argues that the Bank of Japan's credit guidance (directing banks to lend to specific sectors) drove both the postwar growth miracle and the speculative bubble. When the BoJ tightened credit in 1989 (deliberately, Werner claims, to force structural reforms), the bubble burst — producing the Lost Decade. The broader argument: central banks, not governments, make the most consequential economic decisions, often without democratic accountability. Werner also coined the term 'quantitative easing.'