Interview with Richard Werner
On central banking, money creation, why high economic growth is possible, and why it is being suppressed
Host: Richard, good to meet you.
Richard Werner: Great to meet you.
Host: We’ve got limited time, so let’s hit the big points. Help me understand something. I’m not the smartest guy in the world, but I know enough. We seem to have the best technology we’ve ever had and the smartest people we’ve ever had. Yet our economy appears unable to grow. We’re in a cost-of-living crisis. None of our public services seem to work anymore. Are we getting something fundamentally wrong, or is there a group of people who know how to play this game of money better than everyone else?
Richard Werner: Absolutely. You’ve put it quite well — it is a contradiction. We have more knowledge available than ever before and amazing technology. Progress in recent decades has clearly been significant. So why is our economy performing so badly, and why are ordinary people and the middle class not doing very well?
The short answer is: this is what the controllers — I call them the central planners — want to achieve. What you get is what they want us to get. All the control levers are in the hands of a small number of people, and they could switch to quite a different scenario.
In mainstream economics, one of the key protagonists of the 20th century was Paul Samuelson. He obscured the power of banks and money creation. Individual banks can create money, but he promoted the fractional-reserve theory, which is at best a half-truth. It recognises money creation in the system but makes it very diffuse — each bank is just an intermediary. His textbook, first published in 1947 and still going strong, has been promoting this story for decades. He’s a classic case of mainstream economics leading people to the wrong information.
But in his early years he wrote a paper they don’t like to quote anymore, called “Revealed Preference.” I agree with him on this one point. He argued that since we assume people are rational actors who know what they’re doing most of the time, we should expect that their intentions are revealed in their actions. Don’t listen to what they say — they can tell you all sorts of stories. Just watch what they’re doing. That is what they really want.
That’s the principle I’ve been using to analyse central bankers and the central planners in general. They spin quite a yarn and have all sorts of misleading stories that can send you down the wrong path. Just watch what they’re doing. That is the intention.
It is absolutely possible — and I really think it is criminal that we’re not getting it — to have sustainable, high, double-digit economic growth without inflation, without crises, and even arranged so that it is fairly equitable. Everyone, or most people who want to work hard, gets a chance to do really well. An economy of abundance. High growth. Young people get responsibility early, they get opportunities, they can start companies. Companies expand, the economy grows, there’s constant need for new goods and services. That is possible.
Every country can deliver 10% economic growth every year, year after year. We don’t need cycles. We don’t need crises. We don’t need 1–2% growth or zero growth, or countries like Germany shrinking for years. All of that is totally unnecessary. So why aren’t we getting it?
Host: When you say “they” — the controllers, the central planners — are we talking about the central banks? Are we talking about the government? Because they seem too incompetent. I believe they’re incompetent. Or is it higher up? Is it the asset managers around the world? The people who move the money around the world?
Richard Werner: I’ve focused in my work quite a lot on the central bankers because they have the most impact on the monetary mechanism, the financial system, the banking system, and the whole flow of finance. For much of the analysis that’s almost sufficient. But you do hit the point where you wonder why on earth they are doing this.
Take Japan. They created a 20-year recession. And they actually revealed why they were doing it. That’s in my book Princes of the Yen. I quote them — the governor, the deputy governor of the central bank, and these people before they got into leading positions — on the record in the Nikkei and other publications. They said things like: “We think it’s better for the economy to have a structural change… structural transformation… because we want to change the economy.”
As the World Bank once put it in a report: banking crises are a window of opportunity. An opportunity to change the ownership structure. That’s what they did with the Asian crisis. Asian countries were doing really well, and foreigners had no share in that — whether Japan for decades, or Korea, or Southeast Asian economies like Thailand. Foreigners didn’t really own much, and the banks were locally owned. The Asian crisis changed that. The Japanese crisis changed that. That’s how you crack open these countries.
They were saying: we want to change the structure, change the ownership structure. In the Japanese case it was because the post-war Japanese success was due to a fairly straightforward implementation of what is possible. The Japanese had researched quite well what can be achieved. They realised: we can have high growth — 15% growth for decades. It’s actually possible. Let’s do it.
In 1960 a new prime minister announced they were going to double national income in the next ten years. There was a storm of opposition: “That’s nonsense, impossible, cannot be done.” All the economists were outraged. Well, they did it in four and a half years — way ahead of schedule. Of course it can be done. And they kept doing it.
Then it turned out that Japan was considered too successful by very powerful players. That’s where we have to push a little bit behind the central bankers. The central bankers in most countries turn out to be, essentially, traitors to their countries. When push comes to shove, they work for other interests that operate on a bigger, international, globalist scale.
Host: So there is a globalist network with an agenda?
Richard Werner: Yes. There is a globalist network that has an agenda. And this agenda is not actually good for most people — for ordinary people and for most countries. That’s why they need traitors who help them.
Host: Who are these people and what do they want? Are they just enriching themselves? Are they just stealing everything?
Richard Werner: I think it’s about control. And in a way it is embedded in the history of banking and central banking. We don’t really have to leave that path very much to find answers.
Throughout history, those who first understood the tricks used by banks — and it was kept a secret for centuries how banking works — could take advantage. And they did take massive advantage. That made them very powerful, to the extent that kings and princes and monarchs became indebted to them. And that always means you can extract more than just money. Money is best lent to the sovereign because they can tax the people to pay.
The introduction of central banks always goes hand-in-glove with the introduction of new taxes — income tax and so on. When the Fed was created, they created the federal income tax, which didn’t exist before. Somebody’s got to pay the interest on that national debt, which is going to pile up the moment you tell the government: “We’re going to create money for you, and you’ve got to borrow the money at interest.”
So you have people who understand the system, and essentially a small number of dynasties that did really well over the centuries, while for centuries the mechanics remained very little known.
There’s proof of this in the very fact that it took until 2014 for the first empirical test to be done — I did this — on how banks actually work. It was still controversial. The claim that banks create money when they lend was considered a conspiracy theory. Many textbooks wouldn’t even consider it. Famous economists said, “That’s just some monetary nutcases, cranks.” Even Keynes said things along those lines.
The currently still dominant theory is the financial intermediation theory: that banks just gather deposits and those very deposits are then lent out. That is not what happens. But that’s what the textbooks assume. And that false narrative has been around until the 21st century.
One very important building block in fooling people about this, going back something like 800 years, was the invention of double-entry accounting. It was created by and for the bankers. It’s a very clever way to hide money creation and always point out: “Hang on, there’s nothing happening here. Look, the accounts always balance — assets and liabilities.” And this worked so well that mainstream economists, until the 21st century, believed there was nothing to see — banks don’t create money.
Of course, those who knew this and took advantage became very powerful, asking for privileges, legal changes, more rights from the monarchs and from governments. You can see how they moved into a position of very strong power. First it’s about money, but once you have all the money in the world, the next step is power.
On a global scale we see this principle: they want power. The ultimate power is to concentrate power over the whole world in a small number of hands. That seems to be the game they’re playing — some kind of world centralised government. The globalists have essentially been saying that. It’s not a secret. They say we need a globalised world so there should be no national obstacles to our global power. That’s really what it means when you have all the globalist demands implemented.
And of course they need people motivated to work with them and for them. Mainstream economics is one way to train people who don’t really see the full picture.
Host: Is that Keynesian nonsense?
Richard Werner: For example, yes — Keynesian, and all these schools of thought. They love to argue and quibble with each other, but they’re all very similar. They’re all equilibrium economics.
Whether you start with classical economics — David Ricardo was one of the great propagandists. He basically created modern economics by saying: let’s not look at the facts when we can have great theories that come to the conclusions we want. He introduced the so-called deductive methodology: start with axioms and assumptions, build a theoretical mathematical model, and the whole thing is very logically consistent. Logic appeals. Men love logic. So we’re easily influenced: “Oh, that’s pretty logical — got to be true.”
That’s a big misunderstanding, because logic is not truth. Just because something is logical doesn’t mean it’s true. It could be a description of reality — but whether it is, is a simple empirical question. You still need to check the data and the facts. But they never do.
The main trick in this Ricardo approach, which has dominated the last 200 years of economics, is that you present the whole thing in reverse order. You start with your preferred conclusion. You work backwards: what sort of model gives you that conclusion? Then what assumptions do we need to present that model? Then you present it in reverse order: “Let’s just for the sake of argument have these assumptions… oh, we get this mathematical model… oh, that’s quite logically consistent… and here’s the conclusion. Who would have thought?” Of course that’s what the whole thing was aimed at. That’s charlatanism.
Since Ricardo we’ve been on that track. Within this equilibrium approach, equilibrium is the foundational basis that was chosen because there’s no dominant market player and equilibrium is always the markets. You assume demand equals supply. Then you have some quibbles — classical, Keynesian, neoclassical, post-Keynesian, monetarist, Wicksellian — all sorts. But they’re all equilibrium thinkers. And there’s never been any evidence of any equilibrium whatsoever. The whole thing is a bunch of baloney. They get away with it because it’s very logical and because people don’t realise that just because something is logical does not mean it’s true. Truth is empirical and fact-based.
We just need the approach that’s very successful in the natural sciences: look at the facts, observation, data — usually from the past, because we don’t have data on the future. History. Then build explanations based on that data. That’s not how economics does it. But if you did that — and I’ve been doing it my entire career — it works very well. Then you can actually see what’s going on, and you can have predictions about what’s going to happen.
There is a global network of powerful people, families, dynasties who have the ability to control large parts of the world — who’s in power, who isn’t — to maintain their position as the wealthy people in the background. The big grand conspiracy is not really a conspiracy. It’s true.
In my analysis I focus on central banks. You can even say what you just said just by going to the level of central banks, because they already have so much power, and it’s visible and not disputed. You can prove it and show it.
Host: But are they just useful idiots? Are they pawns of these people?
Richard Werner: In the Japanese case I was wondering: why on earth are they doing this? They could just be convinced by the argument that the Japanese economic system is not good for Japan. Well, it delivered 15% growth for decades. It made you double national income every four and a half years at 15% growth. And it can be done. They’ve proven it can be done.
Then Korea, Taiwan, Singapore copied it. And in 1978 China copied it. Deng Xiaoping came to power. The first thing he did was go to Japan with 300 of his top people. He told the Japanese: “Okay guys, we’ve done a lot of ideology — the deductive approach, the Ricardo approach, the Mao red book. We’re all tired of that. We’re throwing out ideology. We just want to do pragmatic stuff that works. I’ve come here as a student. Teach me how I can have double-digit growth.” And they told him. And that’s what China did.
Of course the key was the monetary system. They asked him: “How many banks do you have?” “One bank — central planning.” Well, the central planners love it — power maximisation, control — but it doesn’t really work well. It works for the controllers, but everyone else is unhappy. And they get unhappier.
Host: And we end up where we are now, where it feels like we’re on the fringe of civil war. Populism’s on the rise. There’s a massive amount of discontent. Crime is up. Trust is down. Nothing works in the country anymore. Inflation is rampant. Everything feels like it’s breaking around us.
Richard Werner: Exactly. And of course the UK is a great example, because in the UK we are close to central planning. There aren’t many banks — proper banks that do traditional banking. We’re talking about five big banks, and they don’t even do traditional banking anymore. Once you get so big and your balance sheet is more than £2,000 billion, and you’ve got five banks of that size basically controlling the financial system — accounting for more than 80% of deposits — then the problem is the following.
We confirmed this in research on the US, where there are banks of all sizes and there’s still, fortunately, a large number of banks (although it’s going down there as well — they consolidated quite a bit). What we found analysing those 5,000 banks of different sizes is a very simple principle. It makes common sense, but the finance literature had sort of disputed it. Namely: it’s a rule in banking that we confirmed — big banks want to do big deals with big customers. They need to. Who lends to small firms? It’s small banks. And that’s it.
When you consolidate the banking system like in the UK, nobody lends to small firms. Now, why does it matter? “Oh, they’re just small firms.” Well, no. It’s the middle class. There’s more to it.
In the UK we’ve had for a century now this “productivity puzzle.” Every few years it comes up again — some commission or parliamentary committee discussing why productivity is so low. UK productivity has been low compared to Germany for a century. Why is that?
It’s very simple. Productivity is simply: we look at the whole country, the output produced — GDP is a measure — per person working. You mustn’t use the total workforce but those people who actually work. So if you’ve got unemployment, you can’t count those, because you want the productivity of the people who are actually working. They produce the GDP. You calculate that ratio. That’s your productivity. It’s been quite low in the UK.
To find out why that is, you only have to look at who is the main employer of those people — where do they work? That’s true for the UK, for Germany, for Japan, for the US: the vast majority of people work for small firms. Small and medium-sized companies employ two-thirds usually of employment. In the UK roughly 65%. In Germany and Japan it used to be actually higher — between 70 and 80%. Anyway, the majority works for small firms.
Now, how can their productivity be higher? German small-firm productivity in the past (I’m talking about before the current disaster of intentional destruction and de-industrialisation in Germany) was quite high, because whenever new technology came up, small firms would realise it. They go to the fairs in their industry and so on. They realise: these are new trends, there’s a new technology that affects our industry, our section, our market niche. We’ve got to get it. It means we’ve got to spend some money. We’ve got to master that technology and apply it. Where do we get the money from? We go to our local bank.
That’s the system in Germany. The numbers have also been declining, but there are still around 1,200 small local banks — cooperative banks mostly, some savings banks. You go to your local bank and you explain. They know you already, because they only lend locally. They will not lend outside the local area. So they know all the firms there. “Oh yeah, so you guys want this new technology. Okay, let’s look at the plans.” And within maybe two days they would have the money and they can buy the technology and implement it.
In the UK, forget it. They find out: okay, there’s this new technology, we’ve got to get it. Ah, it’s too expensive. We can’t do it. Let’s find a workaround. But they can’t really get the funding. That’s the problem. And so productivity stays low. Why is that? Because the banks are large, and large banks only do large customers, large business. They don’t want to deal with small firms. That’s all it is.
The consolidation of the UK banking system took place before the First World War, and the problem has therefore been known. Every few years we have these studies — not just on productivity, but also on the banking sector. They always come to the same conclusion: wow, it’s such a concentrated banking sector. The big five dominate banking. They don’t lend to small firms, and they give only short-term loans — one-year, two-year loans. And so that’s the problem.
There’s a great report, the Colwyn Report, which says that the problem is the concentrated banking system. The big five dominate. They don’t lend to small firms. That report was published in 1918 — more than a century ago. The problem had been identified. But what has been done about it? Nothing, of course, until this day. Because really the goal is concentration, and they don’t care about the middle class. The fact that most people work for small firms, and if you want a healthy, wealthy economy where people are doing well, you need many small banks.
But in this country there are strong interests in the City of London against this. If you want to set up a new bank for the super-rich and you make your business case that the super-rich need a special bank, oh, you get the banking licence in record time. But try to set up a local community bank — that’s definitely not going to be easy, to put it mildly.
Host: So when you look at the political layer — Germany or wherever — you make the assumption a politician wants to be successful. They want to be respected. They want to be seen as somebody who was good for the country. A lot of our problems are down to the economy. Not everything — there’s the immigration question at the moment — but a lot of things come down to the economy. And you say it’s easy to fix. How can they be unable to fix it? Are they also just incompetent, or are they also useful idiots? We talk about people being captured. Does the tap on the shoulder happen? “No, this is how it really works.”
Trump was meant to be this anti-establishment, drain-the-swamp, no-foreign-wars guy. Something’s happened over the last year. He’s got involved in a foreign war in Iran, which to everybody on the outside looks like a dumb move. To those who look at this stuff: “Oh no, this is a required war because we require this war to be able to keep funding the military-industrial complex,” and so on. Are we basically just being shown: this is how it is now?
Richard Werner: In many ways, yes. Because in the UK, of course, it’s a bit more entrenched even than in the US, just historically.
Look at the formal legal structure of the UK. It’s a very strange one. There’s no constitution. Oh, there is a constitution — it’s just not written down. Well, okay. And it’s not all relevant anymore. But why is it not written down? There’s a good reason. This is why it will never be written down. Because when you then actually look at who has power, you see that there is a very strange entity called the City of London Corporation. Which is a sovereign state that the King is not allowed to enter without permission. Therefore it’s not directly part of his sovereign territory. But the sovereign state has representation in Parliament — unelected. Unelected representation is the Remembrancer, who is allowed to participate in any debate and be there in any proceedings in order to make sure that nothing happens against the interest of the City of London. So it’s a privileged entity that has clear powers that are above ordinary people and the rest of the entire nation.
What happens in the City of London? That’s where the banks have been, and that’s where for most of its history the privately owned Bank of England was established, and the banking powers got established. And of course their voting in the City of London is not democratic either, because it’s not people who vote — it’s companies who vote by the number of employees. But it doesn’t mean the employees get to vote. No, it’s the bosses. That’s how the City of London does its voting, which is not democratic. So actually at the heart of the UK there is a non-democracy.
These are just some examples of institutional features. And then it shouldn’t be surprising that, unfortunately, yes, it’s the wrong incentive structure, and we don’t seem to get results. But also at the same time, of course, media is very important. And that’s where your role comes in. You’re doing a great job with the independent guys.
Host: I’d like my favourite kind of person listening to this show to be just a normal person trying to get by in life, figure it out, who is kind of waking up to the idea that the government isn’t working for them. One thing I keep tweeting regularly at the moment is: stop voting for poor. Stop getting involved in these bitter fights where you keep this machine running that’s making you poor. For a lot of people out there — hardworking people getting up in the morning, going to work, driving a lorry, running their small business, doing everything they can — yet life is getting harder. They can afford less. They get to the end of the month with no money left. How are they meant to understand how this is happening around them? What is actually being done to them?
Richard Werner: Basically, I think they sense that it could be better. And they’re absolutely right. Everyone who thinks, “Hang on, this is not really the best — it could be much better,” is correct. And I can easily demonstrate that we can have in the UK 10% growth. Give me the job at the Bank of England. The Bank of England could engineer 10–12% growth for two decades. But to do that you need to implement policies that some very influential people don’t like.
The most important thing is to establish many small local banks. Because it immediately takes some of their centralised power — the central-planning power — and decentralises it and spreads out the decision-making power.
That’s what Deng Xiaoping was told by the Japanese when he asked them: “Tell me the secret of high growth.” And they said: “What? You’ve only got one bank for a billion people. How about you create 5,000 banks, and each bank has 30 branches, and each branch has 35 loan officers. Then you will have more than 5 million loan officers that each year will receive hundreds of millions of loan applications from small firms — because these are small banks, they need to lend to small firms — and they will lend to small firms. Of course you select the best. That makes sense. There has to be selection. But the decision will be local. And now you’ve totally decentralised.”
So you’ve moved from a centralised system — essentially the Soviet central-planning system that the UK is very close to, really, with five banks and the Bank of England — that’s pretty centralised — and China with one bank. Then they switched from the Soviet system to the highly successful decentralised system, which is what all the high-growth economies have done.
When Britain was successful, it had thousands of banks — cooperatives, savings banks, local banks, credit unions that were proper banks (not what they are now — they’re not allowed to lend properly to small firms). Many types of provincial banks and so on. We’re talking now about the 19th century, when growth was double digits and there were literally thousands of banks.
Host: But hold on — why would they not want small businesses to be successful?
Richard Werner: It’s the power. It’s the power dimension. As we said earlier: first these guys are about the money, but once they have all the money, what do they want next? Human nature being what it is, never satisfied — they want power next. And that’s what it’s about.
If you have this decentralised system, you are giving local people power and you are empowering families and local small businesses, family businesses. And that’s what they don’t like. They want to centralise everything, which is ultimately evil. And human nature being what it is, once you get so powerful — as Lord Acton quite astutely stated, and he wasn’t trying to be dramatic or overstating it — power corrupts. Because power gives people the ability to do stuff and get away with it. And unfortunately it’s just an empirical observation: not many people can handle power. So they will start to abuse the power. And that’s the reality everywhere — not just in developing countries — everywhere in Europe, in the UK, Germany. It’s everywhere. Once you have absolute power, the corruption will be absolute. And the idea will be: you get these temporary dictators, whether you see them or not, and very often you don’t see them because they want to stay in the background.
This is really what it’s about. But if people are informed about this, they can demand more. And we should demand from our politicians — local politicians, national politicians — we should demand high growth and prosperity, because it’s possible. And it’s actually a whole bunch of BS when they tell us: “Oh, austerity, scarcity, belt-tightening.” It’s complete nonsense. We don’t need any of that.
Even the story they told us since the early 1970s — “limits to growth” — even that was BS. Because they mixed up the concepts on purpose. They say: “Oh, well, there’s physical limits to growth, surely.” Hang on — so you’re talking about physics, right? Physical limits, physical finite things in physics. Okay. Well, if you want to talk physics, you will find out there is no growth in physics, because energy can be transformed but you can’t create energy. There’s no growth.
So when we talk about growth, you are always talking about economic growth. Now, when you talk about economic growth, what is economic growth? What is GDP, national income? What is it? It’s a statistical concept that is made up. It had a purpose originally — the guys who were about to set up the Bank of England wanted to know how much they could extract in interest and taxes from this country, and that’s what national-income accounting was supposed to do. A broader use is that it’s a measure of economic strength and prosperity. It has flaws, but it’s a rough-and-ready measure of economic strength and prosperity. That’s what GDP, national income, is. But it’s a statistical fiction. And that’s why the statistical fiction can’t hurt the environment. So growth is not the enemy of the environment. That’s the first point. That’s why we don’t have to limit growth because that will save the planet. That’s nonsense. There’s no link. These are different dimensions. One is a statistical fiction we’ve made up, and the other is the environment — physical reality.
And secondly: what about limits to growth? Well, there aren’t any limits, because growth is driven by productivity. Productivity is driven by technology. Technology is invented by humans. And the ultimate limit is human ingenuity. And nobody’s found a limit to that one.
Host: Well, I think they’re finding ways to limit it.
Richard Werner: Well, of course — artificially they’re suppressing the economic growth that’s delivered. And they’re the central planners. It’s very simple. What drives growth in very concrete terms? Economic growth is simply a direct proportional function of bank credit creation for productive business investment. In other words: bank loans — the quantity of bank loans to productive businesses. And when you lend to small firms, that’s mostly productive. That’s a simple way of doing it.
Therefore, if you set up 5,000 small local banks, as Deng Xiaoping did, then you will get a lot of investment in productive things and you will get implementation of technology on a large scale. But decentralised. You get high growth — 15% growth for decades, four decades as it happened — lifting more people out of poverty than anywhere else before. That can be done in any country. Other countries have demonstrated it. Britain can do this. We can have this high economic growth.
Host: But how do we get from where we are now to that? Because I look at them — Starmer was a disaster. The Conservatives before them were a disaster. You look at Andy Burnham now even today saying national defence will not come at the expense of social security. It appears that Reeves will be raising taxes in the next budget — maybe capital gains or exit taxes. It feels like they’re just tightening and tightening around us. And I look at them and I’m like: are these useful idiots? Are they incompetent? Do they know what can be done, but they get near power and power doesn’t allow them to do it? Do we just need a revolution on the streets? Do we need the public to really understand that it is this machinery that is destroying the prosperity and the future of our children, our country? What do we do?
Richard Werner: First, people need to understand that we can have high growth. We just need many small banks lending to small businesses. When you’ve got a lot of bank credit for productive business investment, you get high growth. If we had 10% growth in this bank credit, we would rev up economic growth — 5, 6, 7%, pushing it towards 10% is possible.
Why is this not happening? Because often, yes, when politicians say, “Hang on, actually it’s a good idea — let’s set up a local bank in this regional area, this local area,” basically it’s a no-brainer, because the costs are very limited. You just need £20 million in capital, and then after three or four years this £20 million will have injected a multiple — you get maybe £400–500 million, and with a bit of growth and expansion of the bank you soon have a billion in loans from this £20 million in capital. And it becomes a flywheel. And of course it’s profitable if you do it well.
There’s never been a banking crisis because people say, “Oh, you set up banks — that’s risky.” Hang on. When banks lend for productive business investment, you get growth, no inflation, and no crisis. It’s when banks lend for consumption that you get consumer-price inflation. And when banks lend for asset purchases — including real estate, financial assets — and nowadays these five big banks mostly lend to private-equity funds and hedge funds because they want to do such big deals and that’s the only thing they found because they’re so big — then you get asset inflation and banking crises. And that’s why we’ve had this boom-bust cycle in the UK the whole time for the last century.
It is very simple. People don’t understand that we can have high growth by having many small banks lending to small firms, pushing out productive business investment. But next: politicians — some politicians — do understand this. And I’ve had quite a few politicians actually support me in the past when I worked on setting up the Hampshire Community Bank. We had a lot of opposition. In the end the biggest shareholder, when we were just ready — everything was ready, we’d gone through the applicant journey with the Bank of England (they moved the goalposts many times, but we managed to get through) and we were about to hand in the application — our main shareholder decided to pull out. Because ultimately at that stage there was small money. They hadn’t even put in their full £5 million they’d pledged, and they pulled out. But of course once the bank would have launched it would have been quite a different story.
People need to understand that it can be done. And then we need to support those politicians who are gaining understanding. There’s one politician who was on my radar quite early on because she criticised the Bank of England when she was just a member of Parliament.
Host: Liz Truss.
Richard Werner: Indeed. And she’s been there three times. And she got it. I thought: oh, here’s a lady who seems to know a bit, because she understands the important role of the central bank, and she understood that, hang on, the central bank is not really accountable for what it’s doing, and we’re not really asking the central bank to do very much, and we need to have higher standards, and we can’t be bullied by the central bank.
Then she became prime minister, which wasn’t really planned — I think Rishi Sunak was supposed to be the prime minister immediately. So then she was there as prime minister, and immediately it looked like the Bank of England staged a coup. And that proved her entire point. Entirely. And she’s been vindicated now.
You also see of course how the media are essentially complicit — not just complicit, actively colluding in this — because they gave her such a bad write-up, calling her names, “oh she’s stupid.” Come on — she’s been at Oxford. She’s a smart lady. In fact, to me she was one of the smartest politicians because she understood this power mechanism. I think she’s the greatest prime minister we basically didn’t have. What was it — 50, 56 days or something? So I consider we didn’t really get to have her as a prime minister, because she saw the problem. She understood the problem of debt. She understood productivity. She understood the Bank of England. She understood it all. She understood incentives. And she wanted to move quick and get things done. And they screwed it up.
What the Bank of England did was very simple. They just sold government bonds. You create a mini-crisis in the bond market. Yields go up. And the media then, very importantly, write these stories. And of course the central banks love to essentially nurture and have their journalists over the years that get invited and get special treatment. The Bank of England doesn’t ever get a critical write-up, even when they jointly caused the 2008 crisis, or the inflation of 2021–22 from central-bank money creation out of control. No negative write-up on the Bank of England at all. So the control over the journalists is quite good, quite subtle, and works very well. And that’s the other problem. That’s where independent journalism comes in.
Host: Yeah, they haven’t got me yet. I haven’t had that tap on the shoulder. But oh man — this is so sad, but actually what an opportunity we have in a country if we can just get everybody to understand that we can have a different way. As you said, we can have growth. We can really have prosperity, abundance. We can literally have abundance. We can reduce the welfare state. We could shore up our defences. We could protect our border. We could do all of this. But we just have to rein in — or get rid of — the central bank.
I asked that question of Liz when she was sat here for the first time. I said: should we just get rid of the Bank of England? She said: “That’s an interesting question.”
Richard Werner: We don’t need central banks. The UK — Scotland in particular — but also the US: these are examples of very strong economies over decades without a central bank. The Federal Reserve is quite a young central bank. And so it’s absolutely possible. Mostly what they do is they suppress growth.
What they talk about and what they show us as their main policy tool is interest rates. And that’s basically a decoy. I’ve analysed this. If you look up my work — “Reconsidering Monetary Policy,” for example, is the name of a paper which is open access — interest rates, short rates, are pretty much influenced by central banks, but they follow economic growth. In the long run they just always follow growth.
As Dame Kate Barker, who used to be on the MPC at the Bank of England, said at a conference on stage: “When I think about my time at the Monetary Policy Committee, it’s really been a bit of a waste of time.” Why? And of course if you look at the data that’s obvious, because rates actually follow growth and they’re positively correlated — which is the opposite of what economic theory tells you, the mainstream propaganda. They say lower rates lead to higher growth, higher rates lead to lower growth. The truth is the opposite: higher growth leads to higher rates; lower growth leads to lower rates. And that’s it.
So interest rates aren’t really the tool — the main tool they use. They use the quantity of credit, and its disaggregation. But they don’t want to talk about it, because they don’t want people to catch up on how important this is and then start setting up small local banks.
Host: Were the Austrians correct?
Richard Werner: The Austrians are correct in their point that they recognise bank credit creation quite explicitly, and that’s great. And also quite a lot of Austrians are very critical of central banks because they’re generally critical of central planning. And so I have the same views on those points. They do have some other points where I diverge. For example, they say we shouldn’t do statistical econometric analysis on data. Why not? Obviously we should look at data and the facts. They were saying it can be easily manipulated. But it doesn’t mean that you shouldn’t do any data analysis — just make it transparent.
There’s some very good approaches, like Professor David Hendry’s approach at Oxford — the Hendry approach — where you can’t manipulate the data. You first run a regression with all the possible explanatory variables, and your enemies’ variables, you put them also in — all sorts, whatever. Put them all in. Call it a big general model. And then you run it. And then you simplify with a very transparent procedure by dropping the most insignificant variable only one, because in statistics if you drop one everything else will start to change. But you drop the one that’s totally insignificant. Then run it again, and then again drop the one that’s most insignificant, and run it again, and keep doing that until you get the significant data. And that is letting the data speak. And that’s how I’ve done it in my work. And it’s bank credit, inevitably, always. And that explains economic growth. It explains all these things — banking crises, inflation. Credit creation explains it. But we’re not supposed to talk about it. Textbook economics doesn’t even acknowledge that banks create money.
But if people want to look it up, there’s the paper: “Can Banks Individually Create Money Out of Nothing?” That’s one. And the other one is “Lost Century in Economics.” These are two papers of mine, also open source, that can be accessed and read.
Host: It’s quite interesting because we are at this time now where people are just, I think, despairing about what is going on in this country and in other countries as well. Canada, Australia, America. Germany is pretty bad. Your one great market — your car market — is collapsing, it feels like, under attack.
Richard Werner: Yeah. The government has essentially killed the golden goose — the goose laying the golden eggs. Shooting down the automobile industry with all the subcontractors and all the small firms. This is a huge supply chain.
Host: Will AfD fix this? What have AfD said about central banks or banking?
Richard Werner: They’ve sensibly said that they want to exit the euro, which would make perfect sense, because that means you’re not in charge of your monetary policy — they have no monetary policy. And of course it was complete nonsense to abolish the European currency, the Deutsche Mark, and introduce a foreign currency called the euro and sell it as the European currency. That’s been a big failure. So that’s sensible if they do it.
Also they said they would like to exit the EU, which will also be sensible. The EU is a dictatorship. It’s modelled on the Soviet Union. They have a parliament — that’s their claim: “Oh, we’re a democracy, there’s a European Parliament.” Nobody votes. Nobody knows. I couldn’t name one European politician right now.
But whether you vote for them or not, these MEPs are highly paid, overpaid, and they have no power. Normally a politician is supposed to be a lawmaker. In the British Parliament in Westminster, yes, they’re lawmakers. They can make laws. But not in the European Parliament. You see, the Soviet Union claimed to be a democracy, and their claim was: we have a parliament. But it was a rubber-stamp parliament where the members of parliament had no power to write laws. Where did the laws come from? From the unelected Politburo — the centre of power. The Communist Party had the power.
Now that’s exactly what they modelled the European Union on, because the members of parliament have no power to propose any laws. All the laws come from the unelected political body called the European Commission. That’s the dictatorship. And so formally it is the Soviet Union revived, sadly. So getting out of that one will also definitely help, because they keep turning out these ridiculous laws which supersede national law at the moment. This is crazy. And that’s just what these commissars at the Commission decide.
I’ve just written a new report on my Substack (rwer.substack.com) on the latest centralisation plans. They’re literally moving towards capital controls.
Host: Is this the Christine Lagarde plan?
Richard Werner: Yes. It’s a combination, of course. The ECB is involved, but it’s also the commissars in Brussels. You have to understand: they want our deposits. Exactly. And they’ve said it. They want our savings. And of course the UK is going to — it almost feels like the UK never left the EU, because all the crazy EU rules somehow the UK also wants to adopt.
One restriction coming into place in January next year is that banks from outside — this also affects British banks — banks from outside the EU will not be able to offer deposit accounts if they don’t have an EU licence, a local licence, and they have to be authorised. So that’s quite shocking, because it’s the first step towards capital controls.
Host: Is this why they’re so scared of Marine Le Pen, the AfD, Rupert Lowe, the guy with the crazy hair in Holland? Are they scared of all the Romanian parties? They’re basically scared of all the right-wing parties because they tend to be more conservative and conservatives tend to have a focus on more sovereign ideas, sovereign rules, but pro-business. It’s much easier to have your left-wing Marxists in power to maintain this, and that’s why they call everybody who disagrees with them a communist. Is this why they’ve been flooding Europe with immigrants — to maintain this?
Richard Werner: Yes. And I would even say we shouldn’t use the concept “right-wing” here. Of course AfD — we call it normal. Exactly. Because if you literally just take all the policies, the proposed policies of the German AfD, which everyone calls right-wing, extreme right-wing, neo-Nazi or whatever — it’s almost a Nazi party, they will use the Nazi word — what they said here when it was announced, when they did well in the region: Saxony-Anhalt. In the British press, the BBC, the propagandists at the BBC said “the far-right party, the first far-right party since the Nazis.” That was the headline. Mother of God. No. So one has to correct that. That is nonsense.
All their policies actually 20–25 years ago were supported in Germany — were the main policies of almost all the parties, including the left SPD, the socialist party. So really they’re just centrist. It’s a centrist party. But what happened 20–25 years ago is the CIA, which is very much in control of Germany since 1945 — they never gave up their occupation powers and they’ve always used them, and they claim legally they’re allowed to do all the things they do in Germany because of occupation status. Germany is still not sovereign, which is a whole other can of worms, but it’s a fundamental problem in Europe that Germany is not actually a sovereign country, and the parties and politicians essentially have to do what the CIA tells them. And the CIA will show them: here’s the law, occupation statutes — you have to do what we tell you. And of course there’s other ways to make them do what they want.
So the CIA gets what it wants from the politicians, and the politicians are not delivering what could be delivered to the country, such as high growth.
The points that the AfD is making are literally what was mainstream — parties even the left parties would consider centrist. So it clearly was not right-wing. SPD had the same views on immigration 20–25 years ago as AfD now. And you can demonstrate this. So what happened? The CIA 20–25 years ago shifted the entire political spectrum in Germany to the extreme Marxist left. The entire spectrum. So CDU/CSU, which is supposed to be right-conservative, is right out there with the Greens, with the lefty parties, and you just don’t notice any difference. And so AfD is just people who have decided: well, we’re not going for this propaganda. A man is a man, and whatever cultural revolution they’ve been trying to implement. We don’t want immigration. We don’t want large amounts. We don’t want to have mosques everywhere. We want people to get married, have children, and have a sovereign conservative life.
It doesn’t mean one has to be against people who have different views. I think that the most centrist people with these views are actually very tolerant of other people — like liberals. Exactly. Very tolerant. It just means that, hang on, you can’t force this on everyone to have these very different views, where most people just want to be normal.
Host: This right-wing / centrist position I think is going to sweep across Europe now. It looks to me — correct me if I’m wrong — but AfD didn’t get enough. They have to do a coalition with one party. And you know why? Because the mail-in vote was surprisingly extremely different only for AfD, and for the other parties they had lots of mail-in ballots. Sounds a bit like what happened with that mayor in Los Angeles.
Richard Werner: Yes. Yes. Well, many places in the US. And it’s very strange. In fact there were incidents they found in recent German elections where these ballots were sent out — ballot forms to care homes and elderly homes — that’s where a lot of funny business is going on. Or they accidentally sent five times as many ballots. One thing there was: basically they were caught. And so on. So it’s very…
Host: When’s the general election? When’s the next national general?
Richard Werner: I think it’s next year, isn’t it? Or is it 2028?
Host: AfD have a good chance of winning it, right? How will they try to stop them?
Richard Werner: You do see that the AfD is quite popular in the former so-called East Germany — it’s really central, middle Germany. And the AfD, you know, the former GDR, German Democratic Republic under communism — that’s where they’re doing really well. Whereas in Western Germany, essentially, we see that this post-1945 American programme of re-education, which is an official programme still running under the occupation statutes, has been very successful in brainwashing people. And it’s a sort of cultural Marxism programme which has been stepped up a lot in the last 25 years. And there you see the difference. Whereas in East Germany they didn’t have it until so-called reunification in 1990 — they didn’t have it — and therefore you don’t have that history, that prehistory of brainwashing people. And you see the voting results quite clearly.
Host: Oh man. Well, I think we’re going to see a wave of it. We need to get organised better in this country because our right-wing parties are splitting all over the place. But like I say, they’ve tried to stop Le Pen. They tried to throw her in jail, I think. Yeah, there was a criminal case. But Spain I think is going to have a right-wing revolution with everything that’s happened with Ceuta.
Sadly we’ve hit our one hour. People are listening. We’ve tried to make this happen three times and power cuts and air-traffic controls got in the way, and I feel like we’ve barely started. But this is a good start. We will have to do this again, Richard, and carry this on. I am going to spend some time understanding more about central banks and local banks and try and make that a lot more about what I talk about so people can understand what we need to fix our country.
Richard Werner: Excellent. It was too short, but I thank you and we will definitely do this again.
Host: Thanks very much. It will be a pleasure. And check out Richard’s books and Substack. We’ll put it in the show notes. Love you all. See you soon.
Richard Werner: Thank you.
Prospector49
·Financial News & Discussion
·8 hours ago
