Episode notes
Prof. Richard Werner, one of the world's most famous economists, is best known for writing "Princes of the Yen" and penning the term "quantitative easing" in the 1990s while working at the Bank of Japan.
Today, he is a big advocate for small local banks and a believer in the power of Bitcoin. In this episode, he talks about recent events in economics, ranging from the Big Beautiful Bill in the US and all the way to CBDCs and Bitcoin's viability to bring more economic freedom to the world.
––––––––––––––––––––––
Time stamps:
00:00 - Introducing Professor Richard Werner, author of Princes of the Yen and originator of quantitative easing
01:27 - Sponsorships: Sideshift.ai, Citrea, LayerTwo Labs, Bitcoin.com News, NoOnes.com, and Edge Wallet.
02:07 - Big Beautiful Bill & Fiscal Policy: Discussion on the U.S. "Big Beautiful Bill" under Trump, increasing government spending despite promises to cut debt. Werner clarifies fiscal policy isn't direct money printing, using Japan’s experience as an example where massive spending didn’t cause inflation or growth due to lack of monetization.
05:06 - Monetization Concerns: Concerns about monetizing fiscal policy in the U.S., with Trump’s team encouraging banks to buy treasuries, potentially leading to inflation (8:39). The Federal Reserve’s role in possibly counteracting this is uncertain (9:46).
11:42 - Interest Rates & Quantitative Policy: Werner critiques the focus on interest rates, arguing quantitative policy (credit creation) is the real driver. Interest rates follow growth, not vice versa.
17:52 - Tariffs & Trade Policy: Trump’s return to tariffs (e.g., 30% on EU) is discussed. Werner supports tariffs for economic development, citing historical success and criticizing Ricardo’s free trade theory for ignoring terms of trade (19:24). Smart tariffs should encourage high-value exports and raw material imports (36:05).
44:07 - Austrian Economics Critique: Werner criticizes guru-driven economics, including Austrian school, for dismissing data. He emphasizes empirical, fact-based analysis over ideological axioms (45:58).
49:51 - Argentina & Mainstream Economics: Werner discusses Argentina’s free-market shift under Milei, critiquing mainstream economists like Krugman for often being wrong. Balanced budgets are preferred over debt-heavy policies (51:03).
1:08:58 - Central Bank Digital Currencies (CBDCs): Werner sees no upside to CBDCs, calling them a tool for centralized control. They enable tracking and restricting spending, unlike existing digital currencies (1:13:25). China’s cautious CBDC approach is noted, but Western central banks are distrusted (1:15:22).
1:16:51 - Stopping CBDCs: Strategies to oppose CBDCs include increasing cash use, adopting decentralized cryptocurrencies like Bitcoin, and public demonstrations against central banks (1:18:38).
1:20:40 - Stablecoins: Werner views stablecoins like Tether as a potential backdoor for central banks (Plan B) to achieve CBDC-like control, with a stealthier Plan C involving corporate digital reporting (1:23:04).
1:30:22 - EU’s Dictatorial Structure: Werner criticizes the EU’s undemocratic structure, comparing it to the Soviet Union. The European Commission’s power and corruption (e.g., vaccine deals) are highlighted (1:31:22).
1:40:38 - Bitcoin’s Role: Werner doubts a purely deflationary currency like Bitcoin can sustain an economy without credit creation. He suggests small banks using Bitcoin for credit to enable growth (1:41:40). Bitcoin’s shift to a store of value increases risks of a “death switch” (1:47:45).
1:44:42 - Bitcoin Price Prediction: Werner predicts Bitcoin reaching ~$995,000, driven by momentum and institutional adoption, but cautions about risks like an EMP or coded vulnerabilities (1:45:24).
1:52:22 - Bitcoin as Currency: Using Bitcoin for transactions rather than just a store of value could reduce risks and enhance longevity. Werner plans to integrate crypto in his Swiss bank project (1:53:40).
1:55:04 - Closing & Promotions: Werner promotes his Swiss Rhyntal bank project, Substack (rwerner.substack.com), and YouTube channel (Werner Economics).
Today, he is a big advocate for small local banks and a believer in the power of Bitcoin. In this episode, he talks about recent events in economics, ranging from the Big Beautiful Bill in the US and all the way to CBDCs and Bitcoin's viability to bring more economic freedom to the world.
––––––––––––––––––––––
Time stamps:
00:00 - Introducing Professor Richard Werner, author of Princes of the Yen and originator of quantitative easing
01:27 - Sponsorships: Sideshift.ai, Citrea, LayerTwo Labs, Bitcoin.com News, NoOnes.com, and Edge Wallet.
02:07 - Big Beautiful Bill & Fiscal Policy: Discussion on the U.S. "Big Beautiful Bill" under Trump, increasing government spending despite promises to cut debt. Werner clarifies fiscal policy isn't direct money printing, using Japan’s experience as an example where massive spending didn’t cause inflation or growth due to lack of monetization.
05:06 - Monetization Concerns: Concerns about monetizing fiscal policy in the U.S., with Trump’s team encouraging banks to buy treasuries, potentially leading to inflation (8:39). The Federal Reserve’s role in possibly counteracting this is uncertain (9:46).
11:42 - Interest Rates & Quantitative Policy: Werner critiques the focus on interest rates, arguing quantitative policy (credit creation) is the real driver. Interest rates follow growth, not vice versa.
17:52 - Tariffs & Trade Policy: Trump’s return to tariffs (e.g., 30% on EU) is discussed. Werner supports tariffs for economic development, citing historical success and criticizing Ricardo’s free trade theory for ignoring terms of trade (19:24). Smart tariffs should encourage high-value exports and raw material imports (36:05).
44:07 - Austrian Economics Critique: Werner criticizes guru-driven economics, including Austrian school, for dismissing data. He emphasizes empirical, fact-based analysis over ideological axioms (45:58).
49:51 - Argentina & Mainstream Economics: Werner discusses Argentina’s free-market shift under Milei, critiquing mainstream economists like Krugman for often being wrong. Balanced budgets are preferred over debt-heavy policies (51:03).
1:08:58 - Central Bank Digital Currencies (CBDCs): Werner sees no upside to CBDCs, calling them a tool for centralized control. They enable tracking and restricting spending, unlike existing digital currencies (1:13:25). China’s cautious CBDC approach is noted, but Western central banks are distrusted (1:15:22).
1:16:51 - Stopping CBDCs: Strategies to oppose CBDCs include increasing cash use, adopting decentralized cryptocurrencies like Bitcoin, and public demonstrations against central banks (1:18:38).
1:20:40 - Stablecoins: Werner views stablecoins like Tether as a potential backdoor for central banks (Plan B) to achieve CBDC-like control, with a stealthier Plan C involving corporate digital reporting (1:23:04).
1:30:22 - EU’s Dictatorial Structure: Werner criticizes the EU’s undemocratic structure, comparing it to the Soviet Union. The European Commission’s power and corruption (e.g., vaccine deals) are highlighted (1:31:22).
1:40:38 - Bitcoin’s Role: Werner doubts a purely deflationary currency like Bitcoin can sustain an economy without credit creation. He suggests small banks using Bitcoin for credit to enable growth (1:41:40). Bitcoin’s shift to a store of value increases risks of a “death switch” (1:47:45).
1:44:42 - Bitcoin Price Prediction: Werner predicts Bitcoin reaching ~$995,000, driven by momentum and institutional adoption, but cautions about risks like an EMP or coded vulnerabilities (1:45:24).
1:52:22 - Bitcoin as Currency: Using Bitcoin for transactions rather than just a store of value could reduce risks and enhance longevity. Werner plans to integrate crypto in his Swiss bank project (1:53:40).
1:55:04 - Closing & Promotions: Werner promotes his Swiss Rhyntal bank project, Substack (rwerner.substack.com), and YouTube channel (Werner Economics).
