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How Central Banks have Seized Power over our Societies

Best Documentary・46 minutes read

General MacArthur banned plays and cartoons criticizing the occupation in post-WWII Japan. The Japanese economic bubble in the late 1980s led to a devastating recession due to speculative investments and unsustainable borrowing practices.

Insights

  • **Japanese Bubble Economy:** Japan experienced a significant economic boom in the late 1980s driven by speculative investments, with traditional manufacturers delving into finance divisions for property and share speculation, ultimately leading to a burst in 1990 and subsequent economic turmoil.
  • **Central Banks and Exchange Rates:** Central banks, including the Bank of Japan, maintained fixed exchange rates with the U.S. dollar to reassure borrowers, but this led to shrinking imports, current account balances, and struggles to increase lending, culminating in economic crises in various countries due to speculative selling and IMF demands for policy changes.

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Recent questions

  • What was the impact of General Douglas MacArthur's arrival in Japan in 1945?

    General Douglas MacArthur's arrival at Atsugi Naval Aerodrome near Yokohama on August 30, 1945 marked the beginning of the post-war era in Japan. His presence signified the start of the Allied occupation and the subsequent rebuilding of Japan after World War II. MacArthur played a crucial role in overseeing the transformation of Japan's political, social, and economic landscape, implementing various reforms and policies that shaped the country's future trajectory.

  • How did the Japanese government respond to post-war censorship?

    In the aftermath of World War II, the Japanese government imposed strict censorship measures on various forms of media, including Kabuki plays and satirical cartoons. Plays featuring loyal samurai were either banned or heavily censored, while any mention of occupation censorship or satirical depictions of General MacArthur were strictly forbidden. These censorship efforts aimed to control the narrative and prevent any dissent or criticism of the occupying forces.

  • What were the consequences of the Japanese economic bubble in the late 1980s?

    The Japanese economic bubble of the late 1980s had far-reaching consequences on the country's economy and society. The rapid increase in real estate and stock market values fueled by speculative investments led to a period of economic prosperity but also created unsustainable growth. When the bubble burst in 1990, Japan faced economic turmoil, with millions losing their jobs, a rise in suicides, and numerous bankruptcies. The aftermath of the bubble highlighted the risks of speculative excess and the importance of sustainable economic growth.

  • How did the Bank of Japan's policies contribute to the economic crisis in the 1990s?

    The Bank of Japan's policies played a significant role in contributing to the economic crisis that unfolded in the 1990s. Despite calls for monetary easing and quantitative easing to stimulate the economy and combat deflation, the Bank of Japan resisted creating more money. This reluctance to inject liquidity into the economy exacerbated the recession, leading to high debt levels and prolonged economic stagnation. The Bank's failure to implement effective policies highlighted the challenges of managing a complex economic crisis.

  • What factors led to the economic restructuring of Japan towards a U.S. style market economy?

    The economic restructuring of Japan towards a U.S. style market economy was influenced by various factors, including pressure from international organizations like the IMF and the World Trade Organization. Calls for deregulation, increased competition, and structural changes aimed at overcoming entrenched interests in sectors like insurance pushed Japan towards adopting market-oriented policies. The shift towards a more liberalized economy led to unemployment, wealth disparities, and a reevaluation of Japan's economic model in the global context.

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Summary

00:00

Post-War Japan: MacArthur, Tojo, and Economy

  • General Douglas MacArthur arrived at Atsugi Naval Aerodrome near Yokohama on August 30, 1945.
  • Kabuki plays featuring loyal samurai were banned or heavily censored post-war.
  • Satirical cartoons of MacArthur and mention of occupation censorship were strictly forbidden.
  • Yamashita was sentenced to death by hanging after being found guilty by a commission.
  • General Tojo remarked during his trial about the Emperor's will, later stating the Emperor always wanted peace.
  • Eikichi Araki was appointed the first postwar governor of the Bank of Japan but resigned due to war crime indictments.
  • The Liberal Democratic Party in Japan was built into a powerful political machine by Kishi Nobusuke.
  • Japanese corporations became dominant in international markets, leading to formal congressional hearings in America.
  • The Bank of Japan's window guidance system controlled credit allocation, dictating loans and sectors for banks.
  • The credit boom in Japan during the late 1980s led to a significant increase in real estate and stock market values.

26:13

Japanese Bubble Economy: Rise and Fall

  • In the bubble era, politicians, the Ministry of Finance, and companies enjoyed a surge in tax revenues due to rising asset and stock prices.
  • Traditional manufacturers ventured into speculation, expanding finance divisions to engage in Zaitech, using borrowed money for property and share speculation.
  • Leading manufacturers like Nissan made more profit from speculative investments than manufacturing cars.
  • Japan's economic success in the 1980s was attributed to high productivity, not management techniques.
  • The Bank of Japan's informal guidance led banks to increase lending, even without loan demand, fueling the bubble.
  • The Japanese bubble was sustained by the rapid creation of new money by the banking system.
  • Land prices soared due to exaggerated assessments by banks, leading to a financial bubble.
  • Japan's capital outflows surged in the 1980s, with high-profile purchases like the Rockefeller Center and Columbia Pictures.
  • The burst of the bubble in 1990 led to economic turmoil, with millions losing jobs, suicides rising, and numerous bankruptcies.
  • The Bank of Japan's interventions, sterilizing forex interventions, and government spending strategies failed to revive the economy, leading to high debt levels and a recession.

49:53

Bank of Japan's Role in Japan's Economy

  • The Bank of Japan created parks to improve quality of life in Japan, even if sold later at a fraction of the cost, it would still profit as creating money costs nothing.
  • Quantitative easing is an option to inject money into the economy, but the Bank of Japan refused to implement policies to resolve crises.
  • The Bank of Japan was criticized for not printing enough money during a recession in the '90s.
  • Finance Minister Masajuro Shiokawa asked the Bank of Japan to help stop deflation, but the Bank consistently defied calls to create more money.
  • The Bank of Japan argued that Japan's economic structure was to blame for the recession and resisted significant monetary easing.
  • Postwar Japanese leaders kept the origins of Japan's economic success secret, leading to a lack of understanding among bureaucrats and politicians.
  • Japanese economists were influenced by U.S. neoclassical economics, leading to regurgitation of U.S. economic arguments.
  • Primary sector deregulation was needed to overcome entrenched interests in large insurance companies, with a deadline set before trade sanctions.
  • The Bank of Japan's power grew as the Ministry of Finance lost credibility, leading to calls for independence.
  • Structural changes were implemented in Japan's economy, shifting towards a U.S. style market economy, causing unemployment and wealth disparities.

01:10:27

"Central banks' role in global economic crises"

  • IMF, World Trade Organization, and U.S. Treasury pushed countries to allow domestic firms to borrow from abroad for economic growth.
  • Central banks made borrowing in U.S. dollars more attractive than in domestic currencies.
  • Central banks maintained fixed exchange rates with the U.S. dollar to reassure borrowers.
  • Central banks resisted exchange rate adjustments to protect the exchange rate.
  • Central banks struggled to increase lending due to firms borrowing from abroad.
  • Central banks' pegging of currencies to the U.S. dollar led to shrinking imports and maintained current account balances.
  • Speculators selling Thai baht, Korean won, and Indonesian rupee led to central banks depleting foreign exchange reserves.
  • IMF demanded policy changes in Thailand, Indonesia, and South Korea, leading to economic crises.
  • IMF's demands included curbs on credit creation, legal changes, and interest rate hikes.
  • ECB's oversight led to credit expansions, property bubbles, and economic crises in Ireland, Greece, Portugal, and Spain.
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