“Richard Werner Exposes the Evils of the Fed & the Link Between Banking, War, and the CIA,” By James Reed

In a riveting episode of Tucker Carlson's podcast, economist Richard Werner sat down to unpack the mysteries of modern banking, economic puzzles, and the shadowy forces shaping global economies. Broadcast in October 2025, the conversation spanned Werner's career, his bestselling book Princes of the Yen, and his groundbreaking research on Japan's economic woes in the 1990s. But at the heart of it all was a bombshell revelation that challenges everything we think we know about money: banks create it out of nothing. Werner backs it with empirical evidence, historical context, and real-world examples, which is god for "normies." As someone who's spent decades dissecting financial systems, Werner's insights are a wake-up call for the mainstream economic profession (not of course Douglas social credit, which has said this and much more), exposing how this "magic" of money creation drives booms, busts, and inequality.

The Setup: From Japan to Global Puzzles

Werner, a German economist fluent in Japanese, began his story in the 1990s. Fresh out of Oxford, he dove into Japan's economic enigmas as a consultant to the Bank of Japan. The country was baffling experts: massive capital outflows defying interest rate theories, land prices so absurd that Tokyo's Imperial Palace grounds were valued equal to all of California's real estate, and a stock market bubble that burst into a decades-long recession. Werner's quest to solve these led to his 2001 book Princes of the Yen (originally published only in Japanese), which rocketed to bestseller status, outselling Harry Potter.

Tucker Carlson pressed Werner on the "puzzles," and Werner explained how mainstream economics, obsessed with interest rates and equilibrium models, failed spectacularly. No model could explain Japan's capital flows or land bubble because they ignored the real driver: banks

The Core Revelation: Banks Create Money Out of Nothing

The interview's standout moment, and the one that demands emphasis, came when Werner demolished the myth of banks as mere intermediaries. "Banks are not financial intermediaries," he declared. "They have a unique power: the power to create money out of nothing." This isn't hyperbole; it's the "credit creation theory of banking," which Werner empirically tested and proved in a landmark 2014 paper ("Can Banks Individually Create Money Out of Nothing?"). Of course C .H Douglas (1879-1952), said this when Werner was just a twinkle in his dad's eye!

Werner outlined three competing theories of banking:

1.Financial Intermediation Theory (dominant in textbooks): Banks gather deposits from savers and lend them out, taking a cut. No new money is created; it's just redistributed.

2.Fractional Reserve Theory (older, still taught): Banks lend out most deposits but keep a fraction in reserves. In aggregate, this creates money via a "multiplier effect."

3.Credit Creation Theory (dismissed as "crank" by Keynes and others): Banks don't need prior deposits or reserves. When you take a loan, they simply credit your account with new money that didn't exist before. It's created ex nihilo, out of nothing.

To test this, Werner conducted the first empirical experiment: He borrowed money from a cooperative bank and monitored their internal accounting in real-time. The result? No funds were transferred from elsewhere. The bank extended its balance sheet on both sides, adding the loan as an asset and the deposit as a liability. Presto: new money. This rejected the first two theories and confirmed the third. As Werner put it, "The money that you're given as the borrower didn't previously exist. It is net new purchasing power added to the money supply."

Carlson, visibly stunned, asked the obvious: "Any bank? Not just central banks?" Werner affirmed: Yes, from the Bank of Omaha to global giants. This power stems from a legal loophole, the "client money rule" exemption. Non-banks must segregate client funds off their books, but banks can claim deposits as their own liabilities, allowing them to "fiddle the records" via double-entry accounting. Legally, a deposit isn't yours; it's a loan to the bank, and your "loan" from them is the bank purchasing your IOU (promissory note).

The implications are staggering. Public surveys (like one Werner conducted in Frankfurt) show 84% believe governments or central banks create most money. Wrong, it's commercial banks, accounting for 97% of the supply. This explains why macroeconomics has "made no progress in 200 years," per a 2019 study: Models exclude banks entirely, assuming they're irrelevant pass-throughs.

Historical Cover-Ups and Famous Economists' Reversals

Werner didn't stop at theory; he exposed how this truth has been suppressed. John Maynard Keynes discovered credit creation in 1924 but progressively obscured it in later works (Treatise on Money, General Theory), aligning with the intermediation myth as his wealth grew, he even became a director (and likely shareholder) of the privately owned Bank of England. Similarly, Ben Bernanke started exploring credit's role in the Great Depression but redefined "credit creation" as mere intermediation in a 1993 Fed paper, launching his rise to Fed Chair. Alan Greenspan knew it too, evidenced by a 1967 essay criticising the Fed's role in the 1920s bubble, but never uttered "credit creation" publicly during his 18-year tenure.

Werner tied this to history: Banks evolved from goldsmiths issuing receipts for deposits they loaned out (fractional reserves), then faking loans by crediting accounts without moving gold, pure fraud, enabled by secrecy and interest bans. Central banks, like the Bank of England (1694) and Fed (1913), were born for warfare, privately owned to monetise government debt. Shockingly, during WWI, brothers Max and Paul Warburg influenced the Reichsbank and Fed respectively, while their nations warred, illustrating banking's supra-national power.

Economic Booms, Busts, and the Path to Prosperity

With money creation demystified, Werner explained its uses:

Productive Credit: Lending for business investment (new goods/services) drives sustainable growth without inflation. Examples: Post-WWII Japan, Germany, China (post-1978, when Deng Xiaoping created thousands of small banks after learning from Japan).

Consumptive Credit: Fuels inflation (e.g., 2021-22 spike from pandemic loans).

Speculative Credit: For asset purchases (real estate, stocks) creates bubbles, inequality, and crises (e.g., Japan's 1980s bubble, U.S. 2008 crash). Werner warned 85% of U.K. credit goes here, eroding the middle class.

His "Quantitative Easing" (QE) proposal, coined in 1995 for Japan, involves central banks buying bad assets to clean banks without taxpayer bailouts. Bernanke adopted it in 2008; others distorted it. Werner predicts U.S. growth decline unless we decentralise banking: More small, local banks to fund SMEs (99% of firms, 70% of jobs).

Warnings for the Future: CBDCs and Centralisation

Looking ahead, Werner foresees peril in Central Bank Digital Currencies (CBDCs). Marketed as "digital cash," they're programmable control tools: Central banks could dictate spending (e.g., carbon limits, geo-fencing). This centralises power, killing small banks and enabling surveillance. Oppose it, he urges, favour state banks to preserve decentralisation. And cash

Werner has broken the silence that the economic elites, especially academic economists hold like a dark oath. This is a good thing being the first baby steps for the public learning about the present "black magic" of modern banking. But some distance yet to go!

https://singjupost.com/richard-werners-interview-on-the-tucker-carlson-show-transcript/