The Goal of Fiscal, Structural and Monetary Policy

  • Richard A. Werner


We have confirmed that the cause of Japan’s recession has been the sharp reduction in credit creation that began in 1992 and was triggered by the bad debts in the banking system. We have also found that this was due to excessive loan growth quotas imposed on the banks by the Bank of Japan during the 1980s. Finally, we found that the problem of lack of credit during the 1990s could easily have been solved through monetary policy. Bad debts could have been taken off the banks’ balance sheets without costs by the central bank. Even without bank lending, the central bank could have created a recovery a decade ago, by significantly increasing its own credit creation. In other words, Japan’s recession of the 1990s has been the result of the Bank of Japan’s policies.2


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  1. 1.
    Nichigin sösai, kuni ya chihO no zeikin no tsukaikata ‘hontöni heta’, Nikkei Net, 18 September 2004, obtained at: 1800E18092004.htmlGoogle Scholar

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© Richard A. Werner 2005

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  • Richard A. Werner

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