Bank for International Settlements (BIS) takes out the Japanese economy in 1990

Nikkei plungesJapan had the economic carpet pulled out from underneath it after the Bank of Japan officials were called to Basel, Switzerland under Basel I and were told that if they wanted access to American and world markets for there products, they will need to place limits on their capital. Basel I (Basil I was considered one of the greatest emperors during the Macedonian dynasty, which he founded, and ruled over what is regarded as the most glorious and prosperous era of the Byzantine Empire) was the round of deliberations by central bankers from around the world, and in 1988, the Basel Committee on Banking Supervision (BCBS) in Basel, Switzerland, published a set of minimum capital requirements for banks. At that time, Japanese banks were some of the largest in the world. Two years later, the Nikkei suddenly drops and the Japanese economy has never recovered since the Bank of International Settlements put limits on Japan’s bank capital reserves.

Six of the top banks in the world at the time up until 1990, were Japanese banks and the requirement on their capital was very low. Capital takes the form basically of reserves and determines how much banks can lend, so if your bank’s capital requirements are low your bank can lend out more. If your bank can lend out more you receive more income and when you receive more interest your bank receives more profit. That’s a fairly simple explanation but that’s really how it was working with Japanese banks up until 1990. Central banks including Japan’s central bank create and decide the monetary policy of countries and not governments. What the Bank of International Settlements has been doing over the years has been to gradually move to implement a global currency and the way to do that is to get control of manufacturing in different countries.

At the time head of the Federal Reserve Alan Greenspan who called Japan to Basel, Switzerland

At the time head of the Federal Reserve, Alan Greenspan who called Japan to Basel, Switzerland

Then Alan Greenspan along with the head of the Bank of England, Edward Alan John George, Baron George, got together and decided wait a minute Japan, and called the Japanese to a meeting in Basel, Switzerland to the Bank for International Settlements. The bankers at BIS then told the Japanese that if they wanted to continue to have access to western markets, they are going to have to set their capital requirements higher to about 8 percent. At the time, Japanese banks were operating with a capital rate of about 3 percent and a five percent rate hike was huge.

Head of the Bank of England Edward George

Head of the Bank of England Edward George

The Japanese didn’t really have much of a choice considering capital depends a lot on how stock goes in the market. It follows that if your stock goes up your capital goes up. At the time, the Nikkei was soaring as the graph above indicates, so the Japanese said alright, we’ll make an agreement and that agreement is referred to as Basel I.  That agreement determined capital requirements on Japanese banks, and shortly thereafter in 1990, the Japanese stock market crashed with Japanese banks and the Japanese economy going into a tailspin which Japan has never recovered.

Basel I forced the Japanese to lend capital at 8 percent but the only exception was lending on real estate. If Japanese banks wanted to lend on real estate then the lending requirements were only half, in other words, Japanese bank reserves only needed to be 4 percent at the time. This in turn led the rush to real estate lending that went on through the late eighties, the nineties and into the early 2000s. Every thing was getting financed and Japan saw this massive real estate boom because Basel I gave banks an incentive to make real estate loans.  Of course, there is much more to this financial back ground including the Bank of International Settlement’s control over Japan’s manufacturing. And in 2016, the control BIS has over central banks including Japan’s central bank is mind boggling. One example of just how mind boggling this is turning out to be, in 2014 the Bank of England head Mark Carney, announced at the G20 meeting that there will be no more taxpayer bank bailouts which is one more step towards a world central bank which would be the Bank for International Settlements. What people don’t realize is that Mark Carney also sits on a semi-secret board inside the BIS called the Financial Stability Board.