From a software engineering perspective, your first founder is completely correct. The second you have something that runs you want to show it to users, because they’re part of your feedback loop. You want to see how someone who knows nothing about your system will interact with it, whether they’ll be able to use the interface, what new bugs they’ll turn up with their fiddling, etc.
I wonder if perhaps the market research use of an MVP and the software engineering use have been confused, because they’re both “the first time you show the product to users”.
So why didn’t the Bank of Japan print more money? If they didn’t have an incentive one way or another I would expect them to cave to the political pressure, so what was the counter-incentive? Did they genuinely disagree and think that printing money was a bad idea? Were they reluctant to change policies because then they would look stupid?
Also I propose the “I can’t do anything because doing something would be arrogant” attitude be termed modesty-paralysis.