Remaking the economy

In the New Economy the incentive for savers and investors to buy real assets would be increased. Synthetic financial assets would be less able to poison the financial system.

Natural-money would make sustainable energy sources more competitive. Wind and solar generators require three or more times the investment per continuous unit of output than burning coal. Renewable energy could become cheaper than burning coal with natural-money in many locations, as shown in my paper on Money, Markets and Climate Change.

Natural-money could be used to establish a global unit of account by making it redeemable into units of renewable electrical power. Its value would be determined by the endowment of renewable energy in each region. As the price of non-renewable energy increased due to scarcity, carbon taxing and/or trading, the purchasing power of natural-money would increase and counter inflation.

As shown above, natural-money can be both self-financing and self-liquidating. This would allow the government to gift natural-money to businesses that cannot obtain loans from banks. The gift could be tied, for example, to employee tenure, remuneration and their benefits so as to reduce unemployment and welfare payments.

Natural-money would allow governments to stimulate their economies without spending taxpayer’s money, going into deficit or debasing the currency system. Instead, governments would establish a basis for remaking both the real economy and the financial system.