A new monetary system is required to solve the economic crisis

Entrepreneur and economic theorist Roy Sebag’s new book The Natural Order of Money challenges the reader to re-think what they have been taught about what the economy is and how it operates.

Here, Sebag explains how the current economic crisis is intrinsically rooted in a flawed monetary system.

According to an article published last year on the UK Parliament website, politics is becoming more polarised worldwide.

It appears that citizens are increasingly aligning themselves with specific social issues and voting accordingly.

In other words, it is quite rare to find an issue which transcends the political or socio-economic divide. Brexit, Covid-19, and immigration are but a few examples of issues that seem to polarise our society with vehement positions and disagreements.

But there is one issue where agreement is uniform: the health of our economy.

In 1992, James Carville, a strategist for the Clinton campaign, coined the phrase, “It’s the economy, stupid”. This idiom expresses the fact that most members of society can clearly sense when an economy is doing poorly.

Across the G7 economies we have seen record inflation and a substantial rise in the cost of living. Energy markets have become disorderly and volatile. Asset markets, now faced with rising interest rates, are collapsing in value with both equities and fixed income assets suffering one of their worst years in decades.

Housing prices now seem to be following, with mortgage lender Halifax recently reported that house prices fell 2.3 percent in November, which was the largest month-on-month in 14 years.

Beyond these metrics, there is a general sense of pessimism about economic conditions which has permeated throughout the greater society.

I believe the most important question on the minds of people these days is this one: What is wrong with our economy?

In my new book, I have sought to answer that question. The book’s title, The Natural Order of Money, provides a hint.

Collectively, our economic systems have lost their tether to the natural order. Our ideas about prosperity have become ephemeral and do not account for the tangible products of human cooperation.

By consequence, our leaders enact policies that target an idea of prosperity which, itself, does not translate into anything tangible such as food, energy, and basic materials. In this economy, we have a surplus of ideas, technologies, and services but a shortage of basic goods.

If we are to anchor our economic systems again and make tangible prosperity our guiding star, we must first recognise the importance of the ‘real economy’.

This is the segment of our economy that collectively produces the fruits of the earth. The foods, fuels, and basic elements that make all cooperation possible in the first place.

But this requires a society to acknowledge the nobility of toil exhibited in these activities by farmers, drillers, and miners. Put in another way, these activities and their societal contributions must be properly measured and rewarded.

In my book, I argue that all these questions and the potential solutions hinge on the role of money itself within an economic system.

We must remember what money is and how it promotes sustainable economic cooperation.

Once we make sense of money and regain our understanding of it, we are able to correctly diagnose the ailments within our current monetary systems, reason about the negative externalities associated with these systems, and identify how these issues might be resolved once and for all.

Ultimately, my own enquiry in the book leads towards the recognition that money itself must be ‘natural’.

A natural money provides the anchoring to the natural world which, in turn, sufficiently measures and rewards the real economy. It measures and rewards the food, fuels, and basic materials with something that is like food, fuels, and basic materials.

This allows the real economy to make reasonable plans about the future, to invest real capital in productive enterprises, and to obtain a just reward for their products.

Natural money has another benefit. It arrests inflation because it is not subject to the fluctuations of central bank-issued fiat currencies, which are the predominant forms of money employed by the G7 economies today.

Natural money has been used as a form of currency for thousands of years. Indeed, the words ‘pound’ or ‘sterling’ refer to a weight of metal, either silver or gold. This long history and widespread acceptance reflect an inherent level of trust and objective reliability that fiat money does not have.

Natural money is not subject to the same political pressures and manipulations as fiat money. Governments can and do manipulate the supply of fiat money in order to achieve their own political goals, but they cannot do the same with natural money.

This does not, however, imply that governments may lose their power. On the contrary, the role of government and the state is fortified by employing a money with integrity, transparency, and accountability.

Our economy is sick and requires a cure. Natural money is that cure.  If our political leaders appreciate this fact, they will work towards fixing our monetary systems and, in turn, promote tangible economic prosperity.

The Natural Order of Money by Roy Sebag (Goldmoney Publishing) is available on Amazon and in all good book shops, priced £11.99 in hardcover. For more information, visit www.naturalorderofmoney.com. You can learn more about Roy Sebag’s natural money theory in an exclusive interview here

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A new monetary system is required to solve the economic crisis