A New Paradigm for Robust Sustainable Progress with Economic Feedback Control

1. A New Paradigm for Robust Sustainable Progress with Economic Feedback Control The Swedish Sustainable Economy Foundation

2. The Economyan Inherently Unstable System • The natural destabilizing forces in the economy are constantly forcing the system away from a stable equilibrium • These destabilizing forces are the main underlying cause of business cycles, housing bubbles, financial crises and many other harmful instabilities • The current economic paradigm is painfully impotent to fulfill its important task to secure a stable and reliable economic and financial system • As a result of the shortcomings of the current economic paradigm millions of people suffer unjustly and bitter seeds are sown − potentially one day resulting in civil unrest The Swedish Sustainable Economy Foundation 2

3. What are the basic requirements for a fundamentally stable and sustainable economy? • An economic incentive structure harmonizing individual and private interest with common long-term interest • A basic income, sufficient for the fundamental needs of the individual − food, shelter, security, health care and education • An economic feedback control ensuring a sufficiently high, stable and sustainable demand in the economy − rewarding investment, employment and production • An economic feedback control stabilizing the value of real assets in the economy and securing the underlying securities in the financial system • An economic feedback control discouraging the generation of external effects causing long-term damage and a net loss to society The Swedish Sustainable Economy Foundation 3

4. Necessary societal and economic components • A financial system fully secured by real assets in the economy • A feedback control to stabilize the value of the stock of real assets in the economy • A fair and balanced rate of interest reflecting the rate of growth of the average labor productivity in the economy • An average real wage reflecting the average labor productivity in the economy • A free floating currency fundamentally balanced by a continual clearing of the trade deficit − secured through a continual acquisition of a ‘trade deficit currency reserve’ • A feedback control system with sufficiently high fees on negative externalities − to economize the use of limited natural resources and to reduce the emissions of pollutants • A fee reimbursement mechanism securing a regular repayment of an equal share of the income from these fees to every individual The Swedish Sustainable Economy Foundation 4

5. Some fruits of a sound economic paradigm • A stable and secure financial system • A stable value of the stock of real assets and real estate • A stable, fair and balanced rate of interest • A steady growth of the average real wage • A steady reduction of emissions of pollutants • A steady and regular repayment of the income from control fees • A reliable currency with a unique trade balancing capability • A robust high rate of employment without inflation problems • A robust, fair and efficient pension system • A robust, balanced budget with powerful resources for development The Swedish Sustainable Economy Foundation 5