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This is a very nice article Chris.

The more I look at it the more it seems that the way through Peak Oil, Peak What-Have-You and Exponential Growth in general will have to go through a new monetary/financial system. Abstract currency is not bad per se, but the way it is created won't work without underlying physical economic growth. Anyway, the system you propose is way beyond my personal concerns entered on energy, I take my hat to you.

Energy can be a commodity currency without the main downside of previous commodities tried (e.g. gold) its supply is virtually limitless. This sounds like a counter-sense in these times, but it is not. While for precious metals their production is limited in several ways (geographically, etc) there's always space for more wind turbines, more solar panels, more mini-hydro, more tide turbines, more geo-thermal points, etc. Objectively we use a small fraction of the energy available to us, both coming directly from the Sun, or created by the eternal planetary motion.

Other commodities can become so valuable that become more appealing than investment itself - folk sit atop their precious coins and the economy stops. With energy, if the watt-hour goes into price deflation (i.e. buys more stuff than before) there's an automatic incentive for investment on new energy productive infrastructure. And since the amount of energy produced in the lifetime of an infrastructure can be known beforehand with relative accuracy, new currency can be put in circulation swiftly, as soon as a compromise to finish the project is reached (as implied by the article). Compare this to gold mining, were yearly production is just a small fraction of the world stock and production from mining projects is uncertain.

Where I might slightly diverge from you Chris, is the absence of "state intervention". As energy currency gets a higher share of the whole currency in circulation, price inflation can eventually become a problem, at least some regulatory framework might be need to avoid it getting out of control. I'm not really certain it is needed, and energy currency inflation has the good outcome of shaving off low EROEI infrastructure. Another thing worth mentioning is that some technological support would have to exist for watt-hour accounts. Upfront, I'd say this would be a job for the energy grid: watt-hours would be credited in your account when you deliver energy to the grid and subtracted when you consume energy.

So Chris what do you think is missing for all this to start rolling?

luis_de_sousa@mastodon.social

by Luis de Sousa (luis[dot]de[dot]sousa[at]protonmail[dot]ch) on Fri Feb 20th, 2009 at 11:05:20 AM EST
Luis de Sousa:
Abstract currency is not bad per se, but the way it is created won't work without underlying physical economic growth. Anyway, the system you propose is way beyond my personal concerns entered on energy, I take my hat to you.

I agree that fiat currency is not inherently bad. It is possible to conceive of a technically sustainable system, and that is what Keynes had in mind with his "Bancor" and International Clearing Union at Bretton Woods.

To charge interest only on debit balances is inherently unstable and unsustainable. Keynes' Bancor proposal applied a Gesellian approach by specifying a levy on credit balances as well, and this would IMHO enable stability, depending upon what happened to the levies.

Actually getting people to use such a neutral abstract unit as the Bancor is another issue. I don't think people would be inclined to accept such a unit unless it is hegemonically imposed, as with the US $ now, and the £ before it.

My proposal is for a "Petro" as an "Energy Standard".  

The Petro is a constant amount of energy to which people can actually relate - (say) the energy released by burning 1 litre of n-Octane at 20 degrees centigrade. Not that anyone has a clue what n-Octane is - but they have a shrewd idea what a litre of gasoline or heating oil is worth to them, and also a related amount of natural gas, or the equivalent in kilo watt hours.

We could then see the emergence of Value Units redeemable in fuels such as natural gas, gasoline and heating oil. These would all be pretty much constant in terms of their energy value expressed in Petros. Note that nothing would be exchanged for Petros.  "Money's Worth" or Value Units of fuel would be changing hands by reference to the Petro as an "Energy Standard".

So what I am proposing is Energy Accounting on a global basis within a networked International Energy Clearing Union by reference to a Petro Energy standard.

Luis de Sousa:

Where I might slightly diverge from you Chris, is the absence of "state intervention". As energy currency gets a higher share of the whole currency in circulation, price inflation can eventually become a problem, at least some regulatory framework might be need to avoid it getting out of control. I'm not really certain it is needed, and energy currency inflation has the good outcome of shaving off low EROEI infrastructure.

I think that what you are missing is that in fact by far the greatest amount of value created and circulating today relates to the value of land rentals (most money in existence emanates from property-backed loans).

So, through unitisation of land rentals I think we could see new land-based currencies circulating, primarily domestically, since they are by definition only redeemable where they are issued. But there is no reason why they should not circulate by reference to the Petro - there is indeed a great deal of energy tied up in the average building....

The function of the Petro as an energy standard, and of energy based value units priced in Petros, would be to facilitate trade and development, replacing the dollar globally.

I see no state intervention in the future, because I think we will reinvent the State into a more participative form. The future of regulation is self regulation IMHO, since all constituencies, and not just the middlemen, will be involved.

Luis de Sousa:

Upfront, I'd say this would be a job for the energy grid: watt-hours would be credited in your account when you deliver energy to the grid and subtracted when you consume energy.

This is pretty much as I see it. I refer to an "Energy Pool" into which energy is delivered, and from which energy is received. The "Pool" will be owned by all, or by none, being nominally held by a custodian.

It will issue the redeemable Units (not unlike a central bank) in exchange for value, and will also nominally "own" the transaction/title registries aka the energy acounting system.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Fri Feb 20th, 2009 at 07:02:32 PM EST
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