Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
Display:
Yes it is, because you can always buy other things with the currency.

And the e-unit may be tied to a single supplier, which the currency wouldn't be.

So you have these units which on the one hand are supposed to be redeemable in a specific way, but in another are a kinda sorta stand-in for 'real' currency. At the same time, the e-units may be influenced by physical failures, and also limited by contractual specifics.

There's a lot wrong with money, but I think people are getting confused by the purely transactional accounting function of money, and the political and social side-effects of money-ism.

They're close, but they're not synonymous. E-units will have different features, but unless some of these specific questions can be answered they won't necessarily be better.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Mon Jul 13th, 2009 at 12:15:25 PM EST
[ Parent ]
e-units would be units in an energy pool with a common custodian.

Producers would supply the Pool, and consumers would receive from the Pool, with the electricity "spot" price being a market price - a continuous auction maybe - set periodically without any middlemen being involved.

ie direct peer to peer electricity between producer and consumer.

The current middlemen would morph to service provision in return for a share in the flow.

Speculators could buy and sell Units in the Pool, but their doing so would have no effect on the underlying "physical" market price.

See

Energy Pool

particularly slides 59 to 70

Units acquired by consumers are essentially a "hedge". if people want a geared investment/speculation, then they can borrow to buy Units, but it won't affect the market price of physical electricity.

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

by ChrisCook (cojockathotmaildotcom) on Mon Jul 13th, 2009 at 01:03:20 PM EST
[ Parent ]
That doesn't answer the question.

If I have a credit balance of X units then - presumably - I can use them to pay for electricity to heat my house.

But what happens if all of the physical output of the pool has already been claimed by others?

What happens if speculators see a particularly good hedging opportunity and try to buy up as many units as they can?

How does this work if you have tens or hundreds (or thousands) of different units in a market with tens or hundreds (or thousands) of commodities?

Are they interconvertible? How are exchange rates set?

by ThatBritGuy (thatbritguy (at) googlemail.com) on Mon Jul 13th, 2009 at 06:13:02 PM EST
[ Parent ]
Good questions.

You need service-providers-formerly-known-as-banks to manage issue/do due diligence in respect of producers, and a quasi-monetary authority by way of quality control.

That ensures that there aren't more sold than are capable of being produced.

You also need transparency in relation to the number in issue.

If speculators buy up and hoard units - which does not affect the physical market price btw - then they run the risk that when they want out the price they get is way below the spot price, because it will take years for buyers to consume that much, and they therefore require a discount in order to buy.

Units are Units are Units: KiloWatt hours are KiloWatt Hours. There is a common market custodian, and a single homogeneous pool of electricity production.

Re lots of different commodities it's no different to what we have now, except that instead of being exchanged for Units redeemable in intrinsically worthless fiat currency, we have a Unit redeemable in something with an intrinsic use value, that would be pretty much universally acceptable.

The exchange rate is whatever the market arrives at.

IMHO Bob Hahl makes a good case here for such a currency here

KiloWatt Cards

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

by ChrisCook (cojockathotmaildotcom) on Mon Jul 13th, 2009 at 06:34:48 PM EST
[ Parent ]
So the simple peer to peer scheme now has due diligence management (who are the former banks answerable to?) and a quasi-monetary authority which has to count every unit created and redeemed.

This is starting to look a little more complicated than it did originally.

This is more or less practical for something like electricity, which is relatively predictable. It's not so practical for farming or anything which is weather-dependent and inherently riskier. Sometimes it simply won't be possible to guarantee supply, which means that it won't be possible to guarantee that units will be redeemable.

This seems like it might not be an entirely good thing.

ChrisCook:

If speculators buy up and hoard units - which does not affect the physical market price btw - then they run the risk that when they want out the price they get is way below the spot price, because it will take years for buyers to consume that much, and they therefore require a discount in order to buy.

But won't a supply intermediary want to do exactly this, or something like it? The consumer suppliers will need a guaranteed share of the pool to guarantee customer supply, and the only way to create that will be by locking in and hedging a set number of units.

If there isn't a mechanism for this, consumers will effectively be trading the pool directly, which will be an interesting thing to watch.

Re lots of different commodities it's no different to what we have now, except that instead of being exchanged for Units redeemable in intrinsically worthless fiat currency, we have a Unit redeemable in something with an intrinsic use value, that would be pretty much universally acceptable.

The exchange rate is whatever the market arrives at.

Firstly, cash is universal. It may be monopoly money, but its unversality is recognised and useful. (Arguably, abstraction and universality are the one real advantage of fiat currency.)

Exchangeable units would not be universal. I may be able to exchange my kWh unit for a bread unit, but I won't be able to do it by going into a shop - or even online - without a huge currency exchange machine to manage the relative values of every traded unit.

If exchange isn't practical and everything is unitised, that means everyone has to carry around a huge inventory of different units, people would be paid in unit mixes, and so on - which certainly won't be workable.

Secondly, if exchange values aren't stable, they can be gamed, which will attract speculation, sharking, and the rest.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Mon Jul 13th, 2009 at 09:10:34 PM EST
[ Parent ]
If you have been reading what I have been writing you will know that a transition of banks from intermediary to service provider has always been a cornerstone of the architecture I advocate.


If there isn't a mechanism for this, consumers will effectively be trading the pool directly, which will be an interesting thing to watch.

Consumers buy physical electricity from the supplier at the market price. They pay for it either with £ or Units. What's difficult about that? If consumers think Units are good value, they buy them from the Pool or from their mates: if they don't they won't.

Re units as currency generally, I am proposing unitising location rental value and certain forms of energy, particularly electricity.

That's it.

Unitising other commodities etc would not necessarily result in fungible currencies - probably wouldn't.

The former are domestically fungible/ acceptable in exchange. They may be acceptable elsewhere, but would not be redeemable elsewhere of course. ie an element of exchange control is pretty much built in.

The latter are pretty much universally acceptable.

The "Value Standard" or Unit of measure would IMHO best be a unit of energy, rather than an arbitrary abstract £, $ or € with no basis on anything.

What is more stable than a unit of energy as a reference point? A currency consisting of units redeemable in electricity would be pretty much universal,I think, and for a transitional period, and possibly longer, since carbon fules may be synthesised, Units redeemable in carbon fuels will also be universally acceptable against an energy standard.

A Peer to Peer financial system - like any other - needs some form of quality control or framework of trust. How that may be accountable and democratic in a participative way is a matter for agreement between the users of the service and the providers.

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

by ChrisCook (cojockathotmaildotcom) on Tue Jul 14th, 2009 at 09:48:08 AM EST
[ Parent ]
Consumers buy physical electricity from the supplier at the market price.

Bzzzt, wrong. There is no such thing as an "electricity market."

Thank you for playing. Please try again next week.

Re units as currency generally, I am proposing unitising location rental value and certain forms of energy, particularly electricity.

A megajoule/square meters double standard, in other words, with 100 % reserve requirements.

How is this different from a fiat currency (essentially a "tax standard" currency) with 100 % reserve requirements? Except that public policy will have even less ability to control the money supply than it has today.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Jul 14th, 2009 at 02:29:41 PM EST
[ Parent ]
Bzzzt, wrong. There is no such thing as an "electricity market."

Of course there is. By definition. If you buy electricity from any supplier you pay a market price.

You appear to mean an Exchange. And no, there isn't one, for retail customers anyway.


A megajoule/square meters double standard, in other words, with 100 % reserve requirements.

What on earth are you talking about?

Proportional Units - eg billionths - in Pools of land/location rentals will change hands in exchange for whatever buyers and sellers agree, and by reference to whatever value standard they wish to use, fiat or energy.

If a location rental is charged by a community in respect of land of which they have custody then what are essentially local Treasury branches would be in a position to issue redeemable credits based upon this rental.

It's not difficult to value land/location rentals. You should know, the Danes have been doing it for years.

So it's not difficult to manage the issue of Units redeemable in location rental value.

And it really isn't difficult either to manage the issue of Units redeemable in energy by (say) a renewable energy producer or any other producer, come to that. A damn site easier than attempting to measure carbon dioxide emissions.

Both of these would be currencies backed 100% by value. They are consensually acceptable, or not, and are not imposed by fiat.

The key point is that Units of location rentals, and Units redeemed in renewable energy, or out of energy saved, both allow value to be received now in exchange for Units to be redeemed later with intrinsic value created at nil cost.

Unlike units of fiat currency, which is redeemable for......more fiat currency with no intrinsic value.

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

by ChrisCook (cojockathotmaildotcom) on Tue Jul 14th, 2009 at 08:38:50 PM EST
[ Parent ]
  1. Your definition of "market" is not one that appears in any economic school of thought that I am aware of. (Discounting the Austrians, who make a point of claiming that every private enterprise operates on a competitive market. Because in theory another enterprise could start up and challenge them, so they have to behave as if they were actually competing. Yes, the Austrians are insane, that's why I'm discounting them.)

  2. Fiat currencies are backed by real value: The control of the economic production by the state, and the ability to leverage said control into taxes. The easiest way to realise that there is something substantial backing fiat money is to look at a country in which there is nothing substantial backing the fiat currency, whether because the state is too weak to effectively tax the economy (think a dollarised flag of convenience country) or because the local economy has ceased to exist (think Zimbabwe).

- Jake

Friends come and go. Enemies accumulate.
by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Jul 15th, 2009 at 02:19:33 AM EST
[ Parent ]
1/ A market is defined by the transactions entered into.

So the electricity market consists of the sum of all electricity transactions.

These may be one to one (Peer to Peer): one to many; many to many and so on.

In the electricity "market" there are "sub-markets": including a wholesale market (entered into on specific wholesalemarket terms) and a pretty fragmented retail market. There is competition (sometimes) between wholesale distributors, and retail customers may buy at an agreed price from distributors for an agreed period.

There is typically no homogeneous "market price". Whatever the price a buyer has agreed for his physical supply, he would - if the supplier is a member of the Pool I propose - be able to pay in fiat currency, in Units, or in anything else acceptable to the seller. (eg Tesco Points).

2/ Fiat currencies are backed by the power of the State to collect taxes.

The State is one of a chain of credit intermediaries, and like all intermediaries, redundant. The State as a facilitator and service provider is another issue.

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

by ChrisCook (cojockathotmaildotcom) on Wed Jul 15th, 2009 at 04:52:22 AM EST
[ Parent ]

Display:

Occasional Series