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Naturally no-one will hand over value in exchange for a prepay credit instrument unless there is an expectation of access to delivery either by the issuer or someone else.

Clearly there is a need for a guarantee of performance, but a unit of currency - whether in bearer (certificate) form or registered to an account - does not confer upon the issuer a dated obligation to supply upon presentation of the instrument as does a (dated) futures contract.

What it does do is confer an obligation on the issuer to accept it in payment for supply.

In relation to Mig's point, we have to look at availability over time,

There's no reason why an energy generator could not sell entitlements to 10 years' worth of production, or a property owner 10 years' worth of rent.

But they will do so at a discount which reflects the return demanded by investors in respect of that form of value; their judgement of the likelihood of continuing production (or in the case of a property, occupation); and their expectations as to what the unit of currency will be worth in the future by reference to a unit of account.

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

by ChrisCook (cojockathotmaildotcom) on Sat Sep 7th, 2013 at 05:35:08 PM EST
[ Parent ]
ChrisCook:
There's no reason why an energy generator could not sell entitlements to 10 years' worth of production

My electricity producer recently offered a low fixed ten year price in return for an upfront payment that they could use to build another wind power plantation. So something like that then?

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Sun Sep 8th, 2013 at 02:56:26 AM EST
[ Parent ]
My electricity producer recently offered a low fixed ten year price in return for an upfront payment...

Is that purchase transferable? To even another address or person?

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Sep 9th, 2013 at 12:09:14 AM EST
[ Parent ]
Good question. I went to check the specifics, but the offer was gone (I saw it months ago, so presumably they have raised enough). If it was standard consumer deal it is transferable to another adress in Sweden with the same customer. But standard deals usually run for up to three years, not ten, so I guess it has to end in a big dunno.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se
by A swedish kind of death on Mon Sep 9th, 2013 at 04:01:23 AM EST
[ Parent ]
At three years it seems to be a sort of retail level piece of commercial paper offered directly to the customer and thus disintermediated from normal banking.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Sep 9th, 2013 at 10:22:00 AM EST
[ Parent ]
Yes, I had already emphasized dated in my comment.

But it should now be clear that there is no distinction between "delivery" and "supply". If there is any doubt that the commodity will be delivered/supplied, the sale of certificates will be difficult to say the least. So waffly language such as

'confidence accounting'. ie the probability that a particular flow will be achieved

expectation of access to delivery

there is a need for a guarantee of performance

won't cut it. You actually have to garantee investors that there is sufficient supply to cover the certificates issued -- and more importantly, investors have to be convinced of that, or they will put their money elsewhere.

The function of these certificates as a form of money would therefore be strictly limited by a quantity of kWh, or rented accommodation/duration. The difference between this and the gold standard isn't clear to me.

The social usefulness of the certificates would seem at best to be simply a form of advance subscription with an advantage attached (discount). But who is addressed by the system? People with enough money to subscribe in order to gain a future advantage. One of the privileges of those who have enough money is in fact to save money by bulk buying, for instance, while those who live from hand to mouth pay top dollar for necessities (old example of the shilling in the gas meter?). Given that those who have no money ahead of them are far more likely to be living in rented accommodation than to be home-owners, what access will they have to your proposed rental scheme? In other words, what increased equality ie power-sharing would be achieved by it?

by afew (afew(a in a circle)eurotrib_dot_com) on Sun Sep 8th, 2013 at 05:33:53 AM EST
[ Parent ]

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