New form of money as PURE ENERGY ?

[Gablmk]

Hi everyone,

What would be your opinions about a possible new form of money in the future: PURE ENERGY. The idea is to have something like a unit of this "new money" that gives you the right to use 1kWh of electrical energy (or maybe 1 Joule of any type of energy ). After all, the vast majority of basic things that humans need are "burning" some energy before being created (except the brains of the existing politicians). For example, food can be made by powering your agricultural tools with these units of new money. If the electric cars will become the norm, then you can also use this to "fill-up" your battery, and so on ... I think it can be a much more fair system than paper money ( if it's well regulated and no tricky loop-holes are being created).

[GRG55]

Re: New form of money as PURE ENERGY ?

Hi everyone,

What would be your opinions about a possible new form of money in the future: PURE ENERGY. The idea is to have something like a unit of this "new money" that gives you the right to use 1kWh of electrical energy (or maybe 1 Joule of any type of energy ). After all, the vast majority of basic things that humans need are "burning" some energy before being created (except the brains of the existing politicians). For example, food can be made by powering your agricultural tools with these units of new money. If the electric cars will become the norm, then you can also use this to "fill-up" your battery, and so on ... I think it can be a much more fair system than paper money ( if it's well regulated and no tricky loop-holes are being created).

Two questions came immediately to mind:

1) What's in it for the banks? As we know, if there is nothing in it for the banks, and the politicians they fund, then it'll never fly.

2) If I buy a solar panel and stick it on my roof does that mean I can create "money"?

[Gablmk]

Re: New form of money as PURE ENERGY ?

Yes, the current system of banks will have little to gain from this idea and that's exactly what hard working people would want. In the start, the banks might just act as some sort of "middle man" based on the existing infrastructure. They can make sure that the "energy bills" are being fulfilled by the "energy providers" all over the world.
If you buy a solar panel, it can be seen as making an investment (similar to putting money in the bank and expecting yield). You produce energy which has value even in the existing system. You can, in theory, sell your energy today back to the "power grid". So in a way you are creating "money", but this time they have real intrinsic value: these kWh or Joules can warm the house of somebody, they can power up some tools to produce goods ....
This system can be started in parallel with the 'fiat money" that we have today. If some countries, companies or people that really care about this world and have some decision power gather together and cooperate, they can start a new barter system based on ENERGY. For example, big countries that are energy producers (Canada creates ELECTRICITY measured in kWh, Russia through the natural gases creates HEAT measure in Joules and so on ...) can back up this new system. The same goes for big companies that create ELECTRICITY. I am sure that if they start it, the "fiat money system" will die slowly with the ones behind it going mad as it slips from their hands. The problem of money and trading can be solved easily by the smart and innovating people on this planet, but we were made to believe all these years that we have in place an honest system and this is why very few bothered to find an alternative.

[Ghent12]

Re: New form of money as PURE ENERGY ?

What would be the ultimate purpose of this new currency? Why choose an energy-based currency over the current ones? You say it's more fair, but more fair to whom?

[Gablmk]

Re: New form of money as PURE ENERGY ?

First, we can all benefit by protection against inflation: if you own 1000kWh today backed by this currency, after 10 years that amount of energy is still yours and not less of it. Whatever heat you can extract from it to warm your house for this winter, it will be the same (or more if there is technological advance) after 10 years. Of course, this system needs to be backed-up honestly by the energy producing countries, companies ... But, isn't the same story with the existing "fiat money system", we need some level o trust before someone in France, for example, accepts dollars ?
On the other side, if you have 10000$ today that allows you to buy the same amount of energy, let's say 1000kWh, I am not so sure that after 10 years you can buy the same amount of energy with that money. Maybe this winter you can warm your house for a month, but after 10 years you might only do it for a day.

If any bank will try to counterfit this currency, it might be hard as real energy will need to be produced somewhere and this will require real work.

After all, let's look at the existing system and we might conclude is also backed by energy, but first funneled through the "fiat money system". If you want to buy petrol (which is another form of energy) you need to get some currency first. What if, instead of that currency, you could get some legal tender that gives you the right to get, let's say 0.1 barrels of petrol ? Then, you will be skipping the existing banking system, therefore their ability to place commissions, to print more paper or to manipulate prices.

Other commodities (grains, salt ... ) can be used to back a currency, but the most flexible one seems to be the pure energy because we are now much more technological developed than 1000 years ago.
The gold standard was a good system because it was shiny and the wifes of kings liked it, it was easier to carry than grains or salt and it did not degrade over time. And the kings made the rules at the time.

After all, the whole idea of the economy (and therefore the money system) is to find a system to exchange goods in a fair way. Since all the goods are eventually derived from some form of energy, at the end of day, it makes sense to use this as the basis of the exchange system. Imagine how powerful will be the commerce between two countries if they set bilateral agreements in kWh or Joules. These physical quantities cannot be counterfited (it's pure physics and the bankers cannot rigg it), so there will be less fear that one partner is cheating.

[aaron]

Re: New form of money as PURE ENERGY ?

Gablmk > Welcome to iTulip!

[dcarrigg]

Re: New form of money as PURE ENERGY ?

First, we can all benefit by protection against inflation: if you own 1000kWh today backed by this currency, after 10 years that amount of energy is still yours and not less of it. Whatever heat you can extract from it to warm your house for this winter, it will be the same (or more if there is technological advance) after 10 years. Of course, this system needs to be backed-up honestly by the energy producing countries, companies ... But, isn't the same story with the existing "fiat money system", we need some level o trust before someone in France, for example, accepts dollars ?
On the other side, if you have 10000$ today that allows you to buy the same amount of energy, let's say 1000kWh, I am not so sure that after 10 years you can buy the same amount of energy with that money. Maybe this winter you can warm your house for a month, but after 10 years you might only do it for a day.

If any bank will try to counterfit this currency, it might be hard as real energy will need to be produced somewhere and this will require real work.

After all, let's look at the existing system and we might conclude is also backed by energy, but first funneled through the "fiat money system". If you want to buy petrol (which is another form of energy) you need to get some currency first. What if, instead of that currency, you could get some legal tender that gives you the right to get, let's say 0.1 barrels of petrol ? Then, you will be skipping the existing banking system, therefore their ability to place commissions, to print more paper or to manipulate prices.

Other commodities (grains, salt ... ) can be used to back a currency, but the most flexible one seems to be the pure energy because we are now much more technological developed than 1000 years ago.
The gold standard was a good system because it was shiny and the wifes of kings liked it, it was easier to carry than grains or salt and it did not degrade over time. And the kings made the rules at the time.

After all, the whole idea of the economy (and therefore the money system) is to find a system to exchange goods in a fair way. Since all the goods are eventually derived from some form of energy, at the end of day, it makes sense to use this as the basis of the exchange system. Imagine how powerful will be the commerce between two countries if they set bilateral agreements in kWh or Joules. These physical quantities cannot be counterfeited (it's pure physics and the bankers cannot rigg it), so there will be less fear that one partner is cheating.

I have seen this argument elsewhere (although I can't quite remember where at the moment). The argument goes that money is just an approximation of wealth - in truth it is not connected to anything. Then argue that labor, due to productivity gains, is just an approximation of the energy that goes into making products (since so much can be developed with comparatively little human effort). Then argue that energy stands unique with time as one of those things for which there is no substitute. Then argue that externalities fall out when energy isn't traded like a commodity, but is rather the basis for money.

It makes some sense. I don't know how much difference it would really make though.

[Gablmk]

Re: New form of money as PURE ENERGY ?

Quote:

"It makes some sense. I don't know how much difference it would really make though."


I think prices will be much harder to manipulate if energy will be used as a currency (or as a reference for currency) and people doing trade will agree upon it. Let's imagine you run some manufacturing business in the current system and your biggest expenses are with transportation, salaries, heating and powering up your tools & machines. If you make the business plan for the next year in "fiat currency" you will depend a lot on several prices staying the same and hoping someone is not walking around with a printer hidden in his bag and buying energy with the money that he is allowed to print. However, if you make the plan using units of energy as a reference (and you also get paid in units of energy), then you are much safer. You know for sure how much energy for your electric cars will be needed for transportation, you will know how much energy you need for heating, for powering up the tools and how much energy equivalent to pay for your workers. Your workers will also know how much miles they can get on their electric cars and how much heating they can get from the salary based on units of energy. And your deals with the energy providers are already done in kWh or Joules for some period. These cannot inflate in value, they obey the laws of physics: one kWh is the same now, next year or in 1000 years.

[Starving Steve]

Re: New form of money as PURE ENERGY ?

Backing currency with energy is a proposal that dates back to the 1930s--- the easy depression. If I remember correctly, the currency unit was supposed to called, "the erg".

What I like about backing currency with energy is that it would limit the ability of governmentsssssssssssss to print paper backed with faith, and print such faith-backed paper in unlimited quantity and forever. Sad to say, this worldwide print-a-thon is where we are now. No surprise, this new depression is a bit deeper and more difficult to remedy than the depression of the 1930s.

The solution to this mess might be something like this:

"The Federal Reserve Bank of Zimbabwe will pay to the bearer on demand, one Joule of energy, on the electric grid throughout the Republic. This note is exchangeable and legal tender for the equivalent value of one Joule of energy in any form, throughout the Republic. This note is legal tender for the payment of all debts, public and private.

Series 2011. Starving Steve, Chairman of the Federal Reserve Bank of Zimbabwe. 'Tis castration to counterfeit."

[c1ue]

Re: New form of money as PURE ENERGY ?

There are other problems with using energy as a unit of payment.

For one thing: energy in what form? 1 unit in coal is not the same as 1 unit in tar sands, or in wood, or in river water.

A second thing: how do you store money/energy? 1 unit of energy today is not equal to 1 unit of energy in 10 years - there are storage costs and losses.

How do you 'owe' energy? Do you go 'negative' energy?

Lastly what do you do with the present money system? Arbitrarily assign it to energy at some fixed rate? What does this mean for debt then?

[Starving Steve]

Re: New form of money as PURE ENERGY ?

There are other problems with using energy as a unit of payment.

For one thing: energy in what form? 1 unit in coal is not the same as 1 unit in tar sands, or in wood, or in river water.

A second thing: how do you store money/energy? 1 unit of energy today is not equal to 1 unit of energy in 10 years - there are storage costs and losses.

How do you 'owe' energy? Do you go 'negative' energy?

Lastly what do you do with the present money system? Arbitrarily assign it to energy at some fixed rate? What does this mean for debt then?

When coal or atomic, windmills or hydro-electric or natural gas, or even up-graded Alberta oil ultimately is used to turn a turbine, the output is the same, no matter what source. So, the Zimbabwe Dollar might be a fixed unit of energy, like an erg, a kwh, a number of BTUs, a number of calories, or a number of joules..... The point is the currency anchor to the energy is precise and fixed.

Alan Greenspan and Ben Bernanke, are you reading this? Key words: anchor, and precise. Key lesson: No more faith, and no more fiat. Key concept: international unit in something that everyone on Earth needs daily. Key benefit: stability and prosperity.

How do you store energy? Stop burning as much fossil fuel, or slow-down the rate of fission in atomic power plants by dropping in control-rods. Hydro can be stored by impounding water in reservoirs and regulating the release of the water. The San Luis Dam in California stores hydro by pumping water uphill from the California Aqueduct and into the dam's reservoir.

And if the energy certificates (demand notes) are issued carefully, literally energy could be stored in bank accounts because the energy certificates would be sound.

How do you owe energy? The central bank could buy energy on the world market. Or, the central bank could issue less currency. Or the central bank could PAY ITS DEBTS by producing energy.

What do you do with the present monetary system: Answer: Junk it. Send it back to Alan Greenspan and Ben Bernanke.
Walk-out of your economics classes, and toss your textbooks at your professors.

Conversion from the old fiat to the new energy certificates would have to be carefully done.

What does conversion mean for debtors? It means to stop promising and to start producing!

[reallife]

Re: New form of money as PURE ENERGY ?

May I suggest that you do an internet search on 'Emergy', spelled with an M? H.T. Odum considered this concept many, many years ago....

[Gablmk]

Re: New form of money as PURE ENERGY ?

I was about to respond along the same lines as Steve, but he pointed out clearly the answers: energy is energy and it's measured in Joules, no matter from where it comes. The energy of one Joule will produce the at least the same heat for your house now or 10 years from now. It will move you car by at least distance X now or 10 years from now. If someone stores enough energy in certificates that are legally protected by a legal system (we all live in legally protected systems, right ?) to allow him heat, transportation and power for the tools around the house, he can retire in peace without being afraid that his pension is looted "legally" by some bankers. Can anybody guarantee this with the "fiat money" ?
If ones looks carefully at the trade system that we have in place today is still mostly based on energy (oil, after all is a form of energy). But every transaction has to go first through the layers of "fiat money".
The fact that other people were thinking about this in the past is encouraging.

And, we don't have to throw away the old system money. We can have both in parallel and let the people decide if they want to buy paper or units of energy. After all that will be the spirit of "free markets" and not "rigged markets".

[lektrode]

Re: New form of money as PURE ENERGY ?

... one kWh is the same now, next year or in 1000 years.

but wouldnt the deal be up-ended if say some game-changer source of kwh production was brought in to the game?
and it dramatically lowered the cost of the kwh's ?

[Gablmk]

Re: New form of money as PURE ENERGY ?

I guess people need to escape the thinking of today reflected in this: "cost of the kWh". 1kWh is energy that is beneficial for any type of economy. If in the future there will be more of it, therefore more energy, it can only be a positive thing for everyone and change the game for better. Let's say you had an electric car and enough energy in "legal tender notes" to drive the car for 10,000 miles. Are you going to suffer if more energy is available around ? You will still get to drive the car for that distance and have secured transportation. Make a comparison with the "fiat money": how many miles were you able to drive in 1990 with 1000$ and how many can you drive now ? The same idea goes if you had "legal tender note" that will give you the right to 1 gallon of gas. Using that instead of money will protect people against inflation and arbitrary price increases. Just that the backing by pure energy is a bit more general and relies on the pure physical definition.

If there will be inflation of energy in the future, you will see people using it more and standards of living will improve. Is there something wrong with that ?
If a country wants to create more "new money", I mean energy, this can only be a good thing to be followed by other countries or companies. Why should we go to bankers and beg them for the right to make commerce with people that want to work hard ? By having to use "fiat money" that's exactly what all of us are doing: are begging the bankers for the right to make trade.

Money from the today is like the blood inside the body and the bankers are controlling the flow of it. If they let it flow free, the body is healthy and happy, and if they stop it the body becomes sick and needs to go to "doctor". And the "doctor" happens to be the same banker. This trick was discovered a few hundreds years ago by certain bankers (well, originally they were gold keepers) and they are using it over and over since then.