New form of money as PURE ENERGY ?

[lektrode]

Re: New form of money as PURE ENERGY ?

ok - am trying to get my head wrapped around the value assigned to the 'unit'

in the prev world before 'money' came along, the most basic unit of 'currency' was the 'manhour'
ie: it took x number of these to say till and plant a field or cultivate and harvest the field
or chop down trees and split, haul, stack the firewood - with me here so far?

so if it took say 8hours/day x 300days/year to till/plant/harvest the field, cut the firewood etc that one needed to survive for the year (and it likely took a heluva lot more than that, merely to survive in that world) and say these hours are worth some x amount of these kwh's - then how do we account/adjust for the improvements in productivity compared to the earlier period, if we all of a sudden have a tractor to do the plowing and a chainsaw to do the woodcutting?

[Starving Steve]

Re: New form of money as PURE ENERGY ?

The case for atomic energy gets even stronger when one does an emergy analysis of the fuel. ( reference H.T. Odum ) Very little energy is expended for the vast amount of energy the fuel yields. A cup or two of uranium will provide enough energy to electrify a city, at least for a few days.

The case for switching to an energy currency is that energy productive and energy efficient activities would be immediately rewarded with profit. The mess ( the abyss ) the world has dug itself into by using fiat currencies is that wasteful and unproductive activities are reward with a fiat currency profit, so more energy is directed to the waste and inefficiency.... And here we are now: with plenty of fiat money, bloated governments, inefficient and uncompetitive industries, outlandish consumption, and human misery.

After what we are now experiencing in this horrible Great Recession, doesn't it seem ridiculous that an economist, Dr. John Maynard Keynes, proposed that men be given government jobs digging holes in streets and then paid by government to fill those holes in? And the payment for doing nothing but wasting time and energy, not to mention the payment for the waste in the government authorizing activities such as this, would be in fiat money backed by faith and hot air, and issued day and night by the benevolent and bloated government....... For Keynes, this would be the model for growing the economy of the future, and it was!

As I wrote earlier in this thread, I hope kids now might withdraw from economics courses, worldwide. Throw your textbooks at your professors, and walk-out.

[lektrode]

Re: New form of money as PURE ENERGY ?

i gotta hand it to ya - you never fail to reach straight-away to the shank of the issue, mr steve.

[Starving Steve]

Re: New form of money as PURE ENERGY ?

As your work becomes more productive and more energy efficient, you would be naturally rewarded with more energy currency.

If I can electrify a city with one or two cups of enriched uranium, why would I piss around and waste time and energy with solar panels?

An energy currency would quickly sort the mess out: the unproductive would go bankrupt, and the efficient/productive would prosper. Nations doing nothing except for praying all day/night and making war would sink into poverty. Nations doing nothing except for trying to preserve a rare mosquito or a rare field-mouse, would starve....... Conversely, the efficient, practical and productive nations would prosper.

[lektrode]

Re: New form of money as PURE ENERGY ?

yeah but, mr steve - this new form of currency wouldnt be eliminating the fundamental law of 'supply and demand' - would it?
meaning that, if there was all of a sudden MORE, a lot more kwh's available, then their value would decline - in direct relation to the manhours that _dont_ need to be expended to survive, would it not?

and dont be preachin to the choir on the nuke issue - since you know where i stand on that one (with you, tho i dont want to heat my house by burying plutonium underneath ;)

[Starving Steve]

Re: New form of money as PURE ENERGY ?

As more kwh ( or whatever unit of energy) is produced, naturally the price of energy would tend to decrease..... I think that might mean that the cost of living would decline, because the cost of energy is the driver of so many costs in the basket of goods/services used to measure the general cost of living. And if I am correct, that would mean that people would live better and prosper.

The bottom-line for slow-learners such as myself: a lower cost of energy would mean a lower cost of living, and that would mean a higher standard of living and maybe even, just as a hidden bonus--- a better life for everyone.

[dcarrigg]

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.

Yeah, but energy is already priced into the economy. Everyone buys so many kW or BTU hours already. Sometimes I wonder, if the currency were changed to reflect that *(obviously we'd have paper currency and not be trading batteries) then what would change? Central banks would be less able to inflate currency without producing large quantities of energy for which there was no demand...but they just might do that if they felt the moment was right.

People who make energy would add to the monetary base just like people who make credit now. People who make credit now could still issue it based on expected future energy holdings.

Really, the biggest difference I can see is that it is easier to create or destroy fiat currency than it is to ramp up (or down) electrical plants or oil production. We'd have wild deflationary and inflationary swings based on when some hurricane came through or some nut lit all of the oil fields on fire (which effect our economy now regardless).

I guess I'm saying that if energy were money, without a legal/regulatory structure that differed greatly from the one we currently have, not much would change, because the market already converts money to energy and visa-versa.

[Ghent12]

Re: New form of money as PURE ENERGY ?

What c1ue alludes to is essentially correct. While one Joule may be one Joule, what actually matters is where that Joule lies. As an example, if one puts a book on their bookshelf one shelf higher than normal, that "creates" and "stores" Joules in the form of potential energy by utilizing the energy in your body. So what type of Joules are going to be accounted for? Will it be only the ones that are on the power grid? If so, how does one account for vehicles and construction?

Additionally, which energy metric do you account for in this system? What would the cost of a solar panel be--the cost to manufacture, the expected lifetime energy output of it, or some combination of both? What would the cost of a tomato be--the caloric content of it, the energy cost to produce it, or some combination of both?

Also, how do you account for inefficiencies and transport costs? Right now the price system generally leads to different prices of energy in different locations due to those and other factors. Will some energy-based currency have the price of 1 kWh be above 1 kWh in that case, or will the "strength of your currency" be dependent largely upon your geographic location, with Hawaii having the strongest energy currency and places like Oklahoma having among the weakest?

[Starving Steve]

Re: New form of money as PURE ENERGY ?

What c1ue alludes to is essentially correct. While one Joule may be one Joule, what actually matters is where that Joule lies. As an example, if one puts a book on their bookshelf one shelf higher than normal, that "creates" and "stores" Joules in the form of potential energy by utilizing the energy in your body. So what type of Joules are going to be accounted for? Will it be only the ones that are on the power grid? If so, how does one account for vehicles and construction?

Additionally, which energy metric do you account for in this system? What would the cost of a solar panel be--the cost to manufacture, the expected lifetime energy output of it, or some combination of both? What would the cost of a tomato be--the caloric content of it, the energy cost to produce it, or some combination of both?

Also, how do you account for inefficiencies and transport costs? Right now the price system generally leads to different prices of energy in different locations due to those and other factors. Will some energy-based currency have the price of 1 kWh be above 1 kWh in that case, or will the "strength of your currency" be dependent largely upon your geographic location, with Hawaii having the strongest energy currency and places like Oklahoma having among the weakest?

I was proposing specific units of electric energy, on demand, redeemable on the grid, to the bearer of the energy certificate, and guaranteed by the central bank such as the Bank of Zimbabwe, the Bank of England, or the U.S. Federal Reserve Bank.

One kwh of energy on the grid is the same as one kwh of energy on the grid anywhere on Earth, so long as there is a grid. The dollar cash-value of the one-kwh is meaningless. It is worth what it is worth for what it is: one-thousand watts of energy for one-hour of time, delivered to you, on demand.

I was NOT proposing some dreamland form of energy such as what a solar panel might be able to produce over a period of twenty years if the weather was clear and it was always early summer, no birds pooped on the solar panel, not to mention that you were still alive twenty-years on to redeem your energy certificates. My proposal was for usable (maybe electric) energy, paid to the bearer on demand.......... Thus, with energy certificates, there would no longer be vague and meaningless nonsense such as "backed by the full-faith and credit of the United States". ( The latter phrase is an actual quote from Alan Greenspan, spoken in his own mumbo-jumbo Greenspanese language. )

The chief benefit of energy certificates ( or gold certificates ) would be that central banks would be responsible for DELIVERING on their promises, ON DEMAND, in specific units of REAL wealth. So for the first time since the gold window was closed in Washington, D.C. in 1971, the world's financial system would be ANCHORED to something REAL..... The world got into this economic abyss by letting the central banks get away with counterfeiting for decades, and then lying to the world about what was really worth what in real terms, when "push-came-to shove".

I think the world's central banks are beginning to discover that the world's monetary system needs an anchor in something real. I think the People's Bank of China is going to demand an anchor to the world's monetary system very soon..... But what is amazing at this late date (2011) is that the college professors who drempt-up this world paper-money system backed by debt and vague promises--- this Keynsian nightmare---still do not have a clue what is wrong with the world's financial system, nor do they have a clue about why the world's economy is sinking deeper into depression.

[Gablmk]

Re: New form of money as PURE ENERGY ?

The corrupt governments throughout the world will probably never back the idea of trade using energy certificates (or notes). A famous banker said a few hundreds years ago: the very few people (with political power) who will understand the real nature of this money system (based on fractional reserve and creating money out of air) will most likely want to profit from it, rather than to denounce it. As regarding the other ones, the idea of the current money system is so deeply rooted inside their little brains that it will take decades to make them understand basic concepts.
Therefore, the bankers now that they have strong allies: the greed, the ignorance, the vanity and the stupidity of politicians. These politicians only care if someone (banks) will always give them money to create budgets and buy the votes of the retarded ones when is needed to win elections. They have no clue how this money keeps coming and from where. Since they know very little basic mathematics, trying to comprehend any number above one million will create a short circuit and smoke in their brains. Such a corrupt system based on greed, stupidity and ignorance is very hard to be dismantled, especially when you have a lot of the smart and honest people sitting on the sides and doing very little to change it.

Now, going back to the energy backed notes. Rather than hoping for the corrupt governments to institute them as a replacement for the existing money system, another possible approach is to create a parallel system. Several companies (hopefully the honest ones) that provide energy could issue some sort of "energy certificates". This could be energy in any form (electricity, heat from gas burning and so on ...), as long as they all end up being equivalent from a pure physical point of view. Another trade circuit can therefore be created skipping the corrupt banks: people and companies can buy these " energy certificates" and trade between them by using these. For example: Joe gets his monthly 3000$ salary, then he goes quickly to buy 30000kWh worth of energy certificates. If he has an electric car and electric heating, then he can sleep more relaxed at night when thinking about the coming winter: he has secured a certain number of miles for his transportation needs and a certain amount of heat for the house. He will pay with certificates some intermediate distribution companies to provide him with the electricity on demand when he needs (for example, when charging his car battery). These companies will further pay the big electricity producers, who issued the certificates in the first place. And the big companies will either sell them again on the market to get some "fiat money" to quickly buy other things. At this point, Joe gets his chance to buy new energy certificates with the next salary and the circuit is completed without the banks getting fat on the back of other people. In this way, we can have both systems working and people will understand very quick that they will be better off asking their employer to pay directly in "energy certificates".
All we need is a few smart, powerful and honest people & companies to start this parallel system using the existing institutions. After a while, we will get millions and millions of hard workers waking up. People will start converting prices for many goods and services from "fiat money" to energy units. They will rather make their future plans using energy units. Countries will start doing trade in the same way. Factories that use a lot of electrical energy will be very happy because of the stability. If their owners know that they have 10000000kWh in certificates, they will probably sleep better for the next month rather than having some "fiat money" and a price for energy that can change every day.

[tombat1913]

Re: New form of money as PURE ENERGY ?

I think this is a very bad and dangerous idea. It would essentially give the government a monopoly on power production and allow bureaucrats to decide how much power will be available at any given time. If they print too little money then only a certain amount of joules can be consumed, this has the potential to absolutely crush national productivity. All industry could be limited in power consumption by the availability of currency. If they print too much money then there will be over consumption in attempt to spend excess reserves to utilize the power in some semi productive way. The government currently has the ability to indirectly devalue labor and productivity with money printing. In an energy based system they would be able to directly devalue or limit productivity. How on earth would anybody know exactly how many units need to be printed at any given time? Especially because the base to which the currency is pegged is being consumed constantly at fluctuating rates. All currencies are supposed to represent something tangible, but all of them undergo inflation. What would make a power based currency any different? This would also lead to more regulation and likely nationalization of the power grid which would be disastrous.

I follow power demand very closely because I work in a peaker plant and my job depends directly on how much power is being consumed. Here are some other things to consider.

My plant is capable of producing about 650 net MW at any time, but we don't produce unless the price of a MW is profitable or we're required to by regulators. Usually we will start up when the temperature inland gets hot. However, for grid reliability, sometimes we are required by ISO to run the plant to ensure that there is a certain amount of extra power on the grid, the power isn't necessarily being used but is available in the event of a spike in demand or sudden loss in production. Essentially the power is being wasted. The cost of that waste must be passed on to the consumer of course. The currency then would likely have to buy one gross joule, not one net joule, so the actual amount of usable power to your home would never be exactly the same because everybody must share the cost of the extra wasted production which fluctuates.

Also, in addition there are fluctuations in the efficiency of power plants. Depending on what type of load is on the grid a power plant can have dramatically different inefficiencies. Inductive loads cause a departure from unity in the power factor of a generator because they cause the current sine wave to lag slightly behind the voltage sine wave. Because power is voltage times current, this divergence in sine waves causes less actual useful power to be produced because the waves don't peak and trough at the same time. Capacitance loads have the opposite effect causing voltage to lag behind current. Long story short, the value to the currency could essentially be manipulated intentionally or not by the specific type of load on the grid. When either inductive or capacative loads are introduced, the amount of total power necessary increases to create the same amount of usable power.

Another interesting bit of information. There are plants that take advantage of power price swings. They are basically just a motor/generator attached to a pump/turbine. During the night time hours when demand is low and power is cheap they are drawing power to the motor and pumping water from a reservoir to a higher elevation reservoir. Then when the price of power is high during the day, when factories are producing, computers are on and air conditioners are blasting, the leads are reversed on the motor, turning it into a generator and gravity does the work of turning the turbine to produce hydro-electric power. This system is actually net negative on total system power due to heat, friction and I2R losses etc., but is still profitable because of power price fluctuations. It's essentially a waste of energy based on price changes, sort of like the FIRE economy I imagine that this type of phenomena would increase if energy was THE currency.

I guess bypassing my home power meter would be considered counterfeiting? or maybe bank robbery?

[Gablmk]

Re: New form of money as PURE ENERGY ?

This post was meant to be a reply for "tombat1913", so I moved it there

[Gablmk]

Re: New form of money as PURE ENERGY ?

Isn't the monopoly of existing "fiat money production" also dangerous ? The idea of this system is that "free markets" will decide how much energy to be produced. If we think that government can dictate, then the whole discussion moves to another level and the right question is: are we living in democracy or in a dictatorship ?
How is better to have a few private banks dictating how much money is in circulation ? Most of us that understand the system are aware of artificially created booms and busts (inflation & deflation). At least, with energy, communities can decouple from the central system: if some city in a sunny place has enough solar panels to create enough energy locally, they can have their own little economy out of reach from greedy bankers. But, they will still be able to interconnect with other economies because they use the same base: units of energy in Joules. A person coming from another part of the state can use his energy certificates in that city, as long as those are recognized on a wider scale.
Regarding the technical aspects of delivering energy in an efficient way, I have much more trust in engineers to sort out the details rather than bankers. These are aspects easy to solve: the energy provider will make sure he provides the energy with a power factor of one as this enters your house (if this is less, then you consider that he provided less active energy too). After that, it's your business if you can use it in an efficient manner or not. This will motivate the producer and the consumer to find efficient ways of maintaining a unity power factor (and there are good methods of doing it).
Like I said many times: to understand the new concept, one must try to forget the existing "fiat money system". Having more energy produce will not be equal to inflation or "price drops". It will mean prosperity and better standards of living.

Why can't people who put effort in creating solar panels be allowed to have a small economic circuit based on the energy that those panels produce ??? Imagine if you had a small community: one guy will take care of the solar panels and provide energy certificates to the village. Another guy will use those certificates to power up his bread making tools. Another will use them to extract water and clean it. Another will use them to power up the tools for manufacturing clothes and shoes .... and so on. You can have a full economic circuit. If the solar guy has more energy, then the community will produce better bread, better clothes ... and it will allow them to have the streets full of light all night long.

Bypassing your home power meter is stealing even in the existing "fiat money system". So again, if we start talking about this then we need to bring the discussion to another level: are we supposed to live in a system with laws or in the jungle ?

Playing games with energy prices during the night and day is another artifact of thinking biased on the existing "fiat money", so one must try to escape that trap, otherwise the energy based system will never be understood.

[Ghent12]

Re: New form of money as PURE ENERGY ?

I was proposing specific units of electric energy, on demand, redeemable on the grid, to the bearer of the energy certificate, and guaranteed by the central bank such as the Bank of Zimbabwe, the Bank of England, or the U.S. Federal Reserve Bank.

One kwh of energy on the grid is the same as one kwh of energy on the grid anywhere on Earth, so long as there is a grid. The dollar cash-value of the one-kwh is meaningless. It is worth what it is worth for what it is: one-thousand watts of energy for one-hour of time, delivered to you, on demand.

The underlined statement is not true. Depending upon where you are located, that one kWh of energy delivered to you may have required additional fuel than some location immediately adjacent to the power plant. Transmission losses are not insignificant, especially for sparsely populated regions far, far away from sources of power. The problem inherent with any energy-backed currency is that it will have issues with "smoothing" over geographic regions. Just look at the current grid price of one kWh in the various states--there is enormous variance.

So I'm kind of lost on this new scheme, at least when it comes to the geography of it. Can you buy cheap electricity certificates or whatever in West Virginia and then redeem them from power companies in New York, as an example, where the kWh price is over twice as much?


I am also rather dubious as to how "real" an asset energy is, at least compared to gold or other hard money standards. At least gold is transportable and instantaneously available to whoever owns it for transaction, and the only risk for gold-backed currency is that of a bank run if the bank does fractional reserve trickery. However, electricity requires substantial capital costs to produce on demand and is anything but portable--currently, the portability of electricity is rife with inefficiencies and low performance; batteries have pathetic energy density, solar panels are pathetic and virtually useless for anything other than satellites and remote military outposts, and transmission lines from a grid source not only require capital beyond what a lone person can supply but also incur substantial losses as the distance increases.


I guess I will remain skeptical of this type of currency until the issue of portability is satisfactorily resolved. Since the portability of electricity is essentially limited by physics and current technology, I don't think now is the time for an energy-backed currency.

[sgominator]

Re: New form of money as 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

Are You brave enough to try it in India?