Will! Posted December 9, 2017 Share Posted December 9, 2017 (edited) I’m a reader of Dr Tim Morgan’s Surplus Energy Economics blog. One of his central theses is that economies are energy systems, not monetary ones, and thus money is a claim on energy. A post by @tomandluabout a currency pegged to the price of energy on the The Bubbly Bitcoin Thread led me to try the following thought experiment: Imagine a monetary unit backed by a central bank which promises to provide the bearer on demand with a kiloWatt hour of energy in a previously specified form or forms. The value of this energy-backed monetary unit (EBMU) would therefore be fixed at 1kWh. The price of this EBMU in any fiat currency would be the price of 1kWh in that fiat currency. The principle advantage I see is price stability: As the capability of a state’s economy to produce energy and thus to produce energy-intensive goods and services increases so the capability of the state’s central bank to back EBMUs with energy increases. In effect, as the productivity of the economy increases so the monetary supply increases, avoiding deflation. The price of energy is fixed in EBMUs, avoiding energy-price inflation. If the price of energy in a fiat currency rises then the price of the EBMU in that fiat currency rises too. The EBMU would also offer independence from the petrodollar, which could be appealing for oil-rich countries such as Russia and Iran. The principal disadvantage (from some perspectives) would be that there would be no ability for a state to devalue its money while on the ‘Energy Standard’. Any thoughts? Edited December 9, 2017 by Will! Quote Link to comment Share on other sites More sharing options...
nickb1 Posted December 14, 2017 Share Posted December 14, 2017 Energy backed currency was proposed by ecological economist Richard Douthwaite in his book "the ecology of money". One problem with it is that it could encourage more energy carrier production and therefore fossil fuel exploitation in order to expand / maintain the money supply, as gold exploitation was encouraged under the gold standard. Another is that of energy descent (peak oil, coal and gas), which would imply money supply falling as fossil fuel extraction rate falls. Quote Link to comment Share on other sites More sharing options...
Will! Posted December 30, 2017 Author Share Posted December 30, 2017 That looks like an interesting book, although Douthwaite has his Energy-Backed Currency Units valued in terms of Special Emission Rights with that value guaranteed by some international organisation, whereas I was thinking of EBMUs being valued in energy itself and guaranteed by a state's central bank. I think we will continue to exploit energy resources for their utility regardless of the money supply. A falling money supply would be desirable as Energy Return on Energy Invested falls. Quote Link to comment Share on other sites More sharing options...
Will! Posted February 22, 2018 Author Share Posted February 22, 2018 The Petro. Bloomberg: Venezuelans Can’t Buy Maduro's Cryptocurrency With Bolivars I'll be interested so to see whether anyone successfully exchanges one for a barrel of oil. Quote Link to comment Share on other sites More sharing options...
markyh Posted November 22, 2020 Share Posted November 22, 2020 I’m a reader of Dr Tim Morgan’s Surplus Energy Economics blog. One of his central theses is that economies are energy systems, not monetary ones, and thus money is a claim on energy. A post by @tomandluabout a currency pegged to the price of energy on the The Bubbly Bitcoin Thread led me to try the following thought experiment: Imagine a monetary unit backed by a central bank which promises to provide the bearer on demand with a kiloWatt hour of energy in a previously specified form or forms. The value of this energy-backed monetary unit (EBMU) would therefore be fixed at 1kWh. The price of this EBMU in any fiat currency would be the price of 1kWh in that fiat currency. The principle advantage I see is price stability: As the capability of a state’s economy to produce energy and thus to produce energy-intensive goods and services increases so the capability of the state’s central bank to back EBMUs with energy increases. In effect, as the productivity of the economy increases so the monetary supply increases, avoiding deflation. The price of energy is fixed in EBMUs, avoiding energy-price inflation. If the price of energy in a fiat currency rises then the price of the EBMU in that fiat currency rises too. The EBMU would also offer independence from the petrodollar, which could be appealing for oil-rich countries such as Russia and Iran. The principal disadvantage (from some perspectives) would be that there would be no ability for a state to devalue its money while on the ‘Energy Standard’. Any thoughts? We have had this since 2009, it's called Bitcoin. Largest most energy hungry secure cryptocurrency network in the world. Quote Link to comment Share on other sites More sharing options...
scepticus Posted July 3, 2021 Share Posted July 3, 2021 On 22/11/2020 at 14:13, markyh said: We have had this since 2009, it's called Bitcoin. Largest most energy hungry secure cryptocurrency network in the world. Completely wrong, as usual. A bitcoin does not guarantee consumption of a kWh. It may have used many kWh in its construction, but it has no such guarantee attached. In fact it has zero guarantees attached. Neither is it secure, as the USA recently proved. Quote Link to comment Share on other sites More sharing options...
markyh Posted July 4, 2021 Share Posted July 4, 2021 9 hours ago, scepticus said: Neither is it secure, as the USA recently proved. This is fighting talk, please elaborate, you believe Bitcoin has been hacked by the USA ? 🤣 Quote Link to comment Share on other sites More sharing options...
scepticus Posted July 4, 2021 Share Posted July 4, 2021 https://www.marketwatch.com/story/how-did-federal-agents-recover-bitcoin-and-access-a-crypto-wallet-tied-to-the-colonial-pipeline-cyberattack-11623182259 Quote Link to comment Share on other sites More sharing options...
dugsbody Posted July 4, 2021 Share Posted July 4, 2021 1 hour ago, scepticus said: https://www.marketwatch.com/story/how-did-federal-agents-recover-bitcoin-and-access-a-crypto-wallet-tied-to-the-colonial-pipeline-cyberattack-11623182259 The bitcoin protocol is secure. Owning bitcoin is not, as many people have found out due to having their devices penetrated or falling for some other man in the middle attack. Quote Link to comment Share on other sites More sharing options...
scepticus Posted July 4, 2021 Share Posted July 4, 2021 sorry bad wording, that is what I meant. Quote Link to comment Share on other sites More sharing options...
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