energy currency?

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lorb
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Re: energy currency?

Postby lorb » Mon Oct 10, 2016 2:26 pm UTC

reval wrote:For most of us, money is a consumable, not a persistent claim. A system of energy coupons would accurately represent that kind of money. Now you just have to figure out a way to build an economy on that basis ...


Energy is about 1000 times harder to store than food. So, at 3AM I can get energy coupons for free, because energy is usually for free at that time, and 3PM I can go shopping by using them?
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CorruptUser
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Re: energy currency?

Postby CorruptUser » Mon Oct 10, 2016 9:25 pm UTC

Except we also have durable goods that we need, such as clothes, cars and homes, which last for years, decades, or even rarely centuries.

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Re: energy currency?

Postby reval » Fri Oct 14, 2016 3:06 pm UTC

lorb wrote:So, at 3AM I can get energy coupons for free, because energy is usually for free at that time, and 3PM I can go shopping by using them?


Fair objection. If you built an economy on "consumable currency", it would look pretty different from our present economy. People have suggested self-depreciating currencies: e.g., at 9 AM the energy coupons you got at 3 AM would still have some value, but by 3PM they would be worthless. The depreciation rate would be related to the cost of storing energy.

So you wouldn't actually get free energy coupons at 3 AM, because the coupons would have to be based on some non-zero storage capability. Of course, actually using the energy at 3 AM would be the most efficient use of the energy, much better than storing it. Self-depreciating energy coupons would reflect that efficiency.

As you point out, food storage lasts longer. Maybe this means a separate set of food value coupons with a slower depreciation rate? And even longer-term coupons for durables? Maybe abstract 1 hour, 1 week, 1 month, and 1 year coupons that work by depreciation rate for different purposes. Can't see running much beyond 5 years with the "consumables" concept. Just brainstorming how a consumable currency economy might work.

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Re: energy currency?

Postby lorb » Fri Oct 14, 2016 4:39 pm UTC

So the actual currency would be energy storage systems, not energy.
Also I really think you should first read about how the current system of currency works, because you are demonstrating a lack of understanding some aspects of currency and how it works.
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Re: energy currency?

Postby ucim » Sat Oct 15, 2016 4:02 am UTC

The whole point of currency is that it is durable. If you go to an ephemeral currency (like "energy"), the economy will simply use durable goods to store value. They will then become divisible, and a new durable currency will emerge. Somebody will come up with the idea of a proxy for that, similar to dollar bills being a proxy for gold, and then that proxy will become currency. Later on, when the proxy is in deep enough, the link to its backing will be severed, and we'll be right where we are now.

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Re: energy currency?

Postby phillip1882 » Mon Oct 24, 2016 12:43 pm UTC

wanted to address some of the stuff in this topic.

the time of day issue:
there are three things that keep the time of day issue from being a problem, or ways in which you could work around it.
firstly, the supply of currency is limited by how much electricity you produce in a given year.
secondly, you would have to charge people the same amount of electricity no matter what time they use it.
this doesn't mean the price of electricity never changes, as people will save the bills that represent value, increasing the total supply, which affects price. that is, in the first year 1 megawatt of electricity will buy more eggs than in the second year (money supply will double the second year, and increase at a roughly quadratic rate.)
when you pay your electric bill, the bills that represent the currency are destroyed, keeping inflation at a minimum. the people who work at the power plant are payed the same way any other employee is payed. their money is destroyed when they go home and use it.

who owns the money issue:
anyone who owns a power plant that contributes to the power grid can produce money equivalent to his contribution. anything form solar, wind, water, oil, gas, geothermal, you name it, anyone can take part. this idea is nothing new. farmers can have bills of stock that represent how much they are producing, and sell them on the open market. i imagine something similar for the electricity money.

the supply issue:
having an infinite supply of money for a finite amount of resources is probably not a good idea. yes, i know, we don't actually have an infinite supply of money. but it would not be hard for the federal reserve to credit itself trillions of dollars.

the political issue:
admittedly, this one is harder to get around. how do we ensure that the government wont over produce electricity when is tied directly to the money supply? i suppose there's three issues with this. first, the limited supply of money itself puts a cap on how much they can spend toward building new power plants. second, the people will only tolerate so much taxation, so the government can't use the full amount. third, even if the money supply inflates at a higher than quadratic rate, this will be offset by lower prices.

hope this clears things up.
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Re: energy currency?

Postby Tyndmyr » Mon Oct 24, 2016 8:49 pm UTC

I think we adequately covered why the answer is "hell no" at this point. =) Been beating it to death, really.

Fiat currency is actually pretty handy.

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Re: energy currency?

Postby Soupspoon » Tue Oct 25, 2016 10:27 am UTC

Tyndmyr wrote:Fiat currency is actually pretty handy.
But a Ferrari currency turns people's heads... ;)

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Re: energy currency?

Postby CorruptUser » Tue Oct 25, 2016 11:23 pm UTC

Yeah but you can't put a Ferrari in Porsche's g-string.

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Re: energy currency?

Postby Tyndmyr » Wed Oct 26, 2016 3:10 pm UTC

You can do anything once, if you're brave enough.

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Re: energy currency?

Postby Soupspoon » Wed Oct 26, 2016 5:32 pm UTC

Just refrain from incest or Morris Dancing, they say.

(Whoops... So close.)

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Re: energy currency?

Postby reval » Fri Oct 28, 2016 1:49 pm UTC

lorb wrote:first read about how the current system of currency works


Honestly, that's where this is coming from. Karl Polanyi, "The Great Transformation" (1944), is about the three fake commodities that the market system is built on (labor, land, and money). The Wikipedia articles are a little thin on details, and you really have to read that book to get the point of what he's talking about. He's sometimes described as a socialist, but that isn't really correct. He is critical of both liberal and socialist economic ideas.

Polanyi's argument is that society gets a great benefit from having a market, but the market is also very destructive: if the price of labor drops to zero, the workers starve to death - so an "ideal" market cannot exist at all. If it's profitable to destroy the land, the land will be destroyed. Then the land isn't profitable at all anymore. So, first in the UK in the 19th century, then in Europe, and then everywhere else through colonialism, there was a "double movement": expansion of the market, followed by regulation, the "self-protection of society". So we get to have the products of an industrialized society, but we also need health and safety regulation for simple survival.

What happens to money is almost more interesting than what happens to land and labor. Fixed ("gold standard" = "commodity money") exchange rates cause slight payment imbalances to result in major deflationary crises. This destroys businesses. As long as it was just starving workers and destroyed land, the business owners didn't care that much. But "ideal market" money destroys businesses. It turns out no one really "controls" a market like this - you can only try to limit it through regulation.

That's what fiat currency is. An attempt to regulate an "ideal" gold standard currency market so that it doesn't destroy the businesses that are trying to live off that market.

And neither commodity nor fiat currencies are the final answer here. What matters is how society can get the benefit of efficient industrial production without destroying the means of that production - the people, land, and whatever means they use to exchange/share/trade effort.

And, no I don't think this is beating a dead horse. I believe a "consumable"-based, or self-depreciating, currency is quite possible. Yes, the economy looks different when you do things this way. Maybe better. Worth a think or two.

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Re: energy currency?

Postby Zamfir » Fri Oct 28, 2016 2:40 pm UTC

@reval, I don't see the link between Polanyi and this proposal. What are the specific flaws of a fiat currency that would be solved by an energy currency? Especially as philip's proposal is not exactly clear. I order a sandwich, I take out my wallet, then what happens? Something with electricity, but I can't figure out more details than that, or how it would be better, let alone how it would be related to Polanyi...

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Re: energy currency?

Postby Tyndmyr » Fri Oct 28, 2016 3:25 pm UTC

reval wrote:Honestly, that's where this is coming from. Karl Polanyi, "The Great Transformation" (1944), is about the three fake commodities that the market system is built on (labor, land, and money). The Wikipedia articles are a little thin on details, and you really have to read that book to get the point of what he's talking about. He's sometimes described as a socialist, but that isn't really correct. He is critical of both liberal and socialist economic ideas.


Shit, if labor and land are fake, what's real?

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Re: energy currency?

Postby Zamfir » Fri Oct 28, 2016 4:19 pm UTC

Polanyi doesn't say they're fake, he says they are fundamentally not commodities, and there is no context in which you can truly abstract away from their non-commodity aspects. So he calls them fictitious commodities to underline that point.

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Re: energy currency?

Postby Tyndmyr » Fri Oct 28, 2016 4:41 pm UTC

Ah, understood.

*shrug* They're not terribly fungible, but they're still essential.

Fiat currency's pretty fungible, though. I mean, you *could* use gold or something instead, but why? We know what a commodity based economy looks like, and it's got some nasty tradeoffs vs fiat money. It's not a particularly unknown area, I think. Even leaving aside the particular difficulties of energy as a thing to back with, there are good reasons why successful economies moved to fiat currency.

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Re: energy currency?

Postby reval » Fri Nov 11, 2016 9:00 pm UTC

@Zamfir, you're right, I don't have an answer, I was just going back to the fundamentals of currency.

Okay, how about electronic tokens valid for "today only", "this month only", and "this year only". Backed by a government that used tax money to build a big solar electricity utility, with limited energy storage capabilities. Like the Alaska reverse income tax, the government then gives everyone a certain number of tokens every day. Your token gets you a fixed amount of energy, but only while it's valid. When it expires, the government automatically sells you a longer-term token for your "today" token, but at a discounted rate that is connected with the available energy storage capability.

So you go to the sandwich shop. The sandwich shop owner may or may not be able to actually use the kWh from your "today" tokens while they're valid, but certainly knows how many "this month" tokens they will be discounted to when they expire. The owner also knows how many "this month" tokens will be needed to pay this month's rent and supplies. After all, sandwiches are also consumables, just like energy, and they also have an expiration date. So you and the shop owner should in principle be able to negotiate the price of a sandwich that will work for both of you.

Rough model for self-depreciating consumable-based currency?

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Re: energy currency?

Postby Zamfir » Sat Nov 12, 2016 10:53 am UTC

I am going to be skeptical, but I hope I can stay mildly skeptical. It's too easy to just dismiss deviations from the status quo.

If I understand you correctly, the plan has two components: on the one hand, a peculiar government -organized currency scheme with built-in depreciation, on the other hand a convertibility to electricity, similar to the gold convertibility of the nineteenth century. And you consider the first component as potentially useful, while the convertibility is somehow intended to make the first part possible. Is that right?

About the scheme: what is intended to accomplish? It looks like a scheme to discourage savings in currency. You want to postpone consumption by 6 months or so, the scheme encourages you to invest in an explicit investment vehicle instead of holding currency. Is that your goal?

I already see one problem there: we know what the standard consumer-oriented, flexible, short term investment vehicle looks like. Namely, bank accounts with maturity transformation in the back ground. And once those exist, what's to stop people from using them as de facto currency, avoiding the burdensome kWh scheme? You'd just have an unregulated form the present system back.

On the second part, whatt is the electricity convertibility adding to the plan ? What if the government just implements the token scheme without kWh convertibility?

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Re: energy currency?

Postby reval » Wed Nov 16, 2016 4:37 pm UTC

The point is efficient use of resources. That's the point of trading things, right? That's what currency is.

An energy-backed currency is all about the efficient use of energy as a resource. The depreciation is tied to energy storage. This is what improves efficiency. If you can find a productive use for the energy when it's available, you don't have to take the depreciation. Profit! If you can't find an immediate use, then trade for a longer-lasting resource. But they all depreciate in the end.

(Yes, this picture involves government as the ultimate owner of the resources, which it rents out for taxes, or distributes as a reverse income tax. That kind of government backing may be too heavy-handed for some people - although they rarely question property, which also exists only as backed by government. You could design other mechanisms not backed by government. Depends if you prefer resources and utilities to be publically owned.)

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Re: energy currency?

Postby ucim » Wed Nov 16, 2016 5:03 pm UTC

reval wrote:If you can find a productive use for the energy when it's available, you don't have to take the depreciation. Profit!
It would also have the effect of encouraging unnecessary use of this resource. If you have it, use it whether you need it or not; while you could take a loss trading it for more durable credits, it's essentially a discount for using juice you don't need.

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Re: energy currency?

Postby lorb » Wed Nov 16, 2016 7:01 pm UTC

reval wrote:If you can't find an immediate use, then trade for a longer-lasting resource. But they all depreciate in the end.


You are still missing one of the points made in criticism here in this thread: sometimes it's impossible to find anyone who would be willing to give you anything at all for your energy because there is an abundance of supply but no way to store it. Negative energy prices, which are a symptom of nobody willing to buy energy for anything more durable, happen all the time and they would mess up your currency pretty bad.
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Re: energy currency?

Postby 4100xpb » Wed Nov 23, 2016 7:41 pm UTC

ucim wrote: Ultimately, the only thing that government can do that actually gives it value is accept the currency (which it created) for payment of taxes. Everything else is mere encouragement.

Jose


A little while ago I read "Debt: The First 5,000 Years," and it, in an offhand way, suggested that a currency is just that. That is to say, currency is 'whatever the government will accept for payment of taxes,' be it paper money, gold, grain, or rocks.

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Re: energy currency?

Postby reval » Fri Dec 09, 2016 3:49 pm UTC

lorb wrote:sometimes it's impossible to find anyone who would be willing to give you anything at all for your energy because there is an abundance of supply but no way to store it. Negative energy prices, which are a symptom of nobody willing to buy energy for anything more durable, happen all the time and they would mess up your currency pretty bad.


I believe negative pricing is taken care of by having the government act as the issuer of an energy based currency. The government absorbs negative energy prices as an incidental expense that is covered by the depreciation of the currency.

This is not new. We have present-day energy utilities that absorb periods of negative energy pricing as an incidental part of their cost of doing business. If it doesn't mess up the operation of an energy utility, why should it mess up a government-backed currency?

This is also a counterargument to the "depreciation just encourages waste" argument. It looks to me like one could balance the other out. Why couldn't you come up with a depreciation rate that (on the one hand) covers the costs of limited storage, negative pricing, etc, and (on the other hand) allows people to seize opportunities for productive energy use, but stops short of encouraging excessive waste?

I'm not usually a big fan of market mechanisms, but in this case a well-regulated market might be one way to find the correct depreciation rate. For example, I think the US Treasury issues bonds with a definite interest rate (whatever it can get at the moment). Then the bond market trades those bonds at various premiums and discounts that account for numerous changing economic variables such as inflation, the stock market, and so forth. It's a secondary market that gives you information about the actual current interest rate on bonds. If I understand bonds correctly. Couldn't that work for a currency depreciation rate?

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Re: energy currency?

Postby CorruptUser » Sun Dec 11, 2016 4:59 am UTC

The negative pricing doesn't mess up the electric market because the market price is income, not asset value.

And really, we sort of already have energy currency. They are electricity futures. And they fluctuate in value, are not really transferable between geographic regions although correlated, and too difficult to use for anything other than major purchases.


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