Written by By Davian Views (Traditional Industrial Ecologist)
Energy in its rawest form is solar radiation, and in round figures we get one kilowatt-hour per square metre at sea level during the hours of daylight. This is a substantial amount of energy, and well in excess of what we use to maintain a lifestyle in the developed world. There is no shortage of energy, the shortage arises in our ability to utilise it. To give you an idea of how much energy this is, a metre is about one large step, make a square of that size and imagine a one kilowatt electric fire in the middle. If you consider a tennis court is circa 261 m² then you must imagine 261 one kilowatt electric fires. Put another way, this is enough energy to propel three, two litre Diesel family cars at eighty mph along a motorway.
Most people think of collecting solar radiation by using solar panels, either for generating electricity or heating hot water. For the reader interested in alternative methods of generating electricity for circa £0.02 per Kilowatt Hour, my patent application for a Differential Density Momentum Generator can be viewed at the intellectual property office website, publication number GB 2493233, or follow this link.
A local currency based on the kilowatt-hour would be ideal for financing energy harvesting projects such as this. The mechanism would be to forward sell the energy production, to raise the money to build the machine in the first place. This is very similar to mining companies forward selling their production to raise money to construct the mine.
The advantage of creating credit denominated in what you produce is that the risk of default is not raised because of the fluctuations in price of a commodity over time when measured in a Fiat currency. It also provides a home and income for people who wish to save in an energy-based currency.
This form of saving is very similar to a Treasury bond in that interest is paid on capital that the capital is repaid at the end of the term of the bond. So a 1000 Kwh, 10 year, 5% Energy Bond would provide the Saver with an income of 50Kwhs per annum and the capital of 1000Kwhs being redeemed in the tenth year. At this point is worth considering the misnomer of the term Saver. A saver is in actual fact a lender, because they lend their money to the issuer of the bond exchange for the payment of interest.
It would therefore be helpful to redefine the relationship between lender and lendee, in simple understandable terminology, Owner and Ownee. First of all it is worth defining the difference between cash and credit. In our example above the 5% paid on the energy Bond would be paid in cash. The cash in a barter currency based on the kilowatt-hour is available now as opposed to promised at the end of the life of the bond. So for example the 50 kWh paid annually could be used to reduce the electricity bill. This is because being cash the electricity has been generated and can be collected via the National Grid. It might not be exactly the same kilowatt-hour that was generated and credited but the kilowatt-hour is a fungible measurable item and therefore interchangeable with other kilowatt-hours.
So in our Barter currency cash is something that’s been produced and credit is something that is yet to be produced. This also leads to the destruction of cash as and when the kilowatt hour is actually used. As an example, if you use electricity to create synthetic diesel from the carbon dioxide and water in the atmosphere this will require circa 22 kWh of electricity. The resulting litre of diesel will contain only 10.69 kwh of energy to be retrieved when it is burnt, so the loss of 11.31 kWh is due to the processing and manufacturing energy expenditure. When the diesel is burnt the remaining kilowatt hours are destroyed. This means that there is an inbuilt mechanism of currency destruction. This is useful in that the supply of tangible capital is tied to the production and storage and use of tangible assets. These assets are therefore the wealth of the Bread and Butter Economy (BABE) in the Local Ecological Area Foundation (LEAF).
The difference between the IOU of the principal of the energy Bond and the cash of the interest paid allows the money supply to be expanded by the issuance of bonds and contracted by their redemption.
So far, this is a quite familiar model. However if we introduce the three principal natural parameters of being discerning, ethical and streamlined (DES) to our harmonious actions, the model is clumsy and becomes complex rapidly.
Let us see if we can make it simpler and more attractive by combining interest and principal into our currency. This makes it worth holding as a store of growing value, as well as a medium of exchange.
Conventional cash used to be a promissory note, promising to pay the bearer on demand a certain amount of Gold in exchange for the note. These Banknotes also had a serial number so that the number of notes printed was quantifiable. Modern banknotes promise to pay the bearer what they are already in possession of, a piece of paper with writing on it. Modern banknotes still have serial numbers, but most of the money in circulation is electronic, so nobody knows how much there is in total. This is sloppy in the extreme.
Back in 2001 after the War on Terror started, the government brought in money laundering regulations that meant that any money over £2500 was to be recorded. I was working in a casino at this time. There were also large amounts of money being lost through fraud at banks. There was I staring at the obvious solution to both problems: a Roulette table.
A Roulette table can comfortably process some five hundred individual bets per spin, and on a busy game will have a spin every minute or so. These bets are owned by different players, and the only record of the transaction is where the chips are placed on the layout of the table. Each player has a different colour of chip, and the value of each colour chip is determined by a marker at top of the table. The result is that the croupier knows who placed the chip, and therefore who and how much to pay, when they win, because ownership is determined by the colour of the chip. Coloured chips are not stolen by other players, because their ownership is known.
The change of ownership of the chips is determined by their position. If the chips are on the players side of the layout, they belong to the player. If the chips are on the layout they are in play, ownership to be decided by which number the ball lands in. When the ball has dropped in the winning number, a change of ownership happens, The winning bets remain in position and the property of the player. The losing bets are taken by the Croupier and are now owned by the house. The winnings are paid by the house and pushed by the Croupier to the players side of the layout and are now owned by the player.