Hello everyone. Much of the current debates on monetary issues focus on either exposing problems with government sanctioned and backed fractional reserve banking or simply on attacking fiat money in general. Quite a number of people here argue for the return to the gold standard, which obviously might sound like a tempting alternative to the current nightmare of unctrolled money supply. Yet, there are of course quite a few problems with using gold as the commodity of choice.
Has any of you heard of the suggestion to use energy-backed money instead? http://www.energybackedmoney.com/chapter7.html What do you think about it? Naturally, it would be best if it could freely compete with other currencies, but should the government retain a monopoly, wouldn't this kind of money make more sense than either gold-backed or fiat one?
A brief scan of the website yielded nothing but gibberish. Energy speculation is a specialized activity and "backing" money with "energy" would cause all holders of the "energy-backed money" to be energy speculators, whether they should be or not. While gold also has a speculative component, because new gold mining is only a fraction of above-ground gold reserves, it can only have a minor effect on the gold price as compared to the demand to hold gold. Thus, holding gold has very little to do with gold-mining speculation (that's why you have to buy gold-mining stocks if you actually want to speculate on gold mining) and mostly to do with speculation regarding the future purchasing power of gold.
Clayton -
Petrodollar
Petrodollar wiki
What government does with petrodollar monopoly
What other countries that are not US allies are doing about the petrodollar
Using electricity would not be any different. As electricity comes from...
The dollar today is linked to gold and oil. They play loose with the variables...
@ Clayton - Thanks for your comment. Well, I gave a link to the website mostly because it's brief and clear, not necessarily 100% sound or correct.
Well, what do you mean by energy speculation?
The good thing about energy-backed currecy could be that, unlike gold, it could theoretically be subjcted to demurrage (theoretical cost of storing energy) and both its supply and value would depend on technological progress and growing efficiency.
The good thing about energy-backed currecy could be that, unlike gold, it could theoretically be subjcted to demurrage (theoretical cost of storing energy)
...and this wasteful cost is good how?
and both its supply and value would depend on technological progress and growing efficiency
...and this additional uncertainty is good how?
@ Andris
The cost would serve as a demurrage which would prevent currency hoarding and would make money equal to other commodities in a sense that it would diminish in amount (but not necessarily in value per unit) with time (it's something that comes from Freigold ideas by Gesell). This is just a suggestion, energy-backed currency wouldn't have to have this mechanism, but it would help should progress in energy efficiency cause deflation (Just like during the high deflation in America in 1870s that was caused by gold mine strikes in S Africa and Yukon).
As for the uncertainty: well, it would create an incentive to link the money supply to general technological progress and as such it would correspond better with economic progress than gold.
The cost would serve as a demurrage which would prevent currency hoarding and would make money equal to other commodities in a sense that it would diminish in amount
Ok, but what's wrong with "currency hoarding"? And how is diminishing of currency a good thing? And what's wrong with price deflation?
As for the uncertainty: well, it would create an incentive to link the money supply to general technological progress
Having value and supply of money linked to technological progress is good because it would create uncertainty which would create an incentive to link the money supply to general technological progress? Huh? Sounds a bit circular. Anyway, who would gain from the fact that money supply increases with technological progress?