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The interesting thing about using energy as a currency is that its inflation naturally tracks the real world: if everyone has double the currency (and it's back

The interesting thing about using energy as a currency is that its inflation naturally tracks the real world: if everyone has double the currency (and it's backed by real energy), then people are richer in purely material terms as well, in much the way that we're richer on average than people were in 1950. A major issue is that we don't have anything that's usefully dense in energy content to use as money (except nuclear fuels, I suppose, but I have a hard time seeing them in circulation with the current fear of nuclear power...).

bradleyland 14y ago
The amount currency "required" by an economy correlates to the size of the economy. The available energy commodities are not guaranteed to track the size of an economy. That's why we see fluctuations in the cost of energy. > A major issue is that we don't have anything that's usefully dense in energy content to use as money. I don't really understand this comment. If you're going to design a commodity backed currency, the energy density of the commodity is irrelevant. You don't have to swap uranium bars at the store in order to use an energy commodity as currency. You issue contracts representing your ownership of a specific amount of the commodity in a warehouse somewhere. Sound familiar? Commodity backed currency is not new. Swapping out the commodity just ties you to another system of supply & demand.
- randallsquared 14y ago
  Having a piece of paper that says you owe me 6 trillion kJ is fine until it turns out you can't pay up. Ultimately, someone has to have the actual backing commodity. This is no problem with USD, since it's all just numbers anyway. It's less of a problem for gold than for energy, since 1 400oz bar is worth over half a million USD. Half a million USD in barrels of oil is more than 5000 barrels. Ideally you'd want something that was easy to store to base your economy on. :)
notahacker 14y ago
Energy inflation doesn't naturally track the real world at all. You're not richer in real terms for travelling on a thirsty old MD-80 than a new A320neo using little more than half the fuel, and the US is not better off in real terms than 1980, when per capita energy use was higher than it is now. A Google search or Kindle download is not materially less beneficial than a drive to the library/bookstore. In fact, for a developed country like the US the anticipated trend in energy use is in the opposite direction to the anticipated trend in real GDP. http://www.eia.gov/forecasts/aeo/MT_energydemand.cfm http://www.eia.gov/forecasts/aeo/MT_energydemand.cfm An energy-based theory of value is more wrong than the labour theory was in the time of Smith and Marx, and similarly it's increasingly wrong. This forum is full of people who create economic value with computer technology that decreases the demands on physical infrastructure.
- randallsquared 14y ago
  > An energy-based theory of value Hm. I certainly wasn't suggesting that anything be pegged to the kJ, or whatever. I do think that someone with twice the available energy is, to a first approximation, twice as well off, and that reducing the amount of energy it takes to do whatever you want to do also makes you better off, since both of these make you able to do more of the things you want to do (or have more of the things you want to have). It's true that there is an enormous amount of things we can do now that fall below a cost floor such that we can have however much we want, but in general I'm far more concerned with lowering costs and increasing options than with figuring out what the "value" of something is. Is a Kindle download as "valuable" as a physical book? I'm not sure that that has any objective answer. Is the cost of production lower (either in pounds or dollars or energy)? Enormously so. And that makes us all richer in comparison.
  - bradleyland 14y ago
    This whole discussion centers around the concept of energy backed money, which is just commodity backed money. You said that "its [energy] inflation naturally tracks the real world". Notahacker is pointing out that it doesn't. So if we're not pegging money to a kJ (or whatever), then we're no longer talking about energy backed money. > I do think that someone with twice the available energy is, to a first approximation, twice as well off, and that reducing the amount of energy it takes to do whatever you want to do also makes you better off, since both of these make you able to do more of the things you want to do (or have more of the things you want to have). Yes, but we're talking about currency here. I get what you're saying: that the increases in efficiency reduce the "value" of your energy holdings, but it also increases the amount you can accomplish with the same energy. That is not a zero sum in a broader economic sense though, because the cost of different goods vary disproportionately with the cost of energy. Once again, you're stuck with a currency with a supply that fluctuates out of sync with other major economic factors. You'd be better off backing your currency with an index of commodities from multiple sectors, but then you're making currencies in to something they don't need to be. As I said in my original post, if you want to buy assets of a specific kind, go buy them! Currency is a form of short term accounting, and that's a good thing. Long term, you want currency at work in the form of exchange buying and selling things. You really only want people holding as much currency as they need to operate a means of production. Stagnant currency is stagnant means. It's the very definition of an economic slow down. > It's true that there is an enormous amount of things we can do now that fall below a cost floor such that we can have however much we want, but in general I'm far more concerned with lowering costs and increasing options than with figuring out what the "value" of something is. Is a Kindle download as "valuable" as a physical book? I'm not sure that that has any objective answer. Is the cost of production lower (either in pounds or dollars or energy)? Enormously so. And that makes us all richer in comparison. That is efficiency. It's a significant driver of economies. Everyone wants that. What's unclear is how a move from the USD to something commodity backed would benefit efficiency.

bradleyland 14y ago

The amount currency "required" by an economy correlates to the size of the economy. The available energy commodities are not guaranteed to track the size of an economy. That's why we see fluctuations in the cost of energy. > A major issue is that we don't have anything that's usefully dense in energy content to use as money. I don't really understand this comment. If you're going to design a commodity backed currency, the energy density of the commodity is irrelevant. You don't have to swap uranium bars at the store in order to use an energy commodity as currency. You issue contracts representing your ownership of a specific amount of the commodity in a warehouse somewhere. Sound familiar? Commodity backed currency is not new. Swapping out the commodity just ties you to another system of supply & demand.

randallsquared 14y ago
Having a piece of paper that says you owe me 6 trillion kJ is fine until it turns out you can't pay up. Ultimately, someone has to have the actual backing commodity. This is no problem with USD, since it's all just numbers anyway. It's less of a problem for gold than for energy, since 1 400oz bar is worth over half a million USD. Half a million USD in barrels of oil is more than 5000 barrels. Ideally you'd want something that was easy to store to base your economy on. :)

notahacker 14y ago

Energy inflation doesn't naturally track the real world at all. You're not richer in real terms for travelling on a thirsty old MD-80 than a new A320neo using little more than half the fuel, and the US is not better off in real terms than 1980, when per capita energy use was higher than it is now. A Google search or Kindle download is not materially less beneficial than a drive to the library/bookstore. In fact, for a developed country like the US the anticipated trend in energy use is in the opposite direction to the anticipated trend in real GDP. http://www.eia.gov/forecasts/aeo/MT_energydemand.cfm http://www.eia.gov/forecasts/aeo/MT_energydemand.cfm An energy-based theory of value is more wrong than the labour theory was in the time of Smith and Marx, and similarly it's increasingly wrong. This forum is full of people who create economic value with computer technology that decreases the demands on physical infrastructure.

randallsquared 14y ago
> An energy-based theory of value Hm. I certainly wasn't suggesting that anything be pegged to the kJ, or whatever. I do think that someone with twice the available energy is, to a first approximation, twice as well off, and that reducing the amount of energy it takes to do whatever you want to do also makes you better off, since both of these make you able to do more of the things you want to do (or have more of the things you want to have). It's true that there is an enormous amount of things we can do now that fall below a cost floor such that we can have however much we want, but in general I'm far more concerned with lowering costs and increasing options than with figuring out what the "value" of something is. Is a Kindle download as "valuable" as a physical book? I'm not sure that that has any objective answer. Is the cost of production lower (either in pounds or dollars or energy)? Enormously so. And that makes us all richer in comparison.
- bradleyland 14y ago
  This whole discussion centers around the concept of energy backed money, which is just commodity backed money. You said that "its [energy] inflation naturally tracks the real world". Notahacker is pointing out that it doesn't. So if we're not pegging money to a kJ (or whatever), then we're no longer talking about energy backed money. > I do think that someone with twice the available energy is, to a first approximation, twice as well off, and that reducing the amount of energy it takes to do whatever you want to do also makes you better off, since both of these make you able to do more of the things you want to do (or have more of the things you want to have). Yes, but we're talking about currency here. I get what you're saying: that the increases in efficiency reduce the "value" of your energy holdings, but it also increases the amount you can accomplish with the same energy. That is not a zero sum in a broader economic sense though, because the cost of different goods vary disproportionately with the cost of energy. Once again, you're stuck with a currency with a supply that fluctuates out of sync with other major economic factors. You'd be better off backing your currency with an index of commodities from multiple sectors, but then you're making currencies in to something they don't need to be. As I said in my original post, if you want to buy assets of a specific kind, go buy them! Currency is a form of short term accounting, and that's a good thing. Long term, you want currency at work in the form of exchange buying and selling things. You really only want people holding as much currency as they need to operate a means of production. Stagnant currency is stagnant means. It's the very definition of an economic slow down. > It's true that there is an enormous amount of things we can do now that fall below a cost floor such that we can have however much we want, but in general I'm far more concerned with lowering costs and increasing options than with figuring out what the "value" of something is. Is a Kindle download as "valuable" as a physical book? I'm not sure that that has any objective answer. Is the cost of production lower (either in pounds or dollars or energy)? Enormously so. And that makes us all richer in comparison. That is efficiency. It's a significant driver of economies. Everyone wants that. What's unclear is how a move from the USD to something commodity backed would benefit efficiency.