Hi Pete, Yes, I still think that energy would be a good basis for any currency. The important feature of any fiat currency issued by governments is that it should always be redeemable at an issuing bank against something of universal and unambiguous value. This value can be anything that is widely acceptable, the quantity of which shouldn't change from day to day, but only gradually over the longer term.
Gold would be OK (because of its historical, and still-continuing, value), so would a package of basic foodstuffs, so would potable water (as suggested by Brian McAndrews recently), and so would energy. The particular merit of using energy is that it plays a part in the production of all the others. Energy is required in the discovery, distillation or production of potable water, in the growing of crops, and in the production of all other goods and services. The margin of energy-use of one method over another in all of these is the basic cause of profit that's gained by both parties in a trade transaction. However, I can only envisage currencies being redeemable against any of these basic things if governments were to allow private banks to issue their own currencies (with guaranteed redemption on demand). This seems unlikely in the foreseeable future (unless some new currencies creep in from non-banks -- such as air-miles, or 'WalMart'-type debit cards redeemable against groceries) and governments will want to retain their hold over currencies via their central banks (which, whatever they might say, are not independent in extremis). There's just one other basic value of any one national currency and this is the total value of all the national currencies combined (and, at any one time, this would include large amounts of counterfeit currency [US dollars usually!] which is made well enough to pass through the financial system). For this to work properly, and for citizens of any one country being able to avoid being plundered in one way or another by their governments (usually by devaluation), then there must be the freedom for anybody to exchange one national currency for another which they think is more valuable. In practice, this is denied to most people in the world. Or, if it's allowed, then the transactional (exchange) costs are high in the case of most currencies. Because the transactional costs of the main currencies, such as the US$, the euro, the pound, or the yen are much lower than the rest, and because we are seeing the increasing use of the electronic transfer of money, then I imagine that, gradually, the whole world will come to use one currency. At the moment, the best candidate would be the US$ -- but who knows in the longer term? If there were a world currency then the fiscal foolishness of any particularly government which impoverishes its own economy directly (and its own inhabitants) wouldn't have a great effect on the value of the overall currency because the devaluation would be buffered by the other economies. If, however, another currency creeps in from non-bank sources it could only do so if it were definitely and immediately redeeemable against national currencies or some basic stuff such as gold, potable water, energy or foodstuffs. I wouldn't discount this possibility. If it did happen then it's likely that it would displace national currencies (or perhaps even a world currency) for psychological reasons (its value would be felt to be more tangible), but I can't for the life of me think how this could happen. Keith At 14:31 05/03/02 -0800, you wrote: (PV) <<<< This originally went by when I was seriously lagging in following FW, so I didn't comment, but as Thomas has resurrected it, I have another chance to respond: >>>> (KH) >"the mechanistic aspect will not be sufficiently analysable or understood >until we have a currency system that has constant purchasing-parity >across all countries. This can be either one world-wide currency of known >and constant value (that is, a dependable human unit and also a truly >scientific unit of measurement) or the frictionless exchange of >individual currencies (that is, national currencies not being interfered >with by politicians or central banks" (PV) <<<< Keith, I believe you once suggested here, several years ago, that an excellent basis for world currency would be energy. What do you think about that now? I have had that floating about in my head since your suggestion, and I've come to like it more and more. It has all sorts of appeal, not the least being an accurate reflection of the physical world, and a built in pressure for ecologically responsible behaviour. Plus, if gold lust could be transmuted to greed for self-regenerating energy hoards, a huge lot of stray mental energy might be directed towards development of energy technology. At the moment, electricity here goes for about $.06/kW-h, which is 6x10^7 joules/$ Cdn. A new unit worth 10^8 joules would be about $1 US. It would be interesting to look at what would happen to the various sources of energy if they were revalued this way. I'd have to look into the energy content of crude oil, to compare the values. Energy efficiency would become very transparent with this system - a battery delivering 35,000 joules (0.00035 energy units) might cost 3 energy units due to manufacturing cost. And wind and solar properties of land would be regarded as free money, and be more likely to be exploited. >>>> __________________________________________________________ �Writers used to write because they had something to say; now they write in order to discover if they have something to say.� John D. Barrow _________________________________________________ Keith Hudson, Bath, England; e-mail: [EMAIL PROTECTED] _________________________________________________
