Our economy is reeling from a lack of oxygen, or blood, or sugar, whatever is your analogy of oil, carbon coal, gas. To keep things under control with a contracting and increasingly contested and spread carbon supply the banks are making sure you don’t have the money to buy the stuff, a proces called the ‘economic crisis’ and austerity. This is a process with two possible outcomes. 1. Coal and gas win and our planet goes to hell in a plastic handbasket. 2. Renewables win and we get a chance to use the extreme potential to set things right vis a vis our climate.
This however is not easy in our economy. Our economy is the problem basically. It is a system of thought that rules a proces of credit extention based on interest baring loans for which we puchase goods and services created through the use of fossil fuels (mostly). It is a belief system that hinges on one thing: Plenty of fossil fuels. It is fundamentally incompatible with a renewables based economy because could you imagine a sudden expansion of that energy potential based on credit given by a bank? Renewables are local, hard to transport, store (not really but that’s a long story) and usually fully used up already. How do you make machines work without more energy? What is the use of extending credit if the recipient can NOT buy energy with it? Our credit is carbon credit, it has to be matched with carbon in the market or it is valueless.
This makes transition from within our current economic system an impossibility. It can’t happen, at least not until you have a renewable source that is flexible and allows random credit extention. It is not only impossible, the current system is based on scarcity, and it is perfectly possible renewables are not going to be scarce, today Denmark had so much windpower it practically had a negative price!
So how do you transition to the renewables based economy. For this one has to apply a better conceptualization of what money is and what economics could be. Our home grown theory is very simple. The focus is on wealth, and all wealth is the result of a combination of three factors, 1. Materials 2. Energy 3. Skills. Materials is easy to understand, Energy can be manual labour, fossil, nuclear, wind etc. Skills can be human expertise and dexterity, or robotic agility. Effective cybernectics (human or otherwise) could be another way to express it.
Of the three factors above only the second is now a problem. We have stuff, we can recycle. We have knowledge and can educate children to be engineers. Use machine learning algorithms to create optimal designs, design processes, production systems and products. But nr. 2, Energy needs to be done better, and with a better future proofness than today. We propose to do that through the money system.
The Northern and Southern Euro
To solve the Eurocrisis Economists proposed a Nothern and Southern Euro. This is an example of dealing our crisis through the money system. It is however only dealing with the economic crisis, that is with the negative experience of bankers primarily. They like to cut off ‘slackers’, in this case countries with little industrial export, because those countries have consumers wasting fossil fuels. The countries with more industry use the fuel to create products people want, wealth, so in order to maximize European wealth (also to grant it to certain countries) you could make two currency zones. Then you cut of fossil fuels to the Southern zones and make that zone more labour intensive. Make the North more service and industrial. This would be bank policy and they would have no problem coming up with excuses to stop investing in the South and concentrate on the North.
Although this is a partial solution of mainly the wealth problem in the North it is a very clumsy one. The South would go through a series of crisi in which the rich North would pick the cherries, all the while continuing to ruin our planet with fossil fuel use, the slight boom created by the split would mean renewables where even easier to kill, as has happened so many times before and is happening under our eyes, by carbon credit banks. This would mean the South would be poor and without hope. The North would ultimately follow or we would all have to breath the Carbon-Aid (most likely outcome).
Euro, Auro and Joule
If we apply our theory of wealth creation we arrive at a different set of currencies, not one or two but three. I name them the Euro, the Auro and the Joule. These currencies are meant as credit for Fossil fuels, Labour and Renewable Energy (CO2 neutral).
The Euro
The Euro is carboncredit right now. If there was no oil, coal or gas all our money would be worthless instantly. If the banks didn’t deflate so agressively we would see strong inflation today as the carbon supply on offer is shrinking and derivative cash would deplete it instantly. In our system the name Euro would be used for credit extended to purchase fossil fuels. There would be restrictions for extending Euro credit, namely always towards maximal clean energetic return, so the Joule return per Euro would be a criterium for any investment based on Euros. This is necessary for the transition through the three currency system to two currency system with only the Auro and the Joule.
When Euro credit would be extended with the backing asset (fossil fuels) in mind towards creating more renewable energy (Joules), it would be much more effective in increasing wealth than it is today.
The Auro
The second currency is the Auro, from Aurum : Gold. It is Gold or Silver, some kind of absolutely limited tangible asset that can represent labour. Why Gold or Silver? Because its limited nature matches the limited nature of the labour force. This currency is only for organizing labour in society, like it was for many centuries with reasonable succes. Gold may perhaps not be circulated but stored and represented digitally. There would have to be rules against saving, one can for instance only save towards a specific goal, just like you can now only receive credit through development of a business case. The state could collect Auro’s and apply citizen labour where it should for the good of the community. This is not about creating a labour intensive society, but about how to create a sensible way to organize labour when it occurs.
The Joule
The third currency is the liberator, the Joule. It liberates because renewable energy can be almost costless, so no toiling for solar PV electricity. Simplistically said it is energy credit, which can be extended by anyone with a renewable energy source. Trading renewable energy may be a complex thing, because it matters how far away from the source you want to use it, the type, when. These factors are now hidden from consumer awareness, but it takes (for example) a lot of oil to get one barrel of oil to the consumer. Joules would be of limited life, tied to an energy source. If large scale solar methane, wind methanol and ammonia plants would come online you would get agencies extending larger amounts of credit towards interesting activities, based on reserves, similar to our present carbon credit banks. Otherwise it would be localized credit extention as the amount of energy produced is increased (for which humanity optimistically has eternity).
Because of the mostly local nature of renewable energy sources ‘competition’ between regions becomes something else, it is not cashflow and credit competition, one that is only interesting to bankers and investors, it can only be competition in quality of life, maybe the clever use of renewable resources. This type of quality focused competition we also see in the coal-, gas- and oil-free past. One big difference is that we have much more advanced technology today and the ability to tap a virtually limitless pool of renewable energy.
Introducing the three currencies
To apply this three currency system one would have to make investment rules, so that the Euro’s spend yield increased Joule credit potential. Although politically interesting it would make no sense to allow all kinds of wastefull activity to receive Euro credit. The economy would have to collapse with a focus on what keeps people alive and happy, until enough renewable resources where available to increase wealth again. Countries like Spain have no problem there, so much sun means they can quickly build an ‘Joule base’.
Overall the cashflow will drop, this is because renewable energy sources are likely to be limited initially, so created for a specific purpose and not for free sale of energy credit. Also because it becomes obvious that the person owning the energy source (say a 5MW wind turbine) is somewhat of a parasite to ask something in return for his Joules, so the price of energy will tend to maintenance/replacement cost or zero.
If you compare the Euro/Auro/Joule to the Neuro and the Zeuro it would have a similar dynamic, namely that Auro credit would be more prevalent in labour intensive countries (the South) and the Euro/Joule more in the industrialized countries, where energy flows are necessary. But as the South has more sun it may export through emission of Joule credit and het the fruits of Nothern industry. Here also, as more systems become automated, running on renewables the cost of everything will go down, cashflow will shrink and tend to zero. This is what I call the Roboeconomy, where machines running on renewables produce wealth at virtually no cost.
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copyright Frits Rincker