* Proposal: Establishing sustainable units of value ($Z), by Shann Turnbull PhD, [email protected]; Co-founding member: Sustainable Money Working Group
Shann Turnbull argues:
“The purpose of this note is to suggest how to connect the value of money to the natural environment to allow both society and the environment to exist together on a symbiotic perpetual basis. This would correct the current problem of modern official money, and the numerous complementary currencies tethered to them, that are not fit for purpose because amongst other reasons their value cannot be specified by any one or more specific quantities of real goods and/or services. The value of money has become indefinable, unpredictable and not subject to control by any Nation State. Central banks of each nation try to manipulate its value but are overwhelmed by external factors like their nation’s terms of trade, government policies, international interest rates, currency wars, exchange controls, hedge funds, speculators, market sentiments and unpredictable financial problems.
So official money is not fit for the purpose for determining the prices of real things to allow their efficient, effective and/or sustainable allocation by the “invisible hand” of markets.
Intelligent people from another planet would think that humans who believed in a benign invisible hand were either mad and/or money has become a religion.
While there is no fully satisfactory basis for establishing a standard unit of sustainable value in each bioregion of the world, the least worst political, social and economically acceptable approach could be the retail value of electricity (Kwhrs) generated by a producer/consumer cooperative using energy from benign renewable resources.
Some of the compelling reasons for pegging, but not backing, the value of money in each bioregion to Sustainable Energy Dollars (SEDs=$Z), are:
(i) Creating a relative cost advantage for generating renewable energy to reduce and/or remove the need for carbon trading or taxing . The cost advantage arises as interest costs are removed 1 for investment in electricity production from any source. As the investment cost of generating electricity from renewable energy are much larger per Kwhr generated from burning carbon, renewable energy becomes more competitive.
(ii)Energy consumption correlates well with GDP.
(iii)Energy consumption is an essential requirement to sustain prosperity in modern societies. So energy consumption is also an indicator of the quality of a sustainable society.
(iv)A single service of nature that is so fundamental for sustaining life on the planet in perpetuity provides a basis for a highly participative, transparent and democratic governing architecture to minimise self-interested manipulation by minority interests that could arise from using a basket of commodities whose composition would need to be changed over seasons, regions and technological change by governing elites in each region without necessarily recognising long term sustainable issues like climate change.
(v) Market forces are created for distributing the global population to bioregions that possess advantages in the production of benign renewable energy.”
The proposal above does “not explain the profound significance of establishing a sustainable standard unit of value, or using self-liquidating money from a negative interest rate that removes money as a store of value so that role of money is reduced to being ONLY a medium of exchange. These points are developed in my cited reference at the end of my 500 words.
(Refer to:‘Terminating currency options for distressed economies’,at: http://ssrn.com/abstract=2709413.)
A brief outline follows:
Because we have standards for weights and measures anyone can create tables and chairs of standard sizes and weights.
So a standard reference unit of value allows anyone to create contracts to exchange goods and services to democratise the creation of credit/money. The conversion of private credits into public money can then be achieved by credit insurance that guarantees the liquidation of democratically created credits/money.
The cost of the credit insurance would be carried by the contract used as money to create a negative interest rate. This provides a third way for terminating the existence of bottom up democratically created money.
No central bank is required as proposed by Mary Mellor or James Robertson.