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We need a new monetary system

We need a new monetary system

Defects of our present monetary system

My Incomplete List

I do not need a list of defects to be offended by the current monetary system of the US; however, I shall mention a few fatal flaws that are likely to lead to collapse soon.
1. Like all fiat money the United States dollar (USD) is not tied to any real wealth such as gold bullion, barrels of oil, or acres of fertile soil. Its value depends upon what people will give for it. Let us agree for the purposes of this argument only that the presence of United States military personnel in hundreds of foreign countries has nothing to do with the willingness of foreign nationals to accept it in payment for real goods.
2. The quantity of money can be altered by the issuance of debt instruments by banks and others – especially the federal government; hence, we are always susceptible to monetary inflation, that is, inflation caused by a larger supply of money chasing the same or a smaller amount of real goods and services.
3. The rules according to which economic transactions are conducted so favor talented money managers that they are able to acquire a disproportionate portion of the money.
4. Etc. (Items can be added to this list by edits and comments; but, for now, I would like, once again, to refer to Gail Tverberg’s list and paste it below.)
Gail Tverberg’s List

Primary problems
1. Funds are not available to pay for fossil-fuel subsidies for renewable energy projects.
2. Wages consistent with financial solvency and private profit are too low.
3. Energy production companies, especially heavily front-loaded renewable energy production such as photovoltaic solar energy installations, need to borrow money that the credit system can no longer supply.
4. There are insufficient financial returns to pay taxes desperately needed by governments.
Secondary problems
1. Private profit from energy production is seen as inadequate by corporations.
2. Rent cannot be paid for land used in energy production. This cost might be highest in bio-fuel operations, but it belongs to every process that harvests sunlight in real time.
3. Insufficient funds are available to prevent pollution and mitigate its effects. These costs are never paid unless mandated by law – if then.
4. Energy production companies do not pay to prevent mineral depletion and degradation of soil or even try to nor do they pay fines for failure.
5. Energy producers do not account for limitations in so-called free energy. For example, there ought to be a cost premium charged to the process for using limited coastal or off-shore wind power sites.
In conclusion

Let us agree then to take the advice of the fictional Jesus. I hope nobody thinks Matthew’s character didn’t have a single lucid moment. It remains to discuss what sort of a monetary system we do need.
Monetary Systems in General

Good old Dave Kimble has offered to help me write the following in plain English, which I am trying to learn. It deals with community currency because of the perceived benefits of decentralization. What is needed now is a central (national) currency; but, the principal ideas in the following apply just as well if only they can be understood:
On Designing a Community Currency

Thomas L Wayburn, PhD
This is a draft – nay, a draft of a draft. – Herman Melville, Moby Dick
To walk in money through the night crowd, protected by money, lulled by money, dulled by money, the crowd itself a money, the breath money, no least single object anywhere that is not money, money, money everywhere and still not enough, and then no money, or a little money or less money or more money, but money, always money, and if you have money or you don’t have money it is the money that counts and money makes money, but what makes money make money? – Henry Miller, Tropic of Capricorn
Economic Value


One of the principal reasons for replacing the current national monetary system is that money is created by banks when they lend more than the sum total of the money deposited with them. This money cannot be repaid unless the economy grows, that is, the total cash value of sales and purchases is greater this year than it was last year regardless of the quantity of real wealth such as food, clothing, housing, energy represented by each unit of currency. The total amount of currency must increase continuously; and, each unit of currency can be divorced completely from physical wealth. We wish to replace this currency, which represents only a number in a computer somewhere and not anything tangible with a currency based upon measurable quantities of real physical wealth.
If there were one physical quantity, such as emergy (with an M), that could be used to measure all physical wealth – in particular, all wealth necessary to sustain human life on this planet – we would do well to base our new currency upon it. We cannot do this at the present time for two reasons: (i) the emergy values of many water, land, and human labor have not been established nor is there any on-going effort to establish them or even to determine how they should be established and (ii) temporarily the government will need to issue un-backed scrip with which to pay the workers to do the necessary work to transform the United States to sustainability. The workers can use the scrip to purchase goods and services that formerly were paid for with United States dollars (USDs). Hopefully, in time, the economy will be a net producer of real wealth and the new fiat currency will be redeemed with currency described below. Clearly, among the necessary jobs will be the production of sufficient energy, food, and health care to sustain citizens who obey the new sustainability laws.
I need to explain “sustainability laws” and to show that enough workers will be available for essential occupations after the government furloughs workers who serve the market currently but produce nothing that we actually need to live. In “Energy in a Natural Economy”, I analyzed the Bureau of Labor Statistics data from one of the last years in which the United States produced almost everything it consumed. We should now try to establish a small list of fundamental economic entities in terms of which all economic goods and services can be evaluated.
Currently, provided we use Howard Odum’s concept of emergy to as great an extent as currently possible, we can evaluate every economic good or service in terms of land, water, energy, and time. Therefore, we could design a new rational monetary system with four types of currency:
(1) Emergy certificates that would pay for almost all economic goods and services in terms of energy properly weighted by transformities to account for the cost of conversion to a useful form
(2) Water certificates to pay for fresh water as it is found in Nature – as opposed to desalinated sea water
(3) Land certificates to pay a rent for all land use based upon ecological characteristics to be described later. (Clearly, not all land has equal value.)
(4) Certificates to pay for the time spent by workers at essential jobs. The government may not issue these any faster than they are needed to pay workers; so, they are not fiat currency in the sense that the USD is.
The government needs to establish the conversion factors so that workers can pay for economic goods. (And, I need to get some sleep so as to finish this post tomorrow.)