The Forum for Stable Currencies is a voluntary initiative of concerned citizens and Parliamentarians – independent of race, religion or political party.
It was founded in 1998 by Lord Sudeley and Sabine K McNeill by initiating public meetings at the House of Lords. Its archive site reports the programme of international speakers addressing monetary reform, problems encountered by ‘bank victims’ and solutions – from grassroots to governments – via banks and central banks. In the House of Commons, Early Day Motions addressed ‘public’, ‘social’ or ‘green’ credit.
One of the Forum’s off-springs is the Global Table hosted every Wednesday at Friends House by retired Canon Peter Challen.
At the House of Lords, the last meeting was addressed by Aubrey Meyer on the links between the ‘money fuse’ and the ‘climate bomb’ in September 2005.
At St. James’s Piccadilly, Aubrey gave his moving audio-visual presentation to the audience that had come to hear Nobel Peace prize winner Dr. Muhammad Yunus on “Creating a World without Poverty – Social Business and the Future of Capitalism” on February 16th, 2008.
This blog will accompany news and events that relate to the spirit of Forum meetings: addressing problems and focussing on solutions – preferably those we can achieve ourselves and with each other – for, as Dr. Yunus says in the first chapter of his book: institutions have failed us and are notoriously slow and inefficient. But ‘Social Business‘ can influence the future of capitalism – especially if banking is carried out ‘usury-free’ and as ‘social business’!
In the Spirit of the Forum for Stable Currencies
Economists and Social Scientists:
You may be interested to learn about Kilowatt Cards: experimental gift cards that can be redeemed to pay for 10 kilowatt-hours of electricity, in any residential utility account, anywhere in the world. Electric utilities don’t accept them – we do – and then send payments to the utilities at the rate they normally charge residential customers for the same amount of electricity, including taxes and fees. They are supported by the non-profit Kilowatt-Hour Card Corporation.
Because energy is needed to produce or to use nearly all goods and services, “the ability to consume energy” is a meaningful definition of wealth. While some people want gold and silver, everybody wants light, heat or transportation. Kilowatt Cards show that paper notes can be backed by something useful to everyone. But we do not produce or deliver electricity. We just pay for it with national currencies, supported by donations.
Traditional currencies have the attributes of being:
(i) portable, (ii) difficult to counterfeit, (iii) limited in supply, (iv) non-perishable, and (v) easy to recognize. While electricity itself meets none of these criteria, electrical capacity meets criteria (ii) to (v), while paper notes representing payments for electricity can supply attribute (i). Kilowatt Cards are gift cards not a currency, but since they can be used to pay for anyone’s electricity, they are useful to barter for other things – and as a store of value – worth a fixed amount of energy regardless of electricity prices. They have fixed value because 10 kilowatt-hours is a physical constant – a standard amount of work (in the scientific sense) that one can evaluate intuitively: 10 kWh = 10,000 Watt-hours, enough energy to run a 100 Watt light bulb for 100 hours (exactly) and roughly enough to drive a Toyota Prius 25 miles. One gallon of gasoline contains 36.6 kilowatt-hours (U.S., no ethanol).
The concepts of “price” and “value” seem equivalent, but that is not always true. For instance the price of food may be rising because the value of money is dropping, not because the value of food is going up, which shows why inflation is so dangerous. Rising prices matter little to people with extra money but impoverish those without any. If electricity-backed notes are redeemable at face value one cannot loose wealth to inflation (but one can save a stable asset that is less expensive than a house).
Joeseph Stiglitz has spoken about past failures of the gold standard and the coming failure of the “dollar standard,” predicting that all national currencies will eventually fall to inflation and be replaced by private currencies from competing companies, backed by gold and their reputations. But electricity is a unique alternative. It is a standard product (120V, 60 Hz) that is widely used by individuals. It need not be owned or stored by the system to exchange it for the paper (as we demonstrate). And while the price of electricity is not fixed, its value to people is very stable. Unlike the subjective value of gold, electricity can do work. Its value is objective since it can be expressed in terms of light, heat, motion or fuel, using the principle of the conservation of energy (e.g., 1 kWh = 3412 BTU). Reading at night, or traveling by train, consumes about same amount of electricity each time. So no matter what its price in money, electricity has about the same value to individuals. “Saving” should involve assets of value to people.
Tradable kilowatt-hour notes can be viewed as a type of insurance product. Instead of pooling money to guard against physical loss, we can pool money to guard against currency loss. This approach to currency hedging may be better than trading between currencies because they all devalue together (more or less). As with any insurance product, it is important to not have too many claims at once. At this time Kilowatt Cards are being redeemed for electricity at the rate of 1% of the total in circulation per year.
Another application of fixed-value paper is Islamic finance. One might lend kilowatt-hours to a Muslim at zero interest who could trade them for something productive, and eventually repay the debt using inflated currency, but worth exactly the same amount of electricity at the time. Even though Islam forbids payment of debt interest it might allow payment of currency inflation if the real debt were defined in terms of energy, a physical constant. According to this theory the debtor would comply with religious dictates while the lender would get nominal interest in dollars, if not real interest in kilowatt-hours.
Kilowatt Cards are printed on plain paper but cannot be effectively copied because value resides in both the six-digit serial number and the coupon together. One can prove that a card is real (and active) by authenticating it at http://www.kilowattcards.com in a process that alters the serial number. If it is active, two new digits will be returned that should be written on the card by hand, forming the end of a new six-digit serial number (as the first two digits are cancelled). So, nobody holding a Kilowatt Card can use copies of it, since all the copies will have a cancelled serial number after one of them has been authenticated. In this way plain paper can be traded widely, yet proven unique by anybody before accepting it. This way any organization can issue unique paper without special printing plates – just a secure web server.
Currencies backed by a commodity such as gold fix the number of notes in circulation but not their worth, since the amount of gold in any system is finite, and the barter value of gold is subjective. In contrast, the electricity standard fixes the worth of each note, but not the number of notes in circulation.
While any power utility could issue its own electricity-backed notes, the chances for a local system failure due to war or fuel shortages are high. But a delocalized system transforms such physical risks into a financial question, which can be analyzed if the data is made public. So, the redemption value of delocalized scrip does not depend on the continuing operations of any given utility. In other words it can function as a stateless medium of exchange.
As the cost of electricity increases (e.g., when the price of oil spikes), kilowatt-hour notes should become more precious. But the effect that that would have on our system is difficult to predict. For instance, under those circumstances would the fiat currencies hold their value (i.e., 2 – 10% annual inflation), or would they go into hyper-inflation? Would most electricity grids still serve the developed world 24 x 7, or would many people begin to need private generators due to unrealiable electricity supplies? If so, our basic premise would become somewhat unrealistic and we wouldn’t be living in a well-ordered society any longer, but that’s life.
Kilowatt Cards are free in limited quantities. If you provide a mailing address I’ll send you some.
Sincerely,
Robert W. Hahl, J.D., Ph.D.
Chairman
Kilowatt-Hour Card Corp.
121 S. Lee St.
Falls Church, VA 22046
121rhahl@kilowattcards.com
Yes, Robert,
Kilowatt Hours are a most important complementary currency and I do wish you luck with them!
Because ‘money’ is about ‘credibility’, trust in ‘authorities’ and ‘value’, it seems that the ‘killer app’ is still waiting to be invented…
Good luck with your approach!
Sabine