Julian Darley has been talking and writing about the (untested) idea of local currencies "backed by" local renewable energy. I've asked him how can you "back" the currency with something that you cannot store, and can only be used once, but havn't gotten an answer. Perhaps facilities to generate such energy, rather than the energy itself, can be an asset worth putting faith in, but how can a currency be based on that? Or perhaps such a generating facility can forward-sell the power it plans to generate, and such receipts then swapped as money? But when they pre-sell the energy, what is used as payment? And, at some point the energy has to be actually used and paid for, there goes the "money supply"?

It is not clear to me whether "money" has to be "backed by" anything at all. You might say that our current "fiat" currency (do fiat-currency haters always say that word with a sneer? :-) is "backed by" the force of goverment (who, in the USA, gave the "federal reserve" (which is neither) the power to control the currency). But faith in the power of such government may be eroding. Is the problem the strength of such faith, or is the problem the uncontrolled printing of such money?

I agree that "100% reserve banking" may help, but perhaps even better would be to return the power of money creation to the government (via spending), as proposed, e.g., by Douthwaite. Perhaps 100% reserve banking is close to that, since the bank can then only gather interest on the money it has on deposit, not on money created out of thin air by loaning it out. But that still relies on "interest" payments, i.e., on perpetual growth (of resource use, not just money supply), and that's the real problem.

And that has been a historical way for a farmer to convert excess crop into something for trade, it stores 'for a long time' and if you have a fire, the miscibility with water means you don't have the same issues with spreading the fire when dealing with oil.

The root of the problem, apart from money is the root of all evil or evil is the root of all money, is that we are attempting to take a static thing, be it gold or paper or seashells, and make it represent a transaction which is a dynamic thing. Money, unfortunately, is subject to the Laws of Motion with all the exponential dislinearities that implies.

That a little money traveling fast can do what a lot of money moving slowly can also do is the nightmare of the central bankers. The much derided fiat money [ is there any Ferrari money?] has the advantage of NOT being based upon a static thing like gold and thus can be adjusted, within limits, to account for velocity. It is far easier and more fun to create it than destroy it, however.

Beware those limits. When too much Fiat money becomes Ferrari money, the braking system - usually high central bank rates - is used to mop up the excess liquidity, leaving those with their necks overleveraged with a case of road rash. We may be about to have a demonstration for those who have forgotten 1980.

Subprime Time? We can have all the beliefs and theories we like and people will still do stupid things with money just like they do stupid things with cars. Believe any economic theory you like, but money will be dynamic and exponential, just like any other moving object. When too much money meets not enough oil?

Don Sailorman
How do I find your books? They sound interesting, I love good sci-fi.
Bob Ebersole

'Everclear' = volatile assets

I think one of the real problems with peak oil is that money, however it is defined, can no longer be nearly as storable as it is today.

Today, we have insurance companies, banks, and all kinds of other financial services set up around the idea that if you have money now, you can have the same amount, and even more, in the future.

Once we are past peak oil, the amount of resources available to society will gradually (or not so gradually) shrink. We no longer will be able to set aside savings today for the future, except on a very limited basis - perhaps food stored away that we will still have, as long as it keeps. Or clothing and some books. But if we have a fixed number of dollars (or whatever), those dollars will buy less and less as time goes on.

Perhaps society can have some sort of fiat currency with a fixed number of units that will always have a big inflation problem. People will learn to treat the new currency very differently from today's currency. No life insurance, for example.

A great advantage of dollar bills is that I can FORCE you to accept them at face value for all debts private and public.

Not so. I went to the IRS office to pay one of their demand letters (for $300) and was told that they would not take my 3 $100 bills to settle the paper they sent me.

600% versus 533%

About 10.5 % better over 30 years, what a kill!

1972 to 2002...

Sure, looking in the rear mirror allows excellent predictions.