Mike Gravel 08 - Great, or the Greatest
Toward a raising of all issues related to Mike Gravel
For those interested in the political process and the upcoming election. We are dedicated to broadening awareness of Mike Gravel, his issues, his campaign and his progress. Please join the discussion and broaden our awareness.Maurice Robert "Mike" Gravel (IPA: /gɹəˈvɛl/) (born May 13, 1930), is a former Democratic United States Senator from Alas ...learn more
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Created: Sep 17, 2007
Updated: Aug 06, 2009
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Robert Hahl
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You may 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 at www.kilowattcards.com - and then send payments to the utilities at the rate they normally charge residential customers for the same amount of electricity, including taxes and fe es. These gift cards are supported by the non-profit Kilowatt-Hour Card Corporation.
Because energy is needed to produce or to use nea rly 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 the energy 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 obligations to pay 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 of energy (U.S., no ethanol). The typical price for 10 kilowatt-hours of electricity is about 1 U.S. dollar. With minimum wage set at $6.55/hour, that is equivalent to about 655 hours of light per hour. Someday it may not be so inexpensive.
A Hedge Against Inflation
The concepts of "price" and "value" seem equivalent, but that is not always true. For instance the price of food might be going up because the value of money is dropping, not because the value of food is rising, which shows why inflation is so dangerous. Rising prices matter little to people with extra money, but impoverish those without it. If electricity-backed notes are redeemable at face value one cannot loose wealth to inflation (but one can, for example, save a stable asset that is less expensive than a house).
Economist Joseph 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 offers a unique alternative. It is a standard product (120V, 60 Hz; U.S.) 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 stable, its value to people as a source of light, heat and motion is very stable. Unlike the subjective value of gold, electricity can do work. Its value is objective because 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-hours can also be viewed as a type of insurance product. Instead of pooling money to guard against physical losses, we can pool money to guard against currency losses. This approach to currency hedging may be better than trading between currencies because they all devalue together (more or less). But as with any insurance product it is important not to have too many claims at one time. Kilowatt Cards are presently being redeemed for electricity at the rate of 1% of the total in circulation per year.
An important opportunity for fixed-value paper is in 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 an inflated currency worth the same amount of electricity at that time. Even though Islam forbids payment of debt interest, it might allow payments for currency inflation, if the real debt were defined in terms of energy. Accordingly, the debtor could comply with religious dictates while the lender would get nominal interest in money if not real interest in kilowatt-hours.
Currencies backed by a commodity such as gold fix the total number of notes in circulation but not their worth, since the amount of gold in any system is finite, while the barter value of gold is subjective. In contrast, the electricity standard fixes the worth of each note, but not the total number. In general, if kilowatt-hour notes were registered as securities they could be sold for national currencies, real estate or tradable goods, to store the value needed to eventually pay for electricity. Of course if we got money for kilowatt-hours, it would need to be converted into real estate, sovereign debt or commodities as quickly as possible to protect the system from inflation.
Counterfeit Cards Easily Foiled
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 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.
Portable Wealth for an Unstable World
While any power producer could issue its own electricity-backed notes, the chances for a local system failure due to war or to a fuel shortage are high. But a delocalized system transforms such physical risks into a financial question, which can be analyzed if the data is publicly available. And since redemption of a delocalized scrip does not depend on any given electric utility, it can function as a stateless medium of exchange.
As the cost of electricity increases (e.g., as the price of fuel rises) kilowatt-hour notes should become more precious. But the effect that that will have on our system is difficult to predict. For instance, under those circumstances would the national currencies hold their value in the usual way (i.e., 2 - 10% annual inflation), or would they go into hyper-inflation? Would most power grids still serve the developed world 24 x 7, or would many of us use private generators due to unreliable electricity? If so, the basic premise of Kilowatt Cards would become somewhat unrealistic and we wouldn't be living in a well-ordered society any longer, but that's life.
Compare Prices in a New Way
There are two important advantages to be gained by conducting commerce in kilowatt-hours: 1) as a stable store of value, and 2) as a way to compare values. Three separate variables go into a typical pricing calculation: a) What is the item worth? b) What is the money worth? and c) What is the buyer worth? (since people often waste money they don't really need by overpaying). Using kilowatt-hours as the medium of exchange gives ananswer to question b). For instance, a lawyer billing $200 per hour is being compensated at a rate of 20,000 hours of light per hour (at 10 cents per kWh, using a 100 Watt bulb). That does not seem necessary to motivate someone to work, does it? Yet it happens, primarily because electricity prices are so low but also because the value of money is so abstract. The electricity standard may reestablish a link between energy consumption and value creation, which was somehow lost under Stigliz's dollar standard.
Another example: the cost of electricity in VA is 10 cents per kWh, while in
The most frequent criticism from economists is that kilowatt-hours may become more expensive relative to labor-produced goods, so they will have the same problem of deflationary pricing as gold notes have. However, electric grids cannot be "cornered" or transferred from one community to another the way gold can. Also, deflation of some products may be inevitable as energy prices rise because so much of modern life is enabled by cheap and abundant energy. Once that is gone, many things will become uneconomical, and relative deflation will occur no matter which currency is used.
Some have asked how KilowattCards.com will protect itself from inflation. The same way everyone else does, by converting cash to other assests such as land. Another quesiton is: Does our ability to pay electric utilities depend on people continuously buying new cards? If so, wouldn't that be just a new kind of pyramid scheme? A pyramid scheme promises to pay returns to all the investors with no further action required on their part. The promoter says "Give me your cash now and I will return (a lot) more cash in the future." In contrast, Kilowatt Cards pay no interest and promise no return at all unless one redeems them for electricity; which then pay for only the face amount of electricity. Since the card redemption rate is likely to be a fraction of the total number of kilowatt-hours issued, the financial obligations of the system should be manageable.
Finally, competitive systems should arise and those notes could buy circulating Kilowatt Cards from the public to be redeemed. If such redemptions failed, that fact would become known since competitors would have an interest in making it known. So competition between kilowatt-hour notes should keep them all honest to a degree, like private bank notes were before creation of the federal reserve system.
Get Some
Kilowatt Cards are free in limited quantities. If you provide a mailing address I will send you some.
Another way to get involved is to obtain Kilowatt Cards from us through barter, which helps us to issue more cards. You can then barter them for other things.