Reply from Chris Cook
also see reply from Thomas Greco copy pasted in discussion :
Forwarded message ----------
From: Chris Cook Date: Thu, Sep 1, 2016 at 1:47 AM Subject: Re: Fwd: Solar Dollars-a private currency with multiple benefits To: Dante-Gabryell Monson , Thomas Greco
I would define a unit of currency as a 'generally acceptable credit instrument' and a credit instrument as a promise issued in exchange for value received from an acceptor, which the promissor will accept in payment for goods and services he supplies.
Credit Instruments Generally
Note that a credit instrument is not a debt instrument, because there is no obligation on the part of the promissor to provide money to the ultimate acceptor; it is not a forward (derivative) instrument either, because there is no obligation to make delivery of goods and services; and it is not an equity instrument conferring rights of ownership over productive asset and its associated flows of value.
The obligation of the promissor is simply to accept the return of his promise - in addition to any other means of payment such as currency - in payment for his goods and services.
The point is that the acceptance of such an instrument requires trust in the promissor, and that is why trust intermediaries (aka banks and governments) came along. In my view it is completely possible to create trust frameworks simply through agreements such as Protection & Indeminity (P&I) Clubs which have managed shipping risk for 140 years. In this way - with suitable accounting arrangements and unit of account (aka standard unit of measure for value) members of an association with a common interest may accept each others' credit instruments, and settlement of outstanding bilateral P2P obligations may be made either through chain settlement A>B>C>D>A (ie without currency at all) or through using currency.
The 'general acceptability' which makes credit instruments into currency in my view derives from 'value in use over time' or 'utility'.
As I have long said the only generally acceptable currency on this basis is an energy currency, since the utility of energy as a service such as light, heat, power (eg transport) is what makes energy credits (returnable in payment for - say - 10 kWh of energy equivalent) generally acceptable in exchange and hence currency.
Now of course it is the utility of land which underpins more than two thrirds of $ in issuance today, since they came about through the creation and loan of bank created $ denominated credit instruments secured against the capitalised utility value of land.
I believe that we will see local economies underpinned by $ denominated credit instruments returnable in payment for land rental value and that these instruments - which will be the result of long term funding of land development - will constitute a currency which is local by definition.
Unit of Account
I believe that the only objective unit of account (means of keeping score) is a unit of energy eg the equivalent in Joules of 10 kWh or the equivalent in Joules of 1 MMbtu of heat. ie the only objective cost is energy cost. Every other metric is more or less subjective eg $ or € cost, and then on to entirely subjective metrics such as 'human cost'.
But note the difference between energy currency and an energy unit of account. Exchanges of different types of energy currency (heat-based, transport-based, electricity-based) would take place by reference to whatever standard unit of energy is used.
In my view we will come to see the adoption of an Energy Standard unit of meaure for value by which I mean the unit of account eg $ or € will become fixed by reference to a unit of energy. This could be done tomorrow, and everything would change but nothing would change as a new paradigm of Energy Economics replaces Dollar and Euro Economics. New relationships between credit issuers and acceptors would be necessary as well as a need for new service providers and accounting systems (shared transaction/title repositories).
Anyway, it's all set out in my lecture in Volos, Greece a couple of years ago
There's a shorter talk at Ouishare last year here.
How we get 'there' from 'here' is another story, as is the Blockchain.
In relation to the latter, I think the current generation of Fintech is entirely misconceived. I see no need for credit objects/coins at all. In my view the requirments is in fact, for creation, assignment, return & cancellation of 'open' /undated credit instruments within suitable risk and production sharing protocols.