Enerconics simplified

Enerconics is the use of energy as a gold standard of economics. The reason this works is because there is a very close relationship between (inflation adjusted) GDP and world energy consumption (including sources like wood).

The easiest way to understand the concept is to pick up an English ten pound note, and they ought** to say:

“I promise to pay the bearer on demand the sum of tenĀ  pounds”.

Now imagine if you will a country with one electricity supplier who issues a token with something written on it like:

“I promise to supply the bearer on demand one thousand KWH”

Obviously, if this promise is good you can present it to the electricity company and they will deliver the energy. But also, if someone else needed electricity (and almost everyone does), then they could accept the token for 1000KWH in part payment. And because everyone needs electricity, then the token is almost of equal value to all ordinary consumers.

However … unlike a traditional pound note, dollar or whatever, the “enercon” as you might call it, has one huge advantage over other forms of currency … it doesn’t suffer inflation. Or to me more precise, it’s value is fixed by one or if not the most widely used commodity in society.

The Enerconic Multiplier

The enerconic multiplier is simply the ratio of energy “value” used in society to the amount of actual energy both direct and indirect being used. Practically what it represents is the sum of all economic transactions (including purchase of energy) divided by the number of transactions in which energy is used/purchase.

To explain, imagine an economy (like Scotland if we’d gone for “independence”) where the “Sturgeon” – the fake unit of money issued by the Scottish government had lost all credibility. And as a result, imagine the electricity suppliers had started paying their staff and suppliers partly in “Enercons” – that is a token to purchase back electricity. With the Sturgeon now being carried around in wheelbarrows, and the Enercon holding its value, very soon the staff and suppliers would find their own staff and suppliers were happy to accept Enercons rather than Sturgeons. Seeing what a success the Enercon has been, soon other energy suppliers (gas, coal, petrol, oil, etc) start issuing their own Enercon with a nominal KWH value to their own staff – which they in turn are happy to accept because they’ve seen that the only thing shops will now accept is the Enercon.

And the more people who prefer being paid in the Enercon (which could be redeemed for something real) against the Sturgeon (which almost no one else was accepting for payment) … the more the Enercon would become the de facto way of paying for anything irrespective of whether it was obviously connected to energy.

And very soon, just as cigarettes became a unit of currency in prisons, so the Enercon could replace the Scottish Sturgeon as the currency if we’d have been mad enough to go for (fake) independence.

But now, if we counted up the number of transactions in which the Enercon was used, and totalled their energy value, we’d find that the total KWH of Enercons transacted vastly exceeded the energy consumed by the society. In other words, for every KWH being consumed we get perhaps 4KWH’s worth of activity. But, to turn that around, for each 4KWH’s worth of economic activity, on average 1KWH of real energy will be consumed.

And here’s where I have to correct a mistake made earlier. In a previous article I suggested that if the price of electricity were twice as high that more energy was being consumed than produced. That was wrong. In fact, if the price of electricity is greater than the Enerconic Multiplier x the standard price, then no net energy is being produced.

**I said “Ought to say” … because living in Scotland we get notes issued by Scottish banks and I can’t easily check whether it changed.

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7 Responses to Enerconics simplified

  1. TinyCO2 says:

    But energy doesn’t have a static value and is linked to supply and demand.

    Currency is loosely based on the economic success of the participating countries and enercon would be based on the companies that issued them and their intereations with real currency (eg buying raw materials). Unless they were linked nationally and internationally, they couldn’t be used anywhere but where they were issued. A group tied to gas might fail if a new group based on fusion came along or if fossil fuels were banned or just the price of gas went through the roof.

    If the price was static and/or guaranteed, then people might buy enercons for their grand children. If they weren’t you might find you’d paid up front for enercons that end up worthless because the supplier was out of business.

  2. Ron Clutz says:

    Have you noticed uclimate is not functional. Error message:

    Thanks! I’m looking into it.

    • Scottish-Sceptic says:

      Ron, thanks for the heads up on uClimate. For some strange reason the entire database disappeared and I had to reconstruct it. It should be working now.

  3. TinyCO2 says:

    I thought I’d posted a comment to this but must have forgot to press ‘post’. Essentially I wondered how you’d get Enercons to be stable when the cost of energy isn’t static. Curreny is based on the eonomy of the country/s its based on. An enercon would be affected by the energy companies it was based on.

    • Scottish-Sceptic says:

      The biggest insanity in the modern world is not climate idiocy – but the mad idea people have that money has any value. It doesn’t instead the only reason money has any value, is because there are enough daft people in the world who will accept a bit of worthless paper for their time or produce.

      In contrast, gold kind of had a value – although strictly speaking it has very little value to me as I don’t wear it, I don’t use it, it’s no good for making anything with.

      However, energy is something that has a value to everyone – if for no other reason than that we all need energy in the form of food to live. So, energy IS the universal hard currency of life.

      The big difference, is that we understand energy – it’s something that most people can appreciate in its various forms – so we know that it comes in slightly different envelopes each with a different utility and a different worth.

      In contrast, people have no real idea about the value of money. So, they don’t understand that e.g. a Euro issued by one bank doesn’t have the same value as another … because some banks are closer to collapsing and if you get caught with their Euros when their currency collapses then it will be worthless. In the real world (outside the EU) that difference in value is reflected by currency exchange rates. But fundamentally the only value a currency has is that someone will give you something you REALLY value in exchange. So, a pound in a bank – is not actually worth a pound – not unless the bank will exchange the nominal value on your account to “real” money … but in turn that doesn’t have a real value, unless someone will give you something like food or energy in return.

      However, is a “pound” on the Titanic of any value? The answer is no – because no one could exchange that pound for anything (unless you spent far more brining it up to the surface). So, like energy – money is only has a nominal value when it is available for use. Likewise, even if the bank will honour it, a pound in a 90day account is not worth anything to you … until the 90days are up. Which is fine if you can wait 90days, but if the doctor says you will die in a month – that money is totally worthless!

      However, of all the things we have … the one sure thing that an alien from another planet would understand is some form of energy. Because they will not understand paper notes (except perhaps if they want to light a fire or wipe their arse) … they may come from a planet with so much gold it is like pebbles on the beach. But they would understand the concept of energy … and they would understand it has value.

  4. TinyCO2 says:

    Gold is actually very useful but anything, even energy is potentially of little value. What if you issued 1000 gas power enercons and cheap fusion came along? What if gas was banned? Unless energy was a consortium of suppliers your EOn enercons might become vlaueless if EOn went bust. Could you swap UK enercons with US enercons?

    A pound might seem like a fictional concept but it’s based on the UK economy. That’s why Brexit made it fall. Gamblers are betting the UK won’t be as perky afterwards. At some point it might go the other way. Bitcoins are based on the dark economy and so long as it remain unhackable, there’s no chance the net will run out of dodgy stuff to trade.

    • Scottish-Sceptic says:

      The energy from food is unequivocally of value to the starving. However the whole point of economics is that things don’t have a fixed value. Or to put it more practically, if we can work up to 24hrs a day … having secured all that we need or want in the first 20hours of waking, NOTHING is more valuable than sleep.

      Now I take your point about the ability to exchange Enercons … but the Enercon was invented as a means to compare e.g. a neolithic farmer, a Palaeolithic man making fire, a modern banker & a hermit crab (which I pick because like bankers it invests in housing).

      The point about the Enercon, is that it can be used like any other currency in economic theory, but unlike any other currency it can be translated into “economies” as diverse as the Palaeolithic and that of hermit crabs (where almost all the energy goes into day-to-day living – but there is a very small investment in the future, in terms of the few minutes it takes to find and move to a new shell).

      And there are similar concepts such as the “Petro-dollar” … which was a nominal dollar currency pinned to the price of oil. This might be called the “EnerconOil”. And I appreciate that there is some movement between e.g. the EnerconOil and EnerconCoal or Enerconfood … but as we saw with the palm-oil scandal where agricultural land for food was turned over to produce palm-oil leading to starvation, if the price gets too out of align, the market will self-adjust by using the cheapest form of energy (obviously subject to idiotic gov. intervention). But the effect is that the markets will tend to keep the price of energy commodities fairly well aligned, in a way that for example does not occur if we compare the 1960 pound with that of the 2017 pound or the rapidly changing value of currencies.

      So yes there is variance between the different value of energy sources, but that variance is much less than is seen between currencies or between a currency over time.

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