Time Magazine, Oct 25th, 2021, published a remarkably relevant article “The Future of Money.” The article traced the history of American money. Prior to the Civil War banks printed their own paper money. Then the government placed a tax on self-printed money effectively giving themselves a monopoly on printing money. Gold backed certificates predominated from the 1870s until 1971. But there wasn’t enough gold to back all the currency needed. Now we have fiat-based dollars where the government doesn’t even need to print bills. They basically wave trillions of dollars into existence in their own accounts and spend them. The value of dollars is based solely on faith in the US government.
Faith in our government is wearing thin these days no matter what your political values. Both political parties fund their agendas by ever skyrocketing deficits. Eventually America’s debt, like the proverbial chickens, will come home to roost. I believe the biggest threat to America is not any external enemy, but failure of our monetary system. The ensuing chaos will cause unthinkable suffering. Waning faith in government has given rise to many internet-based cryptocurrencies. In the case of the largest, Bitcoin, money is “mined” by massive computers solving puzzles. I wonder, what real value that is to back currency other than speculative? Jackson Palmer the co-creator of Dogecoin, the second largest cryptocurrency, has called it a “scam.”
Let me pose an alternative. Create a currency based on something real and measurable. I suggest universally acknowledged electrical power. The new currency would be based on kilowatt hours. Power companies could issue as many kilowatt-hour certificates as they produce. But the nature of electricity generation is that you can’t generate more than are used. The certificates could be used to pay power bills or circulated as legal tender. Banks could run accounts and make loans in the kilowatt-hour tender. The government could borrow in the kilowatt-hour tender but not simply create fiat money out of thin air. Kilowatt-hour money would be worth the same thing in every country.
Time Magazine did not make firm predictions about the future of money but concluded that it would be very different than now.
Somebody, please tell me why this won’t work before I make a fool of myself by publishing the idea.