by shortonoil » Sun 28 Dec 2008, 13:52:19
$this->bbcode_second_pass_quote('ReverseEngineer', 'A')nyhow, with all the self-appointed Geniuses on this board, not a single one of them has come up with a workable system other than recidivist talk about returning to Precious Metals, which I debunk on a regular basis. I did start a thread quite a while back on Alternative Monetary systems, but I can't find it right now. This is the Numero Uno problem to tackle once the Fed goes the way of the Dinosaur.
The question as to whether a sustainable monetary system can be built after the demise of the present one is an important one, to say the least. The answer is, most likely, if it addresses the deficiency of the present system and the peculiar nuances of human nature.
The problem of the present system rests on its dependance on assets as a bases for it evaluation. Our currency is founded on collateralized debt. When the cost of maintaining an asset and its depreciation exceeds its returns, it converts from an asset to an expense. That is what is happening to the present system and its currency.
As the energy contribution of fossil fuels declines from declining ERoEI and production, as a result of depletion, the return on assets also declines. Lower economic activity reduces the return on all assets. Like a light switch, we are seeing the super rich turn super poor overnight. Their assets, which dominate their balance sheets, are becoming expenses. This will continue for several decades and will decimate the currency and the super rich most heavily.
The first step in creating a new currency will have to be made by creating a currency that is not dependent on assets. This will result in a total transformation of modern human behavior. Its wants and needs will be reformed from this step in our evolution.
There are ways to go about this, but for now, I'll leave this open for comment along with the need in recognizing the importance of our basic nature.