Saturday, October 29, 2016

Much Ado About "How Much ... ?"

8 years ago I wrote a post that linked to another post I had written some 2 1/2 years previously on the strategy of money. In recent weeks, the good people at Extra Credits on YouTube have addressed the same concept as a straightforward history lesson in a series of videos (the 6th, and presumably final, video still forthcoming as I write this). At the end of video #5 we are at the point of paper money abandoning commodity currency (refined gold and silver generally). This prompted me to make an effort to at least outline what I regard as the necessary final step to completing the strategy of money into the traditional closed loop of thought that Sun Tzu actually practiced.

I postulate that "money" is a purely intellectual concept, having no basis in physical goods or commodities. Indeed, that commodities serve to distort the money concept and inject malignant influences on its function. That being said, there still is needed a mechanism whereby transactional value can be derived against an immutable quantity (the function refined metals are supposed to fulfill).

Hydrogen is the most common element in the universe (as far as human science can determine), and as such the possibility of "cornering the market" or any other type of currency valuation manipulation becomes effectively impossible. This aspect alone makes hydrogen a very suitable candidate for determining the relative value of a given currency. Consider ...

A single molecule of hydrogen can theoretically be converted to a known quantity of energy, which can in turn be expressed in a number of practical values depending upon how the released energy is expressed. A 21st century currency issuing entity (not necessarily a single country) is comprised, in part, of electrical generation capabilities, all of which consist of identical calibration metrics regardless of nationality, ideology or any other political or societal influence (Ohm's Law being just as universal - and effectively untamperable with - as hydrogen, as far as we can tell). The electricity generated, powers in turn a host of economic "value added" activities, if only the direct sale of electricity to another currency issuing source.

I propose that some measure of electricity (the erg perhaps?) be established as the baseline metric whereby any currency can be valued by any user. The issuing source (alright, this is becoming tedious - country hereafter) has a measurable quantity of electrical production as part of its domestic economy. This provides an independently measurable metric to determine a value for that country's domestic economy as a whole, against which the influence of domestic or international government meddling can be measured, and from which a unitary value can be derived for that currency against a known and fixed standard of measure. When this process is applied to other currencies, it makes comparative currency valuation a reasonably impartial (and importantly, more difficult to tamper with) process.

This resolves the intangible aspects of paper and digital money by pegging them to a known and hopefully immutable reference source, along with making manipulation of a country's currency much more detectable and thus defensible against.

Adopting such a system of currency valuation in the United States would seemingly not require a Constitutional amendment (see, Art 1, Sec 8, US Constitution, which explicitly charges Congress with the authority to  "coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures") (which also, BTW, effectively prohibits the dis-continuation of physical currency, whether coinage or paper, absent a Constitutional amendment IMO). As the United States dollar remains the planetary reserve currency, it can be expected that other countries would adopt this standard as their domestic political process allows.

Being my idea, I hope no one will be surprised at my enthusiasm for it. I'm also self-aware enough to know that there are undoubtedly a number of potential objections to the basic concept itself, whether theoretical or practical in nature. I hope to read and reply to those as I can.

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