A new kind of money

The decline in the availability of cheap energy is likely to be accompanied by an equally ominous possibility of world financial meltdown. That we are facing both of these threats now is not an accident: energy and financial stability are intimately linked. I believe the solutions for dealing with these twinned threats are equally linked. To build an environmentally sustainable, monetarily stable world, we need to create an economy in which locally produced energy provides the backing for local currencies.

Let's start with energy first. Energy decline will soon challenge just about every common notion of life that we have developed during the industrial era. Most of what we have built in the globalizing world of the last half century depends on cheap energy, particularly oil and natural gas.

After years of oil-industry financed obfuscation, there is a broad scientific consensus that our profligate use of fossil fuels is producing global warming. And despite similar oil industry denials, there is a growing consensus that we are rapidly approaching Peak Oil, after which world oil output will go into permanent decline. (The United States experienced Peak Oil in 1971.) After global Peak Oil, oil will still be available, but at ever increasing prices.