you on the Australian ABC Radio program yesterday.

I was wondering how you suggest that the money/credit creation be controlled. Are you

suggesting something like sound money or hard money?

“invisibility to inevitability in the blink of an eye” (Sebastian Mallaby in the Washington Post.)
Ms. Pettifor’s valiant thrust against the

reigning orthodoxy isn’t likely to become popular — not quite yet. But we may believe in her.

advice from are too stupid for the job. You would have to be really stupid to think that producing more money will generate more wealth forever.

How to fund investment in renewable energy and solve the debt crisis

Emissions Permits Trading, Carbon Credits, Renewable Energy Targets, Feed In Tariffs and other financial structures are all mechanisms to

encourage investment in renewable energy infrastructure. These approaches do it by manipulating the market in fossil fuel energy to encourage

investment in renewable energy.

That is, we encourage the market in building renewable energy infrastructure by manipulating the market in

the output from the renewable energy infrastructure investment market. Why do we do this? We do it because the cost of producing energy from the

sun or from hot rocks or from windmills is more expensive than from burning fossil fuels. However, the running costs of most renewable energy

plants is less than half the cost of running any fossil fuel energy plant because there is no cost of fuel. The cost of renewable energy

infrastructure is overwhelmingly a construction capital cost. The interest charge on money needed for investment in renewables dominates the cost

equation.

If we had zero interest money available for investment in renewables we could have as much renewable energy as we wanted. It might

cost a lot of money to build it but it could be done if there is enough renewable energy infrastructure opportunities available and if interest

charges on investment money was zero.
Is there enough renewable energy available?

Australia alone has renewable energy sources either

from the sun or from the hot underground rocks to provide the whole world’s population with thousands of times their current energy consumption so

there is enough renewable energy available.
How much will it cost?

When we double the capacity of renewable energy infrastructure the

cost decreases by about 20%. By the time we have replaced all our energy needs with renewable energy the cost per installed megawatt will be less

than a million dollars. If we assume an average cost of $1.6 million then we will need about $15,000 per person to meet ALL their energy needs. If

we average this over ten years then it is 30 billion dollars per year for Australia to achieve zero emissions within ten years. At the end of this

time the cost of producing wholesale electricity will be more than halved.
Isn’t this a lot of money?

Each month Australians borrow $20

Billion dollars to buy houses. $30 billion in the scale of national expenditure it is not a large amount of money and is affordable.
How could

we efficiently invest this amount of money?

We know that the most efficient way to spend money is to spend it through a market where there

are many buyers and there are many potential sellers. We have sellers in such a market in Australia today and it is called the renewable energy and

saving energy infrastructure market. There are many sellers of solar energy plants, solar energy photovoltaic panels, windmills, geothermal

projects, insulating our houses, etc. The problem is that there are not enough people with enough money who want to purchase their goods.
How

can we find the money?

In the year to July 2008 the Australian supply of money increased by $240 billion. Somehow eight times $30 billion of

Australian dollars was created that did not previously exist. The government could suggest to the Reserve Bank to create $30 billion dollars of the

new money we need and issue it at zero interest and require it to be spent on renewable energy infrastructure.
But how we do it?

Each

day the Reserve Bank creates money. If necessary it creates several billions of dollars per day. There is no reason for the Reserve Bank not to

create $30 billion dollars of money with special conditions attached to it. That is, the Reserve Bank can create special dollars on which it

charges no interest. Those dollars can only be spent on renewable energy infrastructure and on ways of saving energy. The Reserve Bank can

supervise and control such an organisation and the Reserve Bank can hire private organisations to establish and run the system.
Who would get

the money?

Who gets the money is a political decision and would be determined by the Federal Government as they are the ones who “own” the

money through the Reserve Bank. It is suggested that the money be given to any resident of Australia who volunteers to take it. It could be given

once a year in inverse proportion to the amount of mains electricity per head consumed in the previous year. It is suggested that each person on

their birthday would get on average $1,500 in what we might call Energy Rewards. The exact amount will be calculated from the mains electricity

consumption from their places of residence and there would be limits where the top 20% of consumers get zero and the people (including new born

babies) who could prove they consumed no mains electricity in the previous year received $5,000.
How would the people spend the money?

Many – possibly most people would sell the money to someone better able to invest it. Others would buy shares in investment vehicles that would

in turn invest the money. Many would spend the money on household improvements to save energy such as better insulation. Some may spend the money

converting their vehicles to run on renewable energy sources. The mechanism for establishing what would be eligible would be determined by the

sellers of infrastructure who would offer goods and services and in their sales contracts would specify how the money used by them would create

emissions free energy or would save energy. If their claims proved to be false they would be excluded from being able to accept Energy Rewards as

payment.
Wouldn’t this be inflationary?

No it would not be inflationary on the general economy because Energy Rewards attract no

interest while they are unspent. Energy Rewards are ONLY spent on productive assets and we know that if we invest in new ways to increase our

income then this is not inflationary. Energy Rewards while they remain Energy Rewards do not increase inflation. When they are spent they produce

productive assets that have value and can be sold. If too many Energy Rewards were issued then Energy Rewards may become devalued but that is of no

concern to the rest of the economy. Wholesale Electricity Energy prices are about 5 cents per kwh. The operating cost of most large scale renewable

energy is 1 cent per kilowatt hour. Rather than being inflationary renewable energy plants will decrease prices because renewable energy will be

cheaper than fossil fuel energy.
But wouldn’t it create too much demand for Renewable Energy Infrastructure?

There are many ways to

spend Energy Rewards and the market will determine where it is spent. It is thought that initially most money will go towards companies that have

large plans for renewable energy plants such as solar thermal, geothermal and wind power. That is, people will buy shares in those companies and

those companies will spend the money efficiently.
Wouldn’t it require parliamentary legislation?

The Reserve Bank has power over the

issuing of the currency and provided it works to maintain and protect the currency it could do whatever it wishes. There is no legislation

required. The Reserve Bank may well consult with the Federal Government and if the Reserve Bank did not wish to follow this path the Federal

Government could pass legislation to require the Bank to issue currency via Energy Rewards.
There must be something wrong with this idea

otherwise some country would have implemented it?

This idea has probably been around for a long time in the archives of many governments or

universities. However, until we get a crisis that demands some action then initiatives such as this tend to be forgetten because the system appears

to be working well. The recent turmoil in the global financial markets and the worry over climate change bring attention to the way our financial

system works and to trying to think of different ways of encouraging investment in renewable energy. It turns out that Energy Rewards will solve

the Emissions problem while helping ease the money supply problem in non inflationary ways. If operated worldwide this approach would give a non

inflationary method of increasing the money supply and break the current runaway increase in debt and money supply.
Wouldn’t it be too

expensive to implement and run such a system?

The other reason it has not been suggested is that until the Internet was in place it was

impractical to implement. With today’s information technologies this is a relatively simple system to implement as we have efficient ways to

identify people and we have many electronic market places that operate with millions of buyers and sellers. The cost of running the system would be

born by the sellers of infrastructure and they currently have much higher selling fees than the 1% or less fees required of this system.