Re: preventing stock plunge

[Padmanabha Rao <kvprao@igidr.ac.in>]

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On Tue, 27 Mar 2001, venugopal wrote:
 To translate the energy conern into such an expression would mean some
 thing like, "Other factors like land, capital and manpower used in
 production remaining the same, the value of a product should be
 inversely proportional to the non-renewable energy spent in producing
 it."
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This is puzzling. Shouldn't it be directly proportional ? I assume value
as implying price. Of course non-renewables are highly valuable and so I
guess you meant to say lower depletion of that would be valued by society.
But, for management in the economy the value or price of a product ought
to be directly proportional to the non-renewable source of energy expended
in producing it.
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 The basic thrust is not so much in use of a particular currency but
 on the need for the State to play such regulatory role. That can be done
 by using (a) rigorous enforcement functions, like by closing down
 polluting industries after taking care of alternative arrangements for
 the workers and so on, (b)  fiscal policy, i.e., by taxation and (c) by
 monetary policy, i.e. by controlling overall availbility of money
 supply, adjusting interest rates and so on. These are the issues that
 concern the economy as a whole, and not confined to share markets alone.

It happens that some regulations would become redundant if energy were
used as currency (medium of exchange), and goods and services in the
economy were valued in terms of their energy-added. Contemporary Money
springs from governmental fiat, and its chief use is the facility it
offers for redistribution -to remove poverty, spread ownership of
productive property- through physically less violent means (fiscal and
monetary policy are anyday better than pointing a gun at the
1000-acre-land owner). As long as these are the objectives Money is a
great idea and commendable towards quickly bringing about equal
opportunities to every citizen. I believe the problem with fiat Money is
that it can be easily challenged, simply through subsidiary fiats, as
between a stock broker and his banker-friends or other broker-friends
(here when the fiat is recalled anything that the broker has produced
naturally becomes worthless unless some other new fiat comes along).
Depending on the spread of those smaller fiats the market is
proportionately cornered by the fiat-givers. Of course fiat-giving is
illegal by anybody except the govt, but then it's so easy for bankers to
compromise if they dare to. In sum, money is a double-edged sword. Energy
is unlike money in the sense that no one can issue a fiat for its
existence. It would be a great medium for valuation and exchange once all
citizens have the same opportunity. With India still not having
'completed' the redistributions there is a long way to go.  BUT, energy
when used a medium of exchange and valuation powerfully ensures
environmental accountability (since all energy comes from the environment
including one's mental energy which draws from the food one consumes), so
perhaps depending on how we perceive the redistribution and environmental
problems, energy rupees would of meaning to us.

Thanks.

Padmanabha Rao


 > > 4. Now, coming to the query on energy based currency, I am not clear
 on how > > such idea could be practically implemented, as lot of theory
 still needs to be > > sharpened and tools made sophisticated so that it
 does not make the system > > more cumbersome. Perhaps, what one should
 aim is to progressively ensure > > greater accountability and
 enforcement of environmental standards. If law > > enforcement is done
 rigorously, perhaps the fiscal and monetary policies will > > be better
 tools to guide the economy. The Capital markets automatically play > >
 secondary role in influencing investors' decisions. In order to make
 'energy > > based currency a reality', many more preparatory jobs will
 have to be done, > > like first building up a translation of various
 databases, like, for example, > > the economic survey, or reports of
 State Domestic Product from rupees to > > energy-units and subject them
 to detailed scrutiny and interpretation, which > > is not going to be an
 easy task. Therefore I think it is too premature now to > > think of
 stockmarkets and energy-units. I hope this meets some of the points > >
 raised and I welcome others to participate/ add.


 > > > > "Komaragiri, Param (Param)** CTR **" wrote: > > > > > ...
 relevance of a stock market crash, > > > stock 'points' they frequently
 say in a market plunge, > > > what exactly happens in a stock trade ? is
 the value > > > attributed to each stock too virtual? Is it going to
 whither away > > > when energy based currency if at all becomes a
 reality? > > > ... > > > How do we ideally prevent a stock plunge to
 save an economy? > > > > > > Parameswar > > > > > > > > > >


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