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Kilowatt Money: Zombie Economics for Naive Conservatives

Written by Gary North on March 20, 2013

Gary North’s Reality Check

The conservative movement has always been filled with monetary cranks. This has been true for well over a century.

These cranks have never read a book on economics. They have never taken a class in economics. They have zero practical experience in finance.

They come before the conservative public and present crackpot schemes of monetary inflation, all in the name of conservatism.

Their victims are equally unread, equally unskilled amateurs who think, “Gee, that sounds great! Let’s do it.”

Let’s do what? These cranks never have a plan to get from here to there: the Promised Land. They are like Moses with no escape route into the Promised Land by way of the wilderness. They want to wave a magic wand and get True Money (always capitalized).

These crackpot schemes all partake of the same flaw. They want a government-appointed committee of unelected experts to set up the money and banking system at a zero interest rate. Usually, they want a central bank run by engineers and government statisticians. But all of these schemes rely on government statisticians. All of them reject a gold coin standard where owners of private property — coins and bank accounts — are in charge.

These crackpot schemes begin with this presupposition, which is never admitted by any of the designers: “We do not trust private property and the free market. We trust only government experts.” Their zombie followers line up. “Yes, yes, we too believe only in government-employed experts. This is because we are conservatives.” Then out into they night they march, looking for other conservatives with brains to eat. They find them. They always find them.

The bank reformers have no political support for their schemes. But they spend time describing the wonders of their system. They call on people to get behind it. Except for a few crackpot schemes, such as Social Credit or Greenbackism, no one ever joins the political movement. There is no political movement. There are only mindless zombies.


Here is a recent example: “Electricity As Currency? 10 Reasons It Could Work.” This was subtitled: “Energy-backed currency concept”

It began with a deliberate deception.

Remember the good old days when gasoline only cost $1.50/gallon way back in the ancient times of 2000? Why does it cost more than double that today ($3.71)? A gallon of gas is still a gallon of gas, so it seems obvious that the dollar has lost value.

If you are going to prove currency depreciation by an appeal to statistics, use the Consumer Price Index or the Median CPI. The CPI is most common. Using the Inflation Calculator on the site of the Bureau of Labor Statistics, we learn that consumer prices since 2000 have risen by 35%. That is 2.3% per year. This is bad, but it is not anything like mass inflation.

The anonymous writer goes on:

This rapid devaluation of the U.S. dollar makes it an unstable medium of exchange and certainly not a good store of value — two aspects considered to be the main functions of money. This has led many to examine the flaws of the current monetary system and search for possible alternatives.

This is not rapid devaluation. This is steady-as-you-go monetary depreciation. Hardly anyone notices. Hardly anyone cares.


Some have suggested that returning to the Gold Standard (pegging the dollar to gold) will help control the fraudulent expansion of the money supply and protect the value of the currency.

This is familiar. There is both economic theory and economic history that supports this view.

Others say eliminating the interest attached to each dollar created will get rid of scarcity and provide abundance.

This is Greenbackism.

Each of these ideas has merit since they correct some of what’s broken, yet they both also have flaws which make them difficult to fully support.

Greenbackism is totally wrong. It is intellectually bankrupt. Ellen Brown is a prominent Greenbacker. For my detailed refutation of her economic theory and her historical inventions, which she has never answered, go here: http://www.garynorth.com/public/department141.cfm. (She in fact is a Leftist. She has come out in favor of Bernanke’s QE programs.)

(For the rest of my article, click the link.)

Continue Reading on www.garynorth.com

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10 thoughts on “Kilowatt Money: Zombie Economics for Naive Conservatives

  1. Igor Karbinovskiy says:

    "If you are going to prove currency depreciation by an appeal to statistics, use the Consumer Price Index or the Median CPI." These are government statistics, no? Surely you don't really mean that we should rely on them? Are you saying we shouldn't appeal to statistics at all, not even John Williams' work over at shadowstats?

  2. G. Kuhns says:

    I recall the adage: “If you owe the Bank $16,000 you have a problem; if you owe the Bank $16,000,000,000,000 the bank has a problem. Is the “Bank” the Federal Reserve and the government printing office or is it all of those people (and foreign nations) who “buy” what our government prints?


  3. Enough already says:

    These comments about Conservative Banking Sillies are confusing, surely you are talking about spend and print 'Bernanke & Obama' Democrat Banking systems ?

  4. Rabelrouser says:

    This would conclude the point of an uneducated populace to the Root Cause of the Money, and Spending problems in this nation. And , an uneducated populace is alway the baine of the coming economic collapse.
    Funny how I, as a high school drpo out could personally study this particular issue and come away with the understanding that the Federal Reserve Ponzi scheme and subsequent financial manipulations by elected "representatives" through a open checkbook spending spree on everything imaginable under the sun has brought this nation to financial ruin.
    Conversations with College Edju-Ma-Cated economics majors have all ended with the same comment," Gee they didnt teach us that!"
    How simple to understand but yet, because it is not "politically sexy enough" no one wants to know the truth of the problems.
    That is untill it bites them where they sit, which is quickly going to happen. Boy, will they scream then, TOO LATE!

  5. Rabelrouser says:

    No, even the conservatives have no clue about the root cause of this nations financial problem. I know, I try to educate them, but they just dont want to know. It not politically sexy enough to consider.
    Understand that this Federal Reserve Ponzi scheme has been building for 100 years, it has nothing to do with this admins policies; except they are quickly finishing the already started final fall of the nations economy.
    They can do it because no one wants to realize the truth of the system that is in place, or it is explained away with a mindset that it is all so and so's fault.
    To end with Andrew Jacksons comment:, "If the people knew tonight the truth of the banking system in this nation, Washington would be ashes tomorrow morning". Think about it.

  6. Nutter2612 says:

    Have they ignored that electricity cannot be stored easily and without cost. Energy requires additional energy to move it from one place to another. So, a savings would have a physical net loss merely for attempting to conserve /save. And, a remote transaction would cost additional energy to complete such that distance equals added cost penalty.

    Would not energy money be easily manipulated as people can’t readily see it ? Producers would likely game the system like they do with some commodities.

    Would building a dam or a turbine then be equivalent to coining money ?
    Would it need to be cOntrolled by a central authority to regulate it and therefore destroy innovation.

    If I borrow say 10 KWH from the energy bank and agree to pay interest, who pays for the loss in storage and retrieval. Certainly, no One because the repayment. Would be transacted in future kwh’s. Does this Make all borrowing a futures and options game ? Do they create derivatives ? How do I take 10 Kwh to the bank (in what container) ? Oh, I don’t, they create certificates to represent that amount ! Excuse me, isn’t that what money is ?

    Electricity is a useful commodity nothing more / nothing less. They could make the same argument regarding and useful commodity. Of course, measuring transactions (of barter) in sugar, gold, coconuts, lumber, etc is cumbersome and reduces the ability to transact to having a buyer needing your commodity that can also simultaneously you accepting their commodity. This ultimately becomes an increasingly comPlicated multi-party trade to clear to everyone’s needs.
    Universal “money” ideally eliminates his inefficiency.

    But, (Mr. Archimedes) How do you keep the money from devaluation, counterfeiting, corruption,etc. (including by the regulators)?
    In any money system, Like the price of freedom, it’s cost is eternal vigilance…

  7. Marcus Cato says:

    I have not yet seen a single word of credible rhetoric that can justify the practice of fractional reserve banking, OR of the notion that it's perfectly OK for central banks to create money out of thin air the LOAN it to government AT INTEREST, and expect real people to repay these loans PLUS interest with real wealth — "money" acquired by creating actual goods and services and expending irreplaceable life time and energy in the process. Gary, your article is confusing and contradictory.

  8. It would seem all that is needed is enough debt-free currency in circulation (not put out as an interest-bearing loan from a private central bank) for people to transact everyday business: buying groceries, paying for or receiving money for services rendered or products purchased, and that the money be free from manipulation by a cartel that aligns itself against the public interest. Many of our problems in the last 100 years have come from the intentional withdrawal of enough money for people to engage in commerce (hyperinflation, crashes, panics, followed by the usual solution of getting all the nations into a world war to make everybody forget about how they got screwed by the big banks — again).

  9. MetaCynic says:

    Paper money was originally warehouse receipts for gold and silver. If someone suspected that the issuer of the receipts had more claims out there than gold and silver in his vaults, he had the right to present his receipts for the metal. This right was a deterrent to the fraudulent over issuance of receipts. How does one do that with Kwh receipts?

    Two necessary attributes of money are portability and durability. At today's prices, one can easily carry a half million dollars of gold in pockets spread around one's person. How does one transport a similar value of Kwh under one's control except with heavy batteries? That's why iron is not money. It is too cumbersome to transport relative to its value. Furthermore gold and silver can be safely buried in the ground at very little cost with no worry about physical erosion. How does one store Kwh except in expensive batteries which will lose their charge over time? Ten years later my buried gold and silver will still be there looking like new, while my electricity will be gone!

    Things other than precious metals may emerge as money if free market forces are allowed to work, however I don't think that electricity will be one of them.

  10. Attributing crackpot theories to “conservatives” does not make the crackpot theories themselves “conservative”. Just like publishing a self-promoting article in one blog is not guaranteed to make anybody givs a crap about the blog that you were trying to promote.