Scarce Money and Scarce ResourcesWhy I think carbon credit is deeply flawed

A new wind is blowing. Yes, there is a new idea in the wings. And when you think about the story that pushes it forward, it all makes sense.

There is a specialist discussion is going on on openmoney.ning.com with currency and sustainability experts, specifically about reconsidering Carbon Credit. Be a part of it.

For eons, folks thought that resources were in abundance. The idea that stuff like good air and fresh water and good river for fish and irrigation are scarce and we can still live in comfort would have been unthinkable. That general sense of fairness went to the heart of markets that sprung up everywhere.

Now let's have a second look. The lifeblood of those markets (currency) was based on scarcity: - So among folks and even nations who possessed a lot of them - goats, grains or gold - were considered wealthy. (And precious metal like gold was clearly a scarce resource.)

Again, the notion of basing the exchange of wealth (market) on scarcity of good air would have been unthinkable when it was in unlimited supply. Partly because no one would have felt comfortable if fresh air was limited and partly because everyone was striving to have good air and water in abundance. If anything, there was always another land, another forest, another river to go to. Or another nation to plunder for it.

But over time, natural scarcity as the basis of exchange of wealth gave way to something else. Exchange of gold became exchange of paper - printed money, and IOY slips and slips of future promises by wealthy folks. But there is a twist. Because folks only value exchange if what they get is scarce for them. So money became a commodity in itself, and folks only valued it if it was scarce.

Today, what really is scarce is the good tree that money can be printed on.

Today what really is scarce is good air and good water. That scarcity is now the fact of the day. And because without those natural resources no one feels comfortable in a really free market any real and natural exchange system of wealth should be based on those resources.

It follows that to base our new money on carbon is the silliest notion possible. Carbon is in utmost abundance on earth. We ourselves are made of it. Carbon credit and carbon money will only replicate the same problem we now have with printed money. Understand, that in order for the issuer to make that kind of money valuable, they need to put a price on them and have the power to make it scarce. In other words carbon credit markets may only operate if artificial scarcity can be imposed upon them.

And artificial scarcity implies the power of controlled reduction.

Well, it is not carbon that is scarce - it is good water, good air, good forest, good reef that is scarce. Stuff that is not yet polluted that is what is scarce. And a natural, fair and free exchange system should probably be based on what is naturally scarce. Indeed, that implies no more artificial scarcity in the wealth exchange systems either. At least not until we clean up our stuff and feel comfortable again about the natural resources that makes us all healthy.

But that time is well in the future. Some say the horizon is a thousand years or more. This I cannot tell, and my guess is - no one can. What I can tell though is that there is a new exchange system in the wing.

It is called open wealth acknowledgment, and the best example I can find so far is open money. Folks, we should adopt this between communities around the globe, the more and the freer the merrier. And what it might need to be based on for the environment are fresh water, unpolluted air, healthy reefs, good rain-forest, sustainable plantation forest and the like.

An open exchange market based on the amount of time spent, but also moderated by the measure of good you did to the environment by it. The value would be a relative measure compared to a similar action e.g.: saving water in your home in Melbourne.

Stuff that we need, not stuff that we are made of. Like carbon. The very notion of carbon credit closes the door on you. It says you live on borrowed time.

Well I don't know about you. If that's the story of money, I need a little more positive message.