Energy standard

An energy standard is a monetary system in which the standard economic unit of account is based on a fixed quantity of energy.

Unlike gold standard, or other metal commodity standards, there is only one type of energy standard: exchange. The energy exchange standard does not involve the circulation of "coins", because there is no other form of energy than energy itself, there are only different ways to calculate an amount of energy, but there are international standards, such as kw hours or joules. The main feature of the energy exchange standard is that the government guarantees a fixed exchange rate to the currency of another country that uses an energy standard, regardless of what type of notes or coins are used as a means of exchange. This creates a de facto energy standard, where the value of the means of exchange has a fixed external value in terms of energy that is independent of the inherent value of the means of exchange itself.

Origin
The energy standard developed during the in Vale after the Valois Civil War, where new forms of monetary policies were considered. At the time, the Valois government decided to follow the world's socioeconomic system to favor trade and good relations. However, during the early 17th century, a few political parties and groups in Vale supported the change for an energy based monetary system. The New Anticapitalist Party was among the firsts to advocate such system, while several bishops from the Church of Vale also favored an energy standard, as it would be more in line with Manitist views. Following the Valois Revolution during the Tiberium Wars, the energy standard was established in Vale as part of a new socioeconomic system: aristocratic communalism.

Theory
Energy is a preferred form of money due to its necessity and ease to convert. Energy is the most basic form of value for humanity. Commodity money retains its value despite what may happen to the monetary authority. Under commodity standards currency itself has no intrinsic value, but is accepted by traders because it can be redeemed any time for the equivalent specie. Representative money and the energy standard protect citizens from hyperinflation and other abuses of monetary policy, as were seen in some countries during the Tiberium Wars. Commodity money conversely led to deflation and bank runs, but with energy as the trading commodity, these situations are theoretically impossible.

Advantages

 * Long-term price stability has been described as a great virtue of the energy standard. The energy standard makes it difficult for governments to inflate prices through expanding the money supply. Under the energy standard, significant inflation is rare, and hyperinflation is essentially impossible because the money supply can only grow at the rate that the energy supply increases. High inflation under an energy standard is seen only when warfare destroys a large part of an economy, reducing the production of goods, or when a major new energy source becomes available.
 * The energy standard provides fixed international exchange rates between participating countries and thus reduces uncertainty in international trade.
 * An energy standard does not allow some types of financial repression. Financial repression acts as a mechanism to transfer wealth from creditors to debtors, particularly the governments that practice it. Financial repression is most successful in reducing debt when accompanied by inflation and can be considered a form of taxation.
 * The unequal distribution of energy potential and resource deposits makes it look like the energy standard more advantageous for those countries that have large reserves of energy such as Tiberium. However, as any good has a value from the energy that was produced to make that good, it is considered as energy as well, and therefore, energy sources are considered as goods under an energy standard, meaning that energy itself is actually not directly available per say, but necessitates processing through human engineering, making it more available to the world equally, despite natural resources being more abundant in certain countries.
 * The gold standard acts as a limit on economic growth, while the energy standard has theoretically no limit on growth. "As an economy's productive capacity grows, then so should its money supply. Because a gold standard requires that money be backed in the metal, then the scarcity of the metal constrains the ability of the economy to produce more capital and grow. But as there is no possible scarcity over energy, as it is abundant and the most basic form of human technological necessity, growth is virtually guaranteed as long as there is energy produced, because technology can only improve, thus reducing the cost of production and improving the production of energy itself, making more goods available with less means necessary, eventually going towards a post-monetary system, where abundance is omnipresent."
 * The money supply would in appearance essentially be determined by the rate of energy production. When energy stocks increase more rapidly than the economy, there is inflation. Though that may look true, but in reality, the energy standards sets basis on the value of goods, which are subject to the law of supply and demand. If too much energy such as electricity or computers are produced, and there is not enough buyers, the value of those goods will fall. Therefore, producing more energy or increasing a country's production of electricity or tiberium will not necessarily increase a country's economy, as would be the case if it was a gold standard, where gold supply and production was the basis of the value of money.
 * Energy currency is elemental, timeless and universal; three qualities which arbitrary currencies or other commodity based currencies do not possess.
 * Commodities, services and goods will always fluctuate in relation to energy but those fluctuations would be no longer be speculatively driven on the monetary side - they would be real cost and real demand driven. And there would never be a stampede away from energy.
 * No matter who champions it, no one nation owns energy based money. It is the first truly international, non-political currency base. No nation is able to manipulate it to avoid the consequences of its own economic mis-steps or to beggar its neighbours.

Disadvantages

 * Mainstream economists believe that economic recessions can be largely mitigated by increasing the money supply during economic downturns. An energy standard means that the money supply would be determined by the law of supply and demand and hence monetary policy could no longer be used to stabilize the economy.
 * Devaluing a currency under an energy standard would generally produce sharper changes than the smooth declines seen in fiat currencies, depending on the method of devaluation.
 * An energy standard provides practical constraints against the measures that central banks might otherwise use to respond to economic crises. Creation of new money reduces interest rates and thereby increases demand for new lower cost debt, raising the demand for money.