The Credit

Summary:

Summary: This article proposes Credit, a global currency backed by water and air, as a solution to the crisis of trust in existing monetary systems. It suggests that by reflecting the true value of natural resources and encouraging conservation, Credit could foster sustainability, cooperation, and fairness among nations and individuals.

The world is facing a crisis of trust in money. The current monetary systems are based on fiat currencies, which are not backed by any physical commodity or asset. Fiat currencies are subject to inflation, manipulation, and devaluation by governments and central banks. They also create perverse incentives for economic actors to exploit natural resources and degrade the environment.

One possible solution to this crisis is to create a new currency that is backed by something that is essential for life and universally valuable: water and air. This currency could be called Credit, and it could be tied to a cubic centimeter of pure water and air, decided by nations at a new Bretton Woods-like conference. Credit would be a global currency that would promote sustainability, cooperation, and fairness among nations and individuals.

The idea of Credit is inspired by the insights of Adam Smith, the father of modern economics. Smith recognized that the pursuit of profit could lead to environmental destruction and social injustice. He wrote: "As every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestic industry and so to direct that industry that its produce may be of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest, he frequently promotes that of the society more effectually than when he really intends to promote it."

Smith also warned that the invisible hand could fail if there were externalities or market failures that distorted the true costs and benefits of economic activities. He wrote: "The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load himself with a most unnecessary attention but assume an authority which could safely be trusted, not only to no single person but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it."

The history of money shows that Smith's warnings were prescient. The Bretton Woods system, established after World War II, was an attempt to create a stable international monetary order based on fixed exchange rates and gold-backed currencies. However, this system collapsed in 1971 when President Nixon unilaterally ended the convertibility of the US dollar into gold. This marked the beginning of the era of fiat money, which has been plagued by financial crises, currency wars, debt bubbles, and environmental degradation.

Credit could offer a way out of this vicious cycle. By linking money to water and air, Credit would reflect the true value of natural resources and encourage their conservation and restoration. Credit would also foster global cooperation and solidarity, as nations would have to agree on how to measure and allocate water and air credits. Credit would also reduce inequality and poverty, as everyone would have access to a basic income derived from their share of water and air credits.

Credit is not a utopian fantasy. It is a feasible and desirable alternative to the current monetary systems that are failing us and our planet. Credit could be the catalyst for a new economic paradigm that is based on sustainability, justice, and harmony.