Kilowatt Cards show how financial securites can have stable value. Their value is fixed because 10 kilowatt-hours is a physical constant, a fixed amount of work (in the scientific sense) that one can evaluate intuitively: 10 kilowatt-hours = 10,000 Watt-hours, which is enough electricity to run a 100 Watt light bulb for 100 hours (exactly), or drive a Toyota Prius about 30 kilometers.

Unlike gold, electricity can do work - expressed as light, heat, or fuel - using the principle of the conservation of energy (e.g., 10 kWh = 34,120 BTU).

Because energy is needed to produce or to use nearly all goods and services today, the ability to consume energy is a useful definition of wealth.

The value of 10 KWh can be judged intuitively without reference to a cash price, like one kilogram of pure water (especially when you are thirsty).

Because Kilowatt Cards may be redeemed for consumer electricity almost anywhere on earth they can also be used for barter - and as a store of value - worth a fixed amount of energy, regardless of local electricity prices.

While some people want gold and silver, everybody needs light, heat or transportation. Unlike the gold standard, kilowatt-hour notes may be redeemed for a commodity that is useful to everyone. Real assets are things people actually need.

The price of electricity is not fixed, but its value to people as a source of light, heat and motion is stable. Unlike the value of gold, which is subjective, a given amount of electricity has objective value, because actions like traveling on trains or reading at night consume the same amount of energy each time.

No matter what its price in money, a given quantity of electricity has about the same value to individuals because the work it can do is fixed.

The non-profit corporation behind Kilowatt Cards does not produce or deliver electricity - it only pays for electricity - using national currencies obtained from investments, i.e., rental properties, farm and timber land, bonds, intellectual property, equipment leasing, and other equity holdings to fund payments for electricity as needed, and to keep pace with inflation. Kilowatt Cards are backed by tangible assets, not promises about "growth."

Kilowatt Cards may also be issued in exchange for commodites (e.g. firewood, grains, gasoline) which can be stored and later sold, either to pay for electricity or to be invested in other ways.

The result is a store-of-value (underlying assets) and medium-of-exchange (paper or electronic accounts of kWh liabilities) in a financial instrument that resists inflation. This is a new asset class which is safe to hold because its value is a scientific constant, so not subject to currency inflation - provided that the system is run prudently.

The underlying assets are owned collectively by holders of all the Kilowatt Cards, which instruments pay no interest but do maintain fixed value, and, therefore, may be saved, sold, or loaned at interest. They are liquid assets, stable, and much smaller and easier to aquire than land or equities (the usual inflation hedges).

In the future Kilowatt Cards may be issued directly for money, to be invested in various assets like any other investment fund, but that is not part of this demonstration. Kilowatt Cards are not for sale, but you may request some to test.

The point is that capitalism works best when tangible assets can be monetized using something liquid and stable. Financial liabilities denominated in kilowatt-hours, if backed by real, tangible assets owned in fee simple, could stabilize the boom-bust business cycle - by letting people avoid asset bubbles and just save honestly the value of their labors, commodities, and accumulated wealth, knowing that their savings cannot be simply distroyed through fiat currency growth and bubble collapse.

If electricity-backed notes remained redeemable at face value, one could not loose wealth to monetary inflation.

You may doubt that wealth can be equated with electrical energy - or liken it to the illusion that wealth can be equated with gold - or feel that power grids are so vulnerable that financial capital should not depend on them. But most capital already depends on electricity - for example, nearly every building and business on earth. Name an asset of yours which does not require light, heat or motion to retain value.... I'm waiting.

Securities backed by a physical commodity such as gold must be issued in limited numbers, assuming the gold is owned and stored, or else the gold may be backed by futures contracts (promises).

In contrast, securites backed by kilowatt-hours are not based on stored electricity (which is impossible) or futures contracts for electricity. The issuer of kWh liabilites need only pay for electricity on demand.

As for evaluating its ability to pay, the issuer may report (1) its total kWh liabilities, and (2) its total assets, thereby permitting ordinary financial analysis.

Kilowatt Cards are gift cards not a currency, but since they can be redeemed by anyone to buy electricity, they are useful to barter with for other things worth about the same amount of energy, regardless of electricity prices.

Get sample Kilowatt Cards almost FREE.

It is a truth universally acknowledged that a shrinking economy must be in want of more credit.

Kilowatt Cards was founded to experiment with an alternative to credit-driven asset bubbles and to cope with the shrinking economies that must follow "peak oil."

Our approach is similar to that of the old mutual insurance companies, which were owned by their policy holders and run by trustees, rather than by shareholders.

The Kilowatt-Hour Card Corporation was founded as a not-for-profit entity without owners except for the holders of the Kilowatt Cards themselves. Trustees and employess manage operations but there are no shareholders extracting profits from operations, so that all of the underlying assets funding the kWh libilities can be run prudently to maintain value, not for economic growth. This way the rents can be used to maintain the properties to a decent standard rather than as cash cows.

While the economic surplus is not high under this philosphy, the absence of "owners" extracting profits makes the economic surplus avilable for reinvestment in the underlying assets, creating jobs while protecting the value of the killowatt-hours issued to finance the assets.

The value of such assets should rise with inflation generally, while the reinvested profits should build a cushion against rising energy prices.

The Kilowatt Cards in circulation thus represent collective ownership of the underlying capital in monetized form.

The underlying assets need not be limited to housing and farms. They might include wind turbines, inventory factoring, and any business with collateral that could be financed by a bank, asssuming that there were enough demand for the kWh paper.

Our immediate goal is to show through experiment how one might finance housing, wind farms, and other socially beneficial enterprises without any promises for economic growth. This ability follows from collective ownership of the underlying assets, which avoids usury and extraction of profits.

The money saved by a mutual ownership structure is thus available to be reinvested, providing a cushion against rising electricity prices and a very safe investment vehicle.

Another goal is simply to provide a way to save, without putting money into growth stocks or oversized houses.

This kind of financial product may also democratize credit and smooth out the boom/bust cycles of capitalism, because almost any asset can be monetized as kilowatt-hours without the cooperation of a bank.

Just as Kilowatt Cards does not depend on any particular investment style, it does not depend on any particular electricity supplier.

While an individual electric utility might issue its own redeemable coupons, the chances for a local system failure due to war and fuel shortages would be high.

Our delocalized approach transforms such physical risks into a purely financial question, which can be analyzed on the basis of quarterly earnings and balance sheets.

This approach to finance may be viewed as a type of mutual insurance society. Instead of pooling money to insure against physical losses, it pools land, tangibles, and perhaps soverign debt to guard against currency depreciation and credit contraction.

As with any risk pool it's important not to have too many claims at one time (redemptions for electricity). Kilowatt Cards have been redeemed at a rate of about 1% of the total in circulation per year since July 2007.

Another application for fixed-value paper would be lending in Islamic finance, since one might actually lend at 0% interest if the medium-of-exchange had stable value.

Since fiat currencies are always depreciating, the prohibition against interest means that all Islamic investments are for equity, no loans.

The situation is somewhat different in a world with stable (but liquid) assets. That is, one might lend kilowatt-hours to a borrower who could trade them for cash (or for something productive), and eventually repay the debt by buying kilowatt-hours on the market. That purchase might cost more money than was originally obtained for the kilowatt-hours, but it would represent repayment of the same energy debt.

While Islam forbids payment of interest on debt, it might allow payment of extra money to cover currency inflation after the debt itself was defined in terms of energy. So, lenders could get nominal interest in terms of money, if not real interest in terms of kilowatt-hours, but that might be good enough to help a friend.

Samples of Kilowatt Cards are available FREE in limited amounts.