Economics | Deirdre Kent

Tradable Energy Quotas or Tradable Emissions Quotas? – our discussion rages on

When you fill up with petrol you would surrender TEQ units.

We have now had three online meetings of those wanting to promote TEQs as described by Dr David Fleming and summarised by his colleague Shaun Chamberlin here.

The last discussion was very stimulating and it was hard to sleep that night. Five good brains agonised for an hour over whether to make the unit energy or emissions, but still no conclusion. It isn’t any good launching a campaign until we are clear in our minds of what it would be called, how it is designed and how, if at all, it would work alongside the ETS structure or replace it.

First let’s look at the history. TEQs were designed as applying to energy. Dr David Fleming wrote about managed energy descent and invented this tradable quota system to ensure a smooth descent rather than a chaotic one. But on the website the Parliamentary report of 2011 states on P47 that it could be designed for emissions. It’s just that we can’t see the second design and it is far from simple to figure out what it would be.

Fleming, who died in 2010, didn’t include non CO2 emissions in his Tradable Energy Quotas and I would imagine he didn’t envisage that a country like New Zealand would have half its emissions in agriculture in the form of methane and nitrous oxide.

Josh Floyd the Melbourne researcher from the Simplicity Institute had tentatively suggested to us in an email that we use TEQs for fossil fuels and use the ETS for other GHGs. But there would be different prices for the units coming from two different systems. Someone argued that is logical because they are different gases. I don’t know the answer.

We then asked where is the public now in their thinking? Will they want to reduce their fossil fuel energy? We think they will know they have to reduce their emissions yes. Would they be more on board if the unit was emissions? Probably.

Jack brought up the idea of what happens to a society during a big disruption as he had read that research shows altruism dominates the responses during big disruptions. (Think Christchurch earthquake and the 2020 lockdowns). Then someone asked if we could somehow use the pandemic issue to edge into the campaign.

Every time we talk to someone new about whether we want Tradable Energy Quotas or Tradable Emissions Quotas they answer the latter. But let’s think a bit more.

Ideally it seems people would like it to be Tradable Emissions Quotas (TEQs). As yet we not really sure whether the data is there for making this feasible. TEQs were originally designed to be Tradable Energy Quotas, but since in New Zealand half our emissions are from methane and nitrous oxide from agriculture, and we know we need to reduce all the greenhouse gases, we instinctively choose emissions as the unit.

But let’s suppose the technology and the data is now available to make the unit for the quota “emissions” and see what happens.

There are two ways of measuring emissions – production based and consumer based.

The IPCC has asked countries to use the production-based as the way to count our emissions. In the case of Aotearoa New Zealand we import manufactured goods with embedded carbon dioxide and we export food with embedded methane and nitrous oxide emissions. Using the the IPCC method means we must measure all our emissions from agriculture and waste as well as from industry and transport. And that is why, when we try to invent a Tradable Emissions Quotas and plan to do it on consumption data it just doesn’t work.

And the design still has to be worked out. In the case of Tradable Energy Units the TEQ scheme only wants us to surrender units when we buy fossil fuels or energy. The units go up the chain to the producer or importer and then to the registrar. When we buy items of services with embedded emissions we don’t surrender units, as the price is already reflecting the embedded emissions. In the case of emissions being the unit, there is nothing comparable to fossil fuels.

Also you can think of it this way:-

If we bring down energy use, we will bring down emissions too.

But if we bring down emissions there is no guarantee we will bring down energy use and this will lead to ecological disaster. In fact Dr Rodney Carr in answer to a question on a Climate Commission webinar said our energy would be the same in 2050 as it is now. And our GDP would have increased by 73% with all the material throughput that implies.

I have been reading the chapter in Jason Hickel’s book Less is More called Can Technology Save Us? There was lots of data and science reported. He eventually dismisses green growth as a fantasy.

Why has NZ managed to increase its net emissions since 1990 while others reduced them?

I asked Professor Robert McLachlan this and he answered, “Cutting down more trees than we planted wasn’t so great but the bigger impact of trees in our climate policy has been to delay getting out of fossil fuels. We put all our eggs in the domestic & international carbon trading basket, which fell apart in the 2010s. Now we’re trying more tools. We didn’t have to get out of generating electricity from coal as UK did.”

In the past its main flaws were:-

political football, e.g. as soon as it was set up National campaigned to weaken it, removing agriculture and giving everyone a 50% discount, only recently phased out.
no cap on emissions.
was designed to work together with international markets, but these failed. NZ was a major party to the biggest carbon trading scandal of all time.
carbon price too low.”

He is merciful.

Not so the late Jeanette Fitzsimons who said in 2016, “Scrap it. It fails on every count. Many suspect the design of the ETS, with no price floor and no emissions cap, was never intended to make a real difference to our climate-changing emissions. It was intended to provide a trading platform for speculators, which it has done. While all this waste of effort has been going on, the existence of the ETS has been used to justify having no other measures to address climate change.”

She said, “The purpose of a price on carbon emissions is to encourage people and firms to make better decisions in how they use energy (avoid that extra trip to town); and more importantly, better investment decisions: a wood-waste boiler instead of coal; a wind rather than gas-fired power station; a more efficient car next time. The ETS has done none of this.”

And after reading a long review of it by Catherine Leining, Suzi Kerr and Bronwyn Bruce-Brand, I can’t help but agree with Jeanette’s conclusion,”Any further public time and expense tweaking a broken system will send good money after bad, and use resources that would be better used on measures that will actually reduce emissions.” In one telling sentence at the end, they admit it failed, but they don’t comment on whether the new version will work.

Leining et al’s review goes into the painfully long history since 1993 , says the system applies to about 52% of our gross emissions, says agriculture was going to be introduced in 2013 once ( it not getting there till 2023), gives a graph showing how the price dropped from just less than $30 a tonne in 2011 to about $5 in 2013 then crept up again, and concludes that ETS was “not designed to achieve specific targets for domestic mitigation.” Then comes the punch line. “As a result, while it constitutes a functional cross-sector market, the NZ ETS has not significantly reduced domestic emissions to date” (They failed to say that net emissions had risen 60%)

They go on to say how it will be tweaked. Units will be auctioned every three months from March 2020 under a cap, which is an improvement. It will also limit participant purchasing of overseas units and improve forestry accounting.

However a major distortion occurs by giving a 90 percent subsidy to businesses who are “emissions intensive and trade exposed”. Stuff journalist Charlie Mitchell produced a comprehensive article on these industries. Australian owned Blue Scope Steel, Canadian owned Methanex, Fletchers Golden Bay Cement, Rio Tinto’s aluminium smelter and Fonterra are the biggest recipients. It is argued that some would relocate overseas if they were in the scheme.

It’s no wonder Charlie Mitchell summed up up in Feb 2020 as “Kafkaesque, having nightmarish complexity, riddle with exemptions, impenetrable” and economist Geoff Bertram called it a “dog’s breakfast”.

We’ve had ETS since 2008 but how much has it affected you?

I can’t believe it. We’ve been discussing Emissions Trading Scheme since 1993 in New Zealand and I still didn’t know how to explain it. Although I consider myself a responsible citizen who keeps up with the news I somehow managed to escape from having to learn.

You see I didn’t need to know. Oh well unless I was a politician, a government servant, a Parliamentary staff member or a consultant involved with ETS. Although I had been in climate change groups we had never discussed it because we were in the process of persuading government to do something about climate change. In my case it was local government.

Then, because I was interested in Tradable Energy Quotas (TEQs) as a framework to reduce emissions, I finally thought it necessary to understand ETS. I discovered that only larger land owners and businesses were involved.

Then I read a paper that reviewed the scheme in late 2019 by Catherine Leining, Suzi Kerr and Bronwyn Bruce-Brand.

To my amazement there was a table of climate change policy milestones in New Zealand from 1993 to 2019. 42 lines of actions were listed over those 26 years. Every sector seems to start for a few years with voluntary obligations and then it becomes mandatory. The sectors are forestry, transport, waste, synthetic gas, agriculture. I can’t imagine the number of work hours that everybody has put into this. We know how to measure emissions now for those sectors. Well done.

You can see the political wranglings as the Labour and National Government gain and lose power. But even after all that work, the fourth page says, “As of November 2019 the system applies unit obligations to approximately 52% of New Zealand’s gross emissions.” Agriculture is the biggest political football and so far the industry seems to have persuaded the government to wait and wait.

Then I flip to the end of the article to look at the conclusion. I notice a mild little sentence which says, “While it constitutes a functional cross sector market, the NZ ETS has not significantly reduced emissions to date” Oops! It then goes on to say something quite extraordinary:- “The NZ ETS was not designed to achieve specific targets for domestic mitigation.” Wow.

While things are due to improve with the new Government and the Climate Commission (they finally start auctioning the units in March this year) there is still no reason for you or me to understand the ETS. We aren’t involved. We just see the result – a net increase in emissions. A pity, considering all that work has gone into it…

We are not involved because we aren’t part of the scheme. That is where Tradable Energy Quotas (TEQs) are different. Units are given to the downstream consumer, not bought by the upstream emissions producer. TEQs are denominated in quantity and, unlike ETS, they involve every citizen. The climate emergency can’t be addressed by upstream systems because it doesn’t guarantee emissions decline and it doesn’t involve energy users like you and me and require us to play an active part.

The danger of obsessing over stomach-churning stories about the climate emergency

The word of the year for 2020 was ‘doomscrollling’. Wikipedia says it can be defined as “an excessive amount of screen time devoted to the absorption of dystopian news.”

We are used to it now. For four years we have been waking up in New Zealand to the latest outrage from Donald Trump. For me it was quite obsessive. Now we are more inclined wake up to sanity and competence from that part of the world.

Today we wake up to riots and arrests in Russia and a heat wave in South East Australia. Most major centres in the Victoria’s north will be surpassing 40 degrees. NSW-Victoria border towns could endure temperatures up to 44 degrees. The choice is do I read more stories about that? Maybe not. I know the climate story is grim. I have known for ten years.

Towards the end of last year, after finding myself always passing on alarming facts about the latest freak weather event or climate prediction too often, I realised that all this obsession with bad news keeps me from spending time on championing real solutions.

It wasn’t until I read Jason Hickel’s book Less is More that I found he had articulated what I had been struggling to do. He had just summarised the ghastly story of the climate emergency we are in. It was, he explained a series of eco-facts. He says “The philosopher Timothy Morton has likened out obsession with eco-facts to the nightmares suffered by people with post-traumatic stress disorder or PTSD, where you relive your trauma and wake up viscerally terrified, sweating and shaking. The idea is that if you are able to anticipate the traumatic event, you might be able to avoid it – or at least prepare yourself psychologically. Morton thinks our eco-facts serve a similar function. By endlessly repeating terrifying eco-facts, on some subconscious level we’re trying to insert ourselves into a fictional moment right before the collapse happens, so we can see it coming and do something about it. At least will feel prepared when it arrives.”

“In this sense, eco-facts carry a double message. On the one hand they cry out, urging us to wake up and act right now. But at the same time they imply that the trauma is not yet fully here – that there is still time to avert the disaster stop this is what makes them so beguiling, so reassuring, and why we seem strangely to crave more of them. The danger of this is it will all be lulled into waiting around to waiting for the effects to become more extreme. Once we reach that point we tell ourselves will finally get round to doing something about it. But the ultimate echo fact is never going to arrive.”

So this year I am seriously trying to spend less on doomscrolling on climate and more on comparing the various proposals and acting.
Appealing though it is I don’t fancy the choice of doomscrolling to species extinction. Right now I see the most promising way forward as learning about Tradable Energy Quotas (TEQs)

How would TEQs work for those who live rurally?

A rural family of four plus an elderly mother are working out how to live with less energy. The children are 3 and 1. The father Doug owns a small farm but the mother Joan occasionally drives asn hour and a half to the nearest town to give her specialist art lessons. She spends a lot on petrol her 1996 Nissan Pulsar is often needing repairs.

With three adults and two children, the quota is 8 Tradable Energy Quotas (TEQs) a week each. Between them they will get 24 TEQs a week. They know next year it will be fewer, which gives them the opportunity to plan ahead. They have to surrender TEQs each time they buy petrol or diesel.

The farm is a business so Doug will probably buy TEQs from a broker at the going rate. Doug finds he has enough TEQs this year but plans to buy a draft horse to relieve him next year. Electric tractors are too dear. He plans to breed draft horses and is learning about this.

Joan is faced with options when she is offered more work in town. Driving an hour and half for a morning session for a few dollars is surely not going to be worth it. Does she buy more TEQs? She could, but no she really can’t afford to that and it isn’t a long term option. She tells the class and her boss she is thinking of leaving. But the Polytech doesn’t know of anyone else who can teach her specialty. Everyone thinks.

If she stays home, she could either keep her TEQs and pool with others in a similar situation to set up an appropriate business for the little rural community or else she could sell her TEQs for cash on the market. She tries selling them this year but continues to plan. She knows that her friends are in much the same boat as their old cars aren’t exactly fuel efficient and none of them can afford an electric car. The friends get together and work out a business that would keep them in the rural area, use less petrol, and they would spend less time on the road. They reckon this new business would attract others to their area. Maybe it has something to do with her art, maybe horticulture or something else.

Do you see the trend? Not only do Joan’s students have to work out how they will learn that special art, but the whole family decides as a group how to adapt. Joan and her friends are another group that has to plan together. Rona the mother gets involved with the family decisions. Doug learns about what alternatives he has to his diesel driven tractor. The knowledge spreads around the small community. Everyone gets involved. Everyone has to adapt. And small rural communities are going to thrive.

Why are TEQs better than Fee and Dividend or Cap and Trade?

I am a recent convert to Tradable Energy Quotas (TEQs) invented by the late David Fleming in UK in 1996 for effective climate action. See

https://www.flemingpolicycentre.org.uk/faqs/

I have a theory that the reason it seems superior to FEASTA’s Cap and Trade, Canada’s Carbon Fee and Dividend and all others is because Fleming was a historian/environmentalist who later in life got a PhD in Economics. He understood how the economy works. This meant that he saw the close correlation between energy use and economic growth. He knew that if the economy doesn’t grow it collapses because it is designed like that.

So he took all of this into consideration when he invented TEQs, a managed energy descent framework that wouldn’t result in economic collapse, widespread unemployment and social unrest. He was also aware that rations must be tradable or else a black market develops.

His idea is that government gives an entitlement of energy units (they could be denominated in emissions too) for each adult, and high energy users would have to buy them on the market from low energy users. Businesses and Government etc have to buy theirs on a weekly tender and this sets the price. Hence it delivers climate justice like Fee and Dividend. But it differs in many ways which his colleague Shaun Chamberlin summarised well in his 2015 post here. For effective climate action, every citizen needs to be involved to change the way we live, work and play, so Fleming’s scheme involves every citizen.

While the Fee and Dividend system is simple to administer because in Canada they just impose the fee on about 1350 mines and ‘preparation sites’, (and it is passed down to wholesaler, retailer and customer), there is still no built-in incentive to adjust their lifestyles or to cooperate to adapt to live with less energy. TEQs is not complicated to administer. The weekly tender auctions are just like those for Government bonds and units can be added and subtracted just like Airpoints or Flybuys or Snapper card. Almost everyone has a mobile phone.

They also have to spend extra money to support small, rural and remote communities. I am not sure if TEQs would require this, but I believe that remote rural communities would tend to thrive again.

I am keen to recruit people to a regular Zoom call until we all learn more about it (and this includes economists!) We are thinking out a strategy and have been discussing whether it could be implemented at a local body level. We have had one call and are getting good people involved. We know we have to be able to defend it, compare it with other systems and answer awkward questions so all brains are welcome!!

Sustainability and Money

Sustainability and money Deirdre Kent Nov 2020

A few months ago I gave this presentation to a climate change group. Hope you enjoy it. Well it’s not actually enjoyable to know that energy use and economic growth are so closely linked. As Naomi Klein said “The economy is at war with the climate”. We are going to need all our collective intelligence to downshift without chaos. Can we manage an energy descent without it being haphazard and dangerous socially?

That is why I got to be studying Tradable Energy Quotas (TEQs) which set the scene for a well managed transition to a low energy economy. I even wrote a blog on it recently.

Tradable Energy Quotas (TEQs) – Rationing that works

Some years ago I read about Tradable Energy Quotas as a method of ensuring everyone has access by right to their fair share of what fossil fuels are left and high energy users could buy units from low energy users. Then, being aware that our country, and indeed the whole world, was not make the necessary cuts to emissions in time to have a liveable climate, I thought to revisit the idea.

I discovered that not only had the idea lasted, but that there was a UK organisation called the Fleming Policy Centre which promoted it. This was named after the visionary green economist Dr David Fleming whose ideas on de-growth for a post fossil fuel economy are well worth reading. He died in 2010 but his friend Shaun Chamberlin carried on his work, finishing his two books Surviving the Future and Lean Economy.

Rationing had always appealed to me. As a child I remember taking ration coupons to the shop to buy sugar, clothing, butter and tea along with our money. Naturally our parents managed the petrol coupons.

Petrol was rationed from 1940 to 1950. During the last three years of the war the restrictions were severe. New Zealand also rationed clothing, footwear and nylon stockings.

Then in the 1970s there were oil shocks. When carless days were introduced in 1979 they were unpopular and largely ineffective because a black market arose in exemption stickers given to car owners in essential industries. Petrol rationing was threatened but never imposed.

The fact is that black markets will always appear when there is no trading allowed in ration coupons. And if you ration per month with no trading allowed, then people will buy all the petrol they can and store it in all sorts of containers like “califonts, kegs, kettles, demijohns, vinegar and whisky bottles, tins of all descriptions” as one account says. The government then made this illegal, which really encouraged a black market.

TEQs are ration coupons but they will come in digital form these days like Airpoints or Flybuys. The difference is that you can’t use them alone when you cash them. You will have to surrender them along with your cash when you buy petrol or gas or any fossil fuel.

Fleming worked it out that only 40% of petrol users were private individuals and the rest were business, governments and other organisations. Each year there is a set number of TEQs allowed. 40% are given to individuals in a weekly allowance. The business and governments have to get theirs through buying them at a weekly tender and this sets the price in NZ dollars when people come to trade them. Through a market, heavy users will be able to buy TEQs from low users. Buying and selling is as easy as topping up a mobile phone or Snapper or HOP card for bus trips.

Fleming argues that this method puts the onus on the users to find the best ways of reducing their fossil fuel use. (More about this later). In WW2 people used horse and cart or just walked.

And of course TEQs units also be denominated in emissions rather than energy. In fact it makes more sense these days to do that now that we know how many categories there are for emissions. That’s worth doing instead probably. But you can understand that this was invented in 1996 before so much was known about our NZ emissions. We certainly didn’t know agriculture contributed nearly half our emissions in those days and we have quantified emissions from waste much better too.

A great deal more information on TEQs are at https://www.flemingpolicycentre.org.uk/faqs. This will take a long time for you to get through. Skim it and come back and back. I recommend reading the 2011 All Party Parliamentary report.

If you are a New Zealander and interested in following through as an idea, please get in touch with me at deirdre.kent@gmail.com as we are trying to start a movement to promote TEQs.

Kate Raworth’s “Doughnut Economics” is a great starting point for new thinkers

Kate Raworth is an author who can’t be ignored. Google her book “Doughnut Economics” and you get 155,000 results. In September 2020 Goodreads had 549 reviews and Amazon 469 ratings. Her book is lucid and accessible and I love her chapter headings. She has an extraordinarily comprehensive list of references.(Some chapters have 90-100)

This is a comprehensive review of orthodox economics over a few centuries. Her “doughnut” metaphor describes the realm of a living habitat for humans as being only in the doughnut. We have to be lifted out of poverty to reach a certain minimum standard of living, yet not consume so much of the earth’s resources so that we are breaching planetary boundaries. Her doughnut is unforgettable and will go into future economics textbooks. She describes a social floor for wellbeing and an ecological ceiling.

To illustrate her strong call to rethink economics she packs her chapters with a dense and interesting mix of facts and trends within economics thinking. The strength of this book is that because of Raworth’s deep understanding of the history of economic thinking she is acutely aware she is just but one thinker in a chain, and that there will be another generation of thinkers beyond her. She regularly invites her readers to think our way out of this mess and tempts us with numerous leads. She is an advocate of drawing diagrams.

However naturally there are omissions and blind spots.

Naturally when reading a new book on new economics (I have written two) I go straight to their bibilography and there I find a good list on the topic of money and an excellent one on tax –Gaffney and Harrison, Henry George, Michael Hudson, JS Mill, Ricardo, Josh Ryan-Collins and Peter Barnes. I also find Michel Bauwens on the commons and Janine Benys on biomimicry.

So here is what I think a list of what the next generation of thinkers could productively focus on:-

First Omission – asking what is the root cause of the growth imperative?

One of the more irksome features of her discussion is that she never really asks what causes the growth imperative. She doesn’t appear to stress that it is built into the system. While she cites many who write on money creation including Benes and Kumhof, Charles Eisenstein, Michael Hudson, Steve Keen and Bernard Lietaer but never seems to use the phrase “interest-bearing debt” or explore the consequences of issuing money this way. She dabbles but pulls back when it comes to probing important leads. I urge thinkers to read Chapter 2 of economist Richard Douthwaite’s book The Growth Illusion, where after a discussion about the consequences of issuing money as interest bearing debt, he concludes. “In our present economic system, the choice is between growth and collapse, not growth and stability…The alternative is slums, dangerous roads, old factories, cramped schools and stunted lives.” Douthwaite, like Raworth, was a development economist who spent years on overseas aid work, and in the process he had to spend time relearning and unlearning economics.

Second Omission – the role of power

When I was a full time advocate in the smokefree campaign in the 1980s, I watched public opinion change over a decade of debate and conflict. I was high profile in the media for a decade. On non-smokers’ rights I was a controversial figure in many households, workplaces and clubs. The health lobby, equipped with all the scientific facts, gradually and painfully learnt the reality of political power. We started to understand the subtle influence of the tobacco industry, and came to realise that the frustrating reluctance of politicians to move was because they were waiting for public opinion to change. So I always notice when an academic advocates for change and appear to imply it happens without pain and struggle. The famous quote of Mahatma Gandhi, “First they ignore you, then they laugh at you, then they fight you, then you win” is relevant here. So even a passing reference to the role of power and the agony of the political struggle would have been helpful here.

Third Omission – the importance of currency design

Kate Raworth leads us to the insightful author Silvio Gesell, summarises his argument for a demurrage currency, chooses the best quotes from him, and then pulls back. I urge the next generation of thinkers to follow through this clue, because the design of money changes everything, from purchasing behaviour to investment patterns. If Keynes called Gesell ‘an unduly neglected prophet’ we should really pay attention. She has a whole chapter called ‘Design to Distribute’, but completely omits the critical nature of currency design.

She has read Bernard Lietaer, or at least one of his books, but the next thinkers should read the more of Lietaer and think deeply about his argument that the design of money affects human economic behaviour and that there are good examples in history of a dynamic, successful societies where dual currencies contribute to this result.

Fourth Omission – Energy Decline

I am not sure I do it justice either, but those who understand that because of peak oil the net energy in the industrial system must decline, also know that we have to live with progressively less net energy. That is a big concept because economic growth has for decades been closely correlated with energy growth.

When it comes to discussing the regenerative circular economy, where the essential concept is to ensure we can unmake everything we make. I am not sure how this fits with the Second Law of Thermodynamics says that processes that involve the transfer or conversion of heat energy are irreversible. … It also states that there is a natural tendency of any isolated system to degenerate into a more disordered state. As energy is transferred or transformed, more and more of it is wasted. So the circular economy is not that simple.

I am rather inclined to agree with a University of Otago scientist Craig Anderson who recently wrote on an email discussion, “Concepts like Doughnut Economics will not achieve what we need – they sound lovely and the heart is definitely in the right place – but these concepts are still not yet grounded in the realities of the remaining resource base and energy constraints.”

Fifth Omission – Land Tax reform

She has spent a few pages on Henry George who would replace income tax with land value tax and on the origins of the board game Monopoly. This occurs under the chapter heading Design to Distribute. But she doesn’t really convey that land tax is the most powerful way to distribute wealth. Those wanting to take this topic further should learn about the value of inner city land, not just rural land and learn from Georgist organisations like Progress in Australia for more information. A discussion of the relative merits of capital gains tax, land value tax, death duties, wealth taxes, estate taxes would have been useful.

This book is a must read for any critic of orthodox economics. Raworth concludes, “We are all economists now”. So if we are to survive, we can’t avoid this discipline.

Proposed new local spending currency can only work with a full land rent

Council owned land Manukau. The other property owners get unearned capital gains from rise in land value.

Two of my previous posts have advocated local authorities get authority from Government to issue a new currency which decays like ordinary goods decay. It would exist alongside the national currency. Because it decays, it will circulate much faster than the national currency, the rate being dependant on the rate of decay.

The previous idea was to do what the Mayor of Wōrgl, Austria did during the Great Depression in 1932, to spend it into existence by paying part of the wages of council employees in that currency. In the case of Wōrgl that was a Work Certificate that had to be stamped every month. Owners of the certificates would have to buy a stamp every month worth 1% of the note’s face value. That means over 12% a year of decay, or a -12% interest rate. Well that turned out to be big because the certificates circulated so fast that the town had to withdraw a large percentage of the notes from circulation.

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