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  Currency, Carry and Entropy Things ain’t what they used to be or How currencies are not stores of value   One of the standard attributes that money is claimed to have is that it acts as a store of value. “Store of value” tells you that it is the current holder’s intent to keep the currency for a while before exchanging it and that during that time before the exchange, the currency is expected to hold its purchasing power. Money, however, has a “particular requirement “that is the proverbial fly in the ointment. That characteristic has interesting and not so often mentioned consequences on how to view the “store of value “attribute of money. Gold bugs like to mention how gold has maintained its value over time and how that value has never gone to zero or completely disappeared, like many fiat currencies have done. This may be true, but it is a grossly incomplete statement of affairs. What is always missing in that observation is the storage cost, the negative carry, that c

Energy Return On Energy Invested and its variations is a metric frequently used to look at our efficiency in harvesting energy with respect to the energy input. As an aside, regarding fossil fuels in day to day use we talk about energy production when strictly speaking we don’t produce coal/oil/gas but extract it and sometimes convert it.   Strictly technically speaking fossil fuels as well as renewables are solar energy; one is previously accumulated stock and the other is flow. Think balance sheet versus income statement. EROEI is an attractive concept but has a number of issues which can reduce its utility significantly.   The main issue with EROEI is that it suffers from boundary issues along a number of vectors. 1.        The first boundary issue is that although it is relatively easy to measure the energy produced it is significantly more difficult to determine the energy consumed in producing the energy. Should only direct energy inputs be counted (for example the ene