At the age of eighty-seven, despite his declining health, Borsodi still wanted to make one last effort to challenge the money and banking system. He considered the present system to be the fundamental economic problem needing to be tackled before any social reform would be possible in the United States. "No social reform is possible without a reform of the monetary system," he said, adding, "This is most difficult because so few people understand the problem." In 1972 Borsodi was in Escondido, California, doing research for a book about "an honest money system" that was meant to challenge the conventional thinking that inflation is due to natural causes. One morning when he picked up the local paper, he read about another rise in inflation. He was incensed that politicians claimed ignorance about how to stop it. This was early in the Carter presidency. Out of frustration, he decided too many books had been written on the subject, and still nothing changed. He sat down and wrote what he called the "Escondido Memorandum," outlining a real-life demonstration that would exemplify an "honest money system and prove that a local currency could be issued without bringing about devaluation.

Establishing a nondevaluating currency was part of his proposal to J. P., and he had worked out the mechanism for this purpose. The idea stemmed from Professor Irving Fisher's work at Yale in the 1930s; Fisher used a "weighted basket" of all basic commodities in the world (at least thirty of them) in order to establish a standard of value that could be used like the consumer price index (CPI) to establish fair exchange anywhere. What made the Constant, as Borsodi called it, unique and convinced him that it could be used to establish an "honest" money system anywhere in the world was the fact that it was based on real commodities that were not controlled by governments but by actual trading.

You might ask, "why not use the consumer price index?" Because it is a national index, using prices of consumer goods in the United States only. Borsodi's index used only the three basic types of commodities found anywhere in the world. These were agricultural products (wheat, rice, corn, oats, barley); energy (oil, gas, coal, wood); and metals (tin, copper, zinc, iron). As I have said, besides Fisher, other economists, including Benjamin Graham, considered a similar idea in the 1930s.

Borsodi was determined to test his conviction that an honest money, one that doesn't lose value or gain value (is constant in value), would be the greatest gift to the human race he could imagine. So he set down the elements that he thought would be necessary to carry out the experiment. One was the cooperation of a local banker. The banker would set up a special account, where only Constants would be exchanged. When Borsodi returned from California to Exeter, New Hampshire, his hometown, the head of a local bank agreed to work with him. Borsodi designed and had printed a fair amount of Constants, which he sold to friends for U. S. dollars. These began circulating around Exeter. At this point his health took a turn for the worst, and he could not carry on the work. He called me up and begged me to help him out. Although I was up to my ears with CLT work and was still active in CNVA, I felt his project was so valuable that I could not let him down. I was joined by Eric Hansh, a follower of Henry George from Portland, Oregon, and two other part-time workers. We did most of the work out of the Ashby, Mass. office, and because Exeter was fairly close, we could drive there as often as necessary. We even hired a person to work part-time in an office in Exeter to handle the work from that end.

Borsodi had to drop out almost entirely, which left the responsibility for the Constant in the hands of us amateurs. By now almost 100,000 Constants were circulating in Exeter. Restaurants and businesses were taking them, and even the police accepted them in payment of fines. They continued to circulate for over a year, but we had to close down the office when we didn't have enough working capital (in dollars) to cover our operating costs—a problem many businesses have. Borsodi, however, was satisfied to have demonstrated that people would accept Constants in everyday exchange and that it could become a world currency.

Before Borsodi died in 1977, we persuaded him to put into writing his ideas on how an "honest money system" could be created. This little book entitled Inflation and the Coming Keynesian Catastrophe: A Story of Exeter Experiments with Constants remains Borsodi's legacy to the world on this key subject of modern times.

While I firmly believe that Borsodi's proposal for the Constant can be realized, I also believe that the resources of a large bank or multinational corporation are required to launch it (Borsodi thought it would take $1,000,000). For this reason we have been searching for an alternative to a "basket of commodities" to provide both the security of redemption offered by real commodities and a "constant" measure of value. Because energy is a common element in almost all production, we have considered energy in different forms (oil, gas, coal, and wood) as a possible substitute for the basket. Each one of these, however, presents problems (storage cost, pollution, etc.) The best option appears to be various solar devices, such as photovoltaics and wind generation. At present the major obstacles are cost and limited resources.

The question will be raised, "doesn't the Constant, or any universal money (like gold), go against the concept of local currency or a 'buy local' system?" I don't think so. It seems to me that there is a need for both kinds of currency. Each serves similar but also different purposes. Presently, virtually all currencies are national currencies, whose value is determined by each national government's willingness to accept their currency in payment of taxes. Local currencies, however, are given value because at the local level people can and will trust one other. The volume of money issued can be controlled directly at the local level, and if too much is issued (therefore causing inflation), it will be detected soon enough and will be corrected by the local "Federal Reserve" (or the potluck group—see Paul Glover's Ithaca Hours, p. ). If not enough money is being issued, that too can be rectified by the local "Federal Reserve."

On the other hand, the further away from home that money is issued, the greater the need for a system to prevent inflation in order to sustain confidence—hence the need for a currency that has a common basis of value and is acceptable on the broadest basis possible. Gold and silver have traditionally been the most common universal currency for this purpose. Today, however, no such currency is available—only national money is available, and we can see what havoc this paper money is causing in Asian countries today.

Thus, for world trade we need a money whose value is based on real commodities, as Borsodi suggested for the Constant. This means that there must be a way to redeem the value of paper money on demand in exchange for real commodities; otherwise the paper money will be just that—paper. Borsodi had solved the storage problem on freighters by working out a way of having "the bank of issue" hold options on these commodities, which could be called at any time in order to cover redemption on demand if needed.

I have suggested that an alternative would be to use energy in the form of electricity. This is based on the notion that energy is the common factor in all production and is storable in the form of electricity as well as transportable. While energy in the form of firewood would have some advantages in rural areas like ours, it obviously has too many disadvantages. There are "new energy" inventions such as cold fusion, tapping the vacuum energy of space, etc., however, that hold out hope for unlimited sources of energy drawn directly from the air itself. They are nonpolluting, inexpensive, and require no storage. These sources are now close to commercialization. They could be used for redemption and the determinant of value in the future and would eliminate government issue of money, as Borsodi advocated.

While these "new energy" sources have the potential for low-cost decentralized access to nonpolluting energy, other sources of nonpolluting energy are already available from solar, hydrogen, etc. and are on the market today, although the cost is not yet competitive with coal or oil. These "new energy" devices, which can be set up like a washing machine in your house, will produce more energy in the form of electricity than a house will need, in which case the excess can be sold to the utility, as is also the case with wind generators. They have the added advantage of not polluting the earth or destroying the ozone. Ron Svenson and others have noted that there are solar systems large enough to heat or air-condition buildings the size of schools. These could be installed immediately, particularly in schools, and would serve the additional purpose of providing a refuge in emergencies caused by severe storms or power failures as well as power failure from computer collapse. (See The Coming Energy Revolution by Jeane Manning and Miracle in the Void by Dr. Brian O'Leary.)

So far, in the struggle to bring these new energies to commercialization, at least two factors have blocked development, ignoring the fact that the Department of Energy has not provided any significant funds for their development while at the same time providing billions of dollars for "hot fusion" without any results. The most important block has been the U.S. Patent Office, which had refused to approve any such devices until last year, when a patent was finally issued to Dr. Randall Mills for his invention, which he has called "Hydrinos" or "collapsing hydrogen." Dr. Mills estimates the initial cost of the equipment to heat a home at $2,000, with no cost for energy—in fact, excess energy is returned to the line. Subsequently, more patents have been issued with many more in line to be issued. It looks as if there will be a major revolution in energy production and distribution.

A second block, a shortage of funds to carry out experiments, has resulted in some violence, presumably emanating from sources afraid of losing power.