Mother Jones illustration; Chris Leboutillier/Unsplash; Kristoffer Tripplaar/Sipa/AP
The US government is a big-time hoarder. At last count, in three locations—Denver, Fort Knox, and West Point—it had socked away 248,046,115.696 troy ounces of gold. One might think to round that to the nearest ounce, but at today’s prices, that extra 0.304 ounces of gold would fetch about $1,060 and the entire hoard is worth more than $865 billion. Except it isn’t, because that gold is not for sale.
Sequestration has rendered it priceless.
Why do we keep it? Good question. President Richard Nixon ended the Gold Standard more than a half-century ago—that is, the practice of using gold reserves to backstop the dollar. For 54 years now, the value of our currency has been based on faith—that the United States, like the Lannisters, always pays its debts. There’s not much practical sense in keeping all this treasure around, though. It’s a symbolic, quasi-religious thing. “I think it’s because gold has been an index of power for thousands of years,” says Gustav Peebles, an associate professor of anthropology at the University of Stockholm in Sweden. “I think of it as a sacred hoard.”
“Forty years ago, maybe we would have asked the Fed to do it, but we’re not going to wait around for them to move.”
Peebles, who is American, has been thinking about this a lot. Because if people can unearth vast amounts of a “profane” commodity such as gold, build an economy around it, and then take most of that gold out of circulation and into the realm of the sacred, why couldn’t we do the same thing with other profane commodities—like excess atmospheric carbon? Why couldn’t we collect it, bank it, and then stow it away, harmless?
We’ve tried other tactics. The world’s wealthiest 10 percent are responsible for two-thirds of global carbon emissions, but the comfort class hasn’t shown much willingness to change its behavior. Nor have governments done enough—the Trump administration is now taking us backward—and industrial polluters aren’t about to do the right thing. Tech solutions like direct air capture are pricey and problematic, as this magazine has reported. But if we could convince the masses that waste carbon dioxide is sacred and worth hoarding—like gold—one of our most existential problems might solve itself.
Please don’t scoff. We all have questions. But Peebles is serious. An expert in the history of monetary systems, among other things, he has teamed up with the multi-disciplinary artist Ben Luzatto to develop the idea in depth. The result is a thought-provoking new book, The First and Last Bank, which weaves in aspects of history, monetary policy, philosophy, and religion to make its case. A utopian case perhaps, but Peebles insists that the necessary structures and precedents already exist.
He was visiting his friend in the Adirondacks, where Luzatto was working on conceptual projects related to environmental sustainability, when a lightbulb flicked on. “Sitting around the campfire at night, we sort of had this a-ha experience about the gold standard and how it can serve as a beta test,” Peebles recalls. “The history of banks is intertwined with the history of temples, and they both have a long history of making things priceless—taking a cherished good off the market. And that’s just hasn’t been interesting to economists for some reason.”
But wait, banking carbon—what would that look like in practice?
Consider all the cellulosic carbon waste—corn stalks and such—that farmers clear from their fields in large quantities after every harvest. And all the tree and plant waste generated by arborists, homeowners, landscapers, municipalities, and forestry operations. Put these carbon-rich materiels into a big machine called a pyrolizer and heat it in the absence of oxygen, and you end up with a stable, solid form of carbon known as biochar.
Biochar is already a commodity with myriad uses—as a yield-improving soil amendment for farms and garden, as a building insulator, as an absorptive agent for water filtration and wastewater treatment. It can also be stored in rural warehouses or simply buried, locking away waste carbon for hundreds of years depending on its composition and surroundings—which is why it plays a growing role in today’s market for carbon offsets.
But Peebles and Luzatto have grander aspirations. Their idea is not one-size-fits-all but, very broadly, they envision small communities—churches, towns, colleges, etc—creating their own co-operative carbon banks to accept organic waste from depositors (locals and businesses). The bank would pyrolize and quantify these deposits on site. “It would be like the gold assayers of old. The assaying would happen at the bank. Instead of risk managers at Wall Street banks, we would need a soil scientist,” Peebles explains.
The depositors, in exchange, would receive digital currency they could trade for goods and services within that community—something akin to a cryptocurrency, but grounded in a commodity with real-world value. Companies looking to boost their environmental bona fides would open their own accounts at the bank, whose verification process would be transparent and verifiable—unlike many of the fraudulent schemes in today’s carbon-credit markets. “And then people would want to buy their products to support a transition to a post-carbon economy,” Peebles says.
Community members with no organic waste to deposit could buy into these local currency systems by opening accounts and depositing dollars, thereby supporting the sequestration mission, and getting fungible digital tokens in return.
In the authors’ optimistic vision, a grassroots movement would emerge organically from at first a handful—then tens, hundreds, and thousands—of these community efforts. That’s the beauty of it. Donald Trump and his toadies could bitch and moan and it wouldn’t matter, because the approach doesn’t require the buy-in of politicians or big firms or slow-moving government bodies.
“We do think people might be hungry for a meaningful way of doing their part for the climate battle.”
“It’s a little-known fact that colleges and banks used to issue their own currencies—it was very common in America in the 19th century, so we think the movement could start at a college,” Peebles told me. “It could be part of a curriculum with a bunch of twentysomethings who want to think about what it would look like to run a carbon bank, and the college could backstop it with dollars so the local merchants were interested in joining the community of exchange.”
The 49ers’ quest to dig up gold was, of course, motivated by greed. One might then argue that waste carbon won’t ever be valuable enough for people to want to bother collecting it. But consider that Bitcoin was all but worthless in its early days. It was nurtured by a community of people who were inspired by utopian ideas to “mine” it. Famously, in the first real-world Bitcoin transaction, in May 2010, a Florida software developer named Laszlo Hanyecz paid 10,000 coins for a couple of Papa John’s pizzas. Those Bitcoins, then valued at about $41, would fetch nearly $1.2 billion today. Hope he got extra pepperoni at least.
In any case, the carbon banking idea pairs a collective feel-good element with modest financial benefits. Homeowners and small commercial entities typically pay to dispose of yard waste via local taxes or fees. In this scheme, they get something of value back—both monetary and spiritual, perhaps. Again, some participants would contribute cash to bolster the effort. “If we bring our collective buying power together and we say that we want to pay a higher price than what the carbon waste is worth, that will create a centrifugal movement of carbon waste into our banks,” Peebles says.
This, too, mirrors the Gold Rush. Regional banks were the monopoly purchasers, and you’d naturally bring your gold to the one that offered the best price. But there’s a balance to be struck here; relative to gold, carbon waste is abundant and not terribly sexy. You’d want biochar to fetch a high enough price to incentivize people to participate—and perhaps seed fields of fast-growing crops, hemp and such, to sequester more carbon. But you also don’t want to encourage people to raze forests or steal their neighbor’s shrubberies for cash.
Checking people’s deposits for legitimacy is part of the assayer’s role, Peebles says: “There are ways of spotting, you know, is it fresh wood that was alive yesterday?” What’s more, local forestland, properly managed, could become part of a given bank’s carbon reserves. “We only propose biochar as a transitionary tactic because it mimics the gold standard,” he says. But ultimately the banks will incorporate other ways to sequester carbon—say, untapped oil and gas that a landowner opts to leave in the ground.
The authors don’t foresee a mad Carbon Rush, “but we do think people might be hungry for a meaningful way of doing their part for the climate battle. And I think that having a collective institution will give them that,” Peebles says. “In the book, we talk about the nature of volunteer labor in temples. And temples always have, you know, remunerated workers and volunteer workers. Both are necessary, and we think this is more like that—instead of a gold rush.”
He has two thoughts on the abundance problem. First, “it’s actually not that easy to make good biochar,” Peebles says. It requires time and effort to get it right, “so that’s not as abundant as carbon itself.” What’s more, the gold standard was abandoned in part because people were hoarding gold: “It became too scarce, and so it couldn’t expand with the economy.” Central banks, too, know how to deal with overabundance problems via the monetary technique of “sterilization.” In 1936 and 1937, for example, as excess foreign gold flowed into US banks, the Federal Reserve, fearing inflation, ordered banks to beef up the reserves they kept on hand and issued bonds to sop up the excess money in circulation.
In fact, when the authors finished their manuscript, they asked a macroeconomist to read it and offer critiques. He thought the carbon banks were a great idea and he asked, according to Peebles, “Why wouldn’t we just ask the Fed to do it?”
Well, because the clock is ticking. “Forty years ago, maybe we would have asked, but we’re not going to wait around for them to move,” Peebles says. “We think building a grassroots banking system would be the one thing that might make the Fed wake up and say, ‘Huh, okay, now we have a threat. These carbon banks are a threat to our system because they’re growing.” Indeed, the desire of governments to regulate the gold reserves of private banks was one of the primary triggers that built the central banking system that exists today. “We have the tools to build this locally, and I would love for the Fed to do this, but I don’t think they’re going to do it until we build it ourselves,” Peebles says.
But it still sounds so far-fetched, doesn’t it—in this era of rampant disinformation and unchecked greed, with a federal government openly hostile to protecting the environment and safeguarding the health of its land and people—that a utopian economic movement could spring up and alter our collision course with the laws of nature?
Then again, doesn’t every social movement begin as a longshot. Peebles cites the rise of Protestantism in the 16th and 17th centuries and the growth of central banks during the 19th century. We had the US Civil Rights Movement, of course. And the creation of the Euro: “It’s been a disaster in many ways, right?” Peebles says. “It’s gone through multiple crises, but the Euro is still around because a certain group of people is committed to it. And that was started by a small group of acolytes who were enthusiastic about a vision and pushed it forward.”
“We don’t need everyone to be excited about this right off the bat,” Peebles says. “We can start small, and if it works, then it can spread from there.”