Ryan Monsurate

A Technical Summary for Economists, Finance Professionals, and Policy Experts

Working Draft — January 2026

Executive Summary

The K-Dollar is a proposed global reserve currency backed by verified energy production. It addresses three structural failures of the current dollar-based international monetary system: the Triffin Dilemma, inequitable seigniorage distribution, and currency weaponization. This document provides a technical overview of the proposed mechanism for money creation, verification, governance, and transition.

1. The Problem: Structural Failures of Dollar Hegemony

1.1 The Triffin Dilemma as Structural Instability

Kindleberger (1973) and Eichengreen (2011) document how reserve currency status requires the issuer to supply global liquidity through persistent deficits, which eventually undermines the currency’s store-of-value function. The US debt-to-GDP trajectory makes this tension increasingly acute.

1.2 Seigniorage as Rent Extraction

Following Rogoff (1998) and Gopinath (2015), dollar hegemony constitutes a rent extracted from the global economy. Estimated annual US benefits:

This rent is captured by virtue of historical accident and network effects, bearing no necessary relation to productive contribution.

1.3 Weaponization and Systemic Risk

Farrell & Newman (2019) document “weaponized interdependence” in dollar-denominated networks. Post-2022 Russian sanctions demonstrated full deployment of this toolkit, accelerating dedollarization efforts globally. The system’s coercive capacity undermines its legitimacy and invites the construction of alternatives.

2. The K-Dollar Mechanism

2.1 Core Principle: Energy as Monetary Anchor

Energy consumption correlates with GDP at r > 0.95 across historical periods and national contexts. Unlike gold, energy production can grow with the economy (avoiding deflation). Unlike fiat currency, it cannot be arbitrarily created. Energy represents the irreducible physical substrate of economic activity.

The K-Dollar ties money creation to verified energy production, creating a currency backed by real productive capacity rather than sovereign promise.

2.2 Money Creation Formula

Primary Issuance Rule:

Where: -  = verified global energy production growth (3-year geometric mean) -  = discretionary adjustment (bounded; requires supermajority governance approval)

Allocation Mechanism:

In plain English: Your share of new K-Dollars = Your verified energy production ÷ Total global verified energy production × Total new K-Dollars created

New K-Dollars are allocated proportionally to verified energy production. This redistributes the Cantillon Effect from proximity to central bank operations toward proximity to energy production—a normative choice favoring productive contribution over historical privilege.

2.3 Distributed Issuance: Beyond Sovereign Allocation

To maximize distribution of monetary privilege, K-Dollar issuance rights extend beyond national governments:

Cooperative Model Example:

A community solar cooperative pools 2,000 acres, installs 500 MW capacity, registers with the K-Dollar Authority, and receives issuance rights proportional to verified output:

Annual K-Dollar Issuance = Verified kWh produced × Global K-Dollar rate per kWh

This enables direct citizen participation in money creation, distributing the Cantillon Effect to individuals and communities rather than concentrating it in sovereign treasuries.

3. Verification Architecture

3.1 The Verification Problem

Self-reported reserves invite manipulation. The OPEC “quota wars” of the 1980s saw member states increase reported reserves by approximately 300 billion barrels overnight without corresponding discoveries—a rational response to quota systems based on stated reserves.

K-Dollar verification must create a game-theoretic equilibrium where falsification is detectable and penalties exceed potential gains.

3.2 Multi-Source Reconciliation Model

Discrepancies exceeding 5% trigger enhanced review. Penalties for falsification: 3× clawback of excess allocation, voting weight reduction, enhanced monitoring.

3.3 Verification Costs and Sustainability

Estimated system costs: $300-900M annually (satellite access, sensor networks, audit infrastructure). These costs are distributed among participants proportional to verification burden and funded through small transaction fees on K-Dollar settlements.

4. Governance: Dual-Weighted Voting

4.1 The Fragmentation Problem

A “one nation, one vote” model incentivizes fragmentation gaming—a federation could theoretically reorganize into constituent states to multiply voting power. Population-weighted voting addresses this while maintaining equitable representation.

4.2 Dual-Weighted Structure

Voting weight combines two factors:

Illustrative Calculation (2023 data):

Effects: - Energy production dominates but population provides meaningful baseline - Developing nations with large populations retain voice even with limited current production - Investment in energy production increases both K-Dollar allocation AND voting weight - No gaming through political fragmentation (population constant; infrastructure doesn’t multiply)

4.3 Decision Thresholds

5. Redemption: The Kilowatt-Hour Standard

5.1 Core Unit

1 K-Dollar represents a claim on a defined quantity of energy, redeemable in various forms at standardized conversion rates.

5.2 Conversion Framework

5.3 Equipment Redemption

For durable energy equipment (solar panels, wind turbines): - Certified expected lifetime output (e.g., “5 MW turbine producing X GWh over 20-year warranted life”) - Maintenance/warranty contract included and netted into valuation - Global average capacity factor applied (location-specific variance is buyer’s risk) - Standardized testing and certification protocols

5.4 Excluded Instruments

Energy storage (batteries): Batteries store rather than create energy. They are market-priced products denominated in K-Dollars but not redemption instruments. Market mechanisms price storage value independently.

6. Transition Architecture

6.1 The Political Economy Challenge

The United States captures $500-900B annually from dollar hegemony. Rational actor models predict fierce resistance to any transition that eliminates this rent. Historical precedent supports this: the US rejected Keynes’s Bancor proposal in 1944 specifically to preserve dollar privilege.

6.2 Favored Nation Accommodation

To make US participation politically feasible, the K-Dollar framework includes explicit transitional accommodations:

Sunset provision: All temporary accommodations phase out on published schedule. Extensions require 80%+ global vote—effectively impossible, ensuring credible commitment to transition.

6.3 Coalition Formation Strategy

Adoption follows a middle-powers coalition model:

Phase 1 (Years 1-7): Coalition Building - Core coalition: India, Brazil, European Union, Canada (~30% global energy production) - Treaty negotiation and technical infrastructure development - Parallel diplomatic engagement with secondary adopters

Phase 2 (Years 8-15): Parallel Operation - K-Dollar system operational alongside dollar - Voluntary adoption for trade settlement and reserve holdings - Network effects begin shifting equilibrium

Phase 3 (Years 15-25): Transition Completion - Critical mass adoption triggers tipping point - US joins under Favored Nation terms or faces isolation - Dollar system maintained for domestic US use; K-Dollar dominates international settlement

6.4 Crisis as Catalyst

Historical precedent (Bretton Woods via WWII, floating rates via 1971 Nixon shock, euro via post-Cold War integration) suggests major monetary transitions require crisis catalysts. The framework maintains “opportunistic readiness”—technical architecture complete, coalition pre-negotiated—to deploy when windows open.

Potential triggers: - US debt sustainability crisis - Geopolitical rupture accelerating dedollarization - Financial system failure undermining dollar confidence - Climate/energy shock creating demand for energy governance

7. Incentive Analysis

7.1 Who Benefits

7.2 Who Bears Costs

7.3 Second-Order Effects

Energy investment acceleration: All nations incentivized to increase domestic energy production for both K-Dollar allocation and voting weight. Expected result: global energy investment surge, potential energy abundance.

Technology race: Energy technology becomes geopolitically strategic. First-mover advantage in fusion, advanced nuclear, or high-efficiency renewables translates to monetary influence.

Development pathway: Developing nations gain clear route to increased global influence through energy infrastructure investment rather than reserve accumulation or financial sector development.

8. Open Questions and Further Development

Several mechanism details require additional specification:

1. Population vote calibration: Optimal ratio of energy votes to population votes for desired balance
2. Cooperative minimum scale: Threshold preventing micro-gaming while enabling genuine distributed participation
3. Favored nation duration: Optimal transition period balancing US incentives against system integrity
4. Fractional reserve rules: Whether and how K-Dollar-denominated credit creation is permitted
5. Carbon adjustment: Whether negative externalities should affect energy-type weighting

9. Conclusion

The K-Dollar represents a technically feasible alternative to dollar hegemony that addresses the Triffin Dilemma, distributes monetary privilege according to productive contribution, and reduces systemic weaponization risk. The mechanism—energy-backed issuance, multi-source verification, dual-weighted governance, and managed transition with incumbent accommodation—balances theoretical elegance against political feasibility.

The binding constraint is not technical but political: whether a coalition of sufficient scale can form and whether incumbent beneficiaries can be persuaded that managed transition serves their interests better than chaotic displacement.

References

• Eichengreen, B. (2011). Exorbitant Privilege: The Rise and Fall of the Dollar
• Farrell, H. & Newman, A. (2019). “Weaponized Interdependence.” International Security
• Gopinath, G. (2015). “The International Price System.” Jackson Hole Symposium
• Kindleberger, C. (1973). The World in Depression, 1929-1939
• Rogoff, K. (1998). “Blessing or Curse? Foreign and Underground Demand for Euro Notes.” Economic Policy
• Stone, R. (2011). Controlling Institutions: International Organizations and the Global Economy

This document is a working draft of the K-Dollar proposal. For the complete analysis including detailed chapters on verification architecture, governance mechanisms, legal framework, and geopolitical strategy, contact the authors.

Document Version: 0.1 (January 2026)