Credit Commons

= synonym for Mutual Credit Clearing System, i.e. cashless trading circles

Description

1.

Thomas Greco:

"The real power lies in our ability to employ a basis of issue that does not require us to first get cash (political debt-money). That basis is the transfer of goods or services from one party to another. This is what I mean by "monetizing the value of our own goods and services." We need to claim this power instead of letting the banks monopolize it.

In a credit clearing circle, the resulting debit (obligation) incurred by the buyer supports the credit obtained by the seller. That credit is essentially a supply of money that is created separately without involvement of the banking system. However, if that credit is simply a personal i.o.u. of the buyer, the risk of default is great and any such loss would be borne by the seller alone. (The seller gave up value and was not able to later get value from the buyer).

In a credit clearing circle, however, that credit is supported by all the members, not just the buyer who created it. So if the buyer defaults, the other members are still obliged under the agreement to honor the credit that is held by the seller. So the members collectively bear the loss when one of them defaults.

The essential elements then are

(1) the agreement under which the members of the credit clearing association operate,

(2) the process and formula by which the credit creation power is allocated amongst the members, and

(3) the central database of transactions (debits and credits) and account balances.

When payment for goods or services is rendered in such a system, credits are transferred from one account to another.

2.

Another explanation by Thomas Greco at http://beyondmoney.blogspot.com/2006/09/point-and-counterpoint-on-economic.html

"Cash is scarce. Credit is abundant. Cash comes from banks. Credit is something we can give each other.

Why ask for payment in the form of something we DON’T control when we can pay each other using something we DO control.

Actually, goods and services pay for other goods and services in the process of reciprocal exchange. Money is just an intermediary device we use to overcome the “barter limitation.” Money bridges a gap in time and space so that reciprocity can be achieved in the normal course of commerce.

Is there another way to bridge the gap?

Everyone is both a consumer and a producer, both a buyer and a seller.

Mutual credit provides the “space” within which wants and offers can find each other. It addresses the question, When, and from whom, can the desired item be found? This space is what I call “the credit commons.”

All it takes is organization -- a way to “clear” debits arising from purchases against credits arising from sales.

How can goods and services pay for other goods and services without using money? Not with primitive barter, but through an evolved process called credit clearing.

This is the service that both commercial “barter” companies and grassroots LETS systems provide.

Just as the present networking of personal computers on the internet provides unprecedented power for peer-to-peer communications and access to information, the outlook for the future is for networks of credit clearing services that provide easy and efficient non-cash payment possibilities for all kinds of purchases and sales." (http://beyondmoney.blogspot.com/2006/09/point-and-counterpoint-on-economic.html)

Example

See our entry on LETS