Monthly Archives: September 2006

Point and Counterpoint on Economic Exchange

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.

* Barter is a trade between two parties in which each one is simultaneously both a buyer and a seller. Each has something the other wants. A swap is made, and each is satisfied. This coincidence of wants is unusual; that’s why money was invented.

t.h.g. September 28, 2006