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"}ul.lst-kix_5wknczree46j-8{list-style-type:none}ul.lst-kix_5wknczree46j-7{list-style-type:none}ol{margin:0;padding:0}table td,table th{padding:0}.c2{color:#000000;font-weight:normal;text-decoration:none;vertical-align:baseline;font-size:11pt;font-family:"Arial";font-style:normal}.c6{padding-top:0pt;padding-bottom:8pt;line-height:1.15;text-align:left}.c9{font-size:13pt;color:#2e75b5;font-weight:bold}.c12{padding-top:12pt;padding-bottom:0pt;line-height:1.295}.c25{padding-top:2pt;line-height:1.2;text-align:justify}.c33{background-color:#ffffff;max-width:451.4pt;padding:72pt 72pt 72pt 72pt}.c28{padding-top:6pt;line-height:1.2;text-align:justify}.c22{padding-top:2pt;padding-bottom:0pt;line-height:1.295}.c14{padding-top:6pt;padding-bottom:6pt;line-height:1.2}.c7{padding-top:0pt;text-align:left}.c3{padding-bottom:0pt;line-height:1.0}.c36{margin-left:72pt;padding-left:0pt}.c29{color:inherit;text-decoration:inherit}.c1{border:1px solid black;margin:5px}.c10{padding-bottom:8pt;page-break-after:avoid}.c17{font-size:16pt;color:#2e75b5}.c38{width:33%;height:1px}.c31{padding-bottom:8pt;line-height:1.295}.c20{line-height:1.295;height:16pt}.c16{font-size:12pt;color:#1e4d78}.c15{padding:0;margin:0}.c13{margin-left:36pt;padding-left:0pt}.c0{orphans:2;widows:2}.c32{color:#1155cc;text-decoration:underline}.c8{font-size:10pt}.c21{margin-left:36pt}.c35{color:#ff0000}.c24{padding-bottom:0pt}.c26{font-size:8.5pt}.c30{height:12pt}.c34{line-height:1.295}.c27{height:16pt}.c19{page-break-after:avoid}.c37{padding-bottom:6pt}.c23{font-size:12pt}.c11{font-weight:bold}.c4{font-family:"Calibri"}.c18{font-size:11pt}.c5{font-style:italic}.title{padding-top:0pt;color:#000000;font-size:26pt;padding-bottom:3pt;font-family:"Calibri";line-height:1.15;page-break-after:avoid;orphans:2;widows:2;text-align:left}.subtitle{padding-top:0pt;color:#666666;font-size:15pt;padding-bottom:16pt;font-family:"Arial";line-height:1.15;page-break-after:avoid;orphans:2;widows:2;text-align:left}li{color:#000000;font-size:12pt;font-family:"Calibri"}p{margin:0;color:#000000;font-size:12pt;font-family:"Calibri"}h1{padding-top:12pt;color:#2e75b5;font-weight:bold;font-size:16pt;padding-bottom:8pt;font-family:"Calibri";line-height:1.295;page-break-after:avoid;orphans:2;widows:2;text-align:left}h2{padding-top:2pt;color:#2e75b5;font-weight:bold;font-size:13pt;padding-bottom:8pt;font-family:"Calibri";line-height:1.295;page-break-after:avoid;orphans:2;widows:2;text-align:left}h3{padding-top:6pt;color:#1e4d78;font-weight:bold;font-size:12pt;padding-bottom:6pt;font-family:"Calibri";line-height:1.2;page-break-after:avoid;orphans:2;widows:2;text-align:justify}h4{padding-top:14pt;color:#666666;font-size:12pt;padding-bottom:4pt;font-family:"Calibri";line-height:1.15;page-break-after:avoid;orphans:2;widows:2;text-align:left}h5{padding-top:12pt;color:#666666;font-size:11pt;padding-bottom:4pt;font-family:"Calibri";line-height:1.15;page-break-after:avoid;orphans:2;widows:2;text-align:left}h6{padding-top:12pt;color:#666666;font-size:11pt;padding-bottom:4pt;font-family:"Calibri";line-height:1.15;page-break-after:avoid;font-style:italic;orphans:2;widows:2;text-align:left}</style></head><body class="c33"><p class="c10 c0 subtitle"><a id="h.btotoosw5xg1"></a><span>l </span></p><p class="c0 c10 subtitle"><a id="h.z8fz04avgatc"></a><span class="c11">The Credit Commons: </span><span class="c11">A money for the solidarity economy</span></p><p class="c0"><span class="c11">By Matthew Slater, Twitter @matslats </span><span class="c11 c35">FOLLOW ME</span></p><p class="c0"><span>Contribution from Jamie Hansen-Brown; design by Katalin Hausel; </span></p><p class="c0"><span>Peer reviewed by Susana Belmonte, Art Brock, Sesto Giovanni Castagnoli, Stephen DeMeulenaere, Lynn Foster, Ian Grigg, Dan Hassan, Bob Haugen, Lucas Huber, Thanasis Priftis, Sybille Saint Girons</span></p><p class="c0"><span class="c11">Translation in French: Sybille Saint Girons</span><span> > work in progress here https://docs.google.com/document/d/1JeSXnhHOGBL5zfvCInqzVH95EB7EVaPPIVY9Xi513HQ/edit#heading=h.o3xobhj3aq7e<br></span><span>Please use the ideas in this paper freely</span><sup><a href="#cmnt1" id="cmnt_ref1">[a]</a></sup><sup><a href="#cmnt2" id="cmnt_ref2">[b]</a></sup><span>, using hashtag #creditcommons.</span></p><p class="c0 c30"><span></span></p><p class="c0"><span class="c11">This document will be Desktop-published and released as a pdf</span><span> in the </span><span>coming weeks</span><sup><a href="#cmnt3" id="cmnt_ref3">[c]</a></sup><sup><a href="#cmnt4" id="cmnt_ref4">[d]</a></sup><sup><a href="#cmnt5" id="cmnt_ref5">[e]</a></sup></p><p class="c0"><span>It will also be recorded and made available as one or a series of podcasts.</span></p><p class="c0"><span>Ynternet is working to make this document more accessible using </span><span class="c32"><a class="c29" href="https://www.google.com/url?q=https://wordpress.org/plugins/aesop-story-engine&sa=D&ust=1455100055870000&usg=AFQjCNFJwfC07CxxjZn4Y00U5eW6OB0qoQ">Aesop storytelling engine</a></span><span>, also to</span><span> create various twitter cards (</span><span class="c32"><a class="c29" href="https://www.google.com/url?q=https://dev.twitter.com/cards/types&sa=D&ust=1455100055871000&usg=AFQjCNGatIFjcsvpqKkynWH3MeWIWKhacA">https://dev.twitter.com/cards/types</a></span><span>) promoting and curating further the concepts. </span><hr style="page-break-before:always;display:none;"></p><p class="c0 c30"><span></span></p><h1 class="c10 c0 c34"><a id="h.umvhack5owfq"></a><span>Table of </span><span>contents</span></h1><p class="c0"><span class="c18">Summary</span></p><p class="c0"><span class="c18">Glossary</span></p><p class="c0"><span class="c18">1. The economy and the solidarity economy<br> 1.1 Deflation, the elephant in the room<br> 1.2 Whose economy is it anyway? <br> 1.3 Social movements not getting to the root problem<br> 1.4 Resourcing the solidarity economy</span></p><p class="c0"><span class="c18">2. A deeper understanding of money and payments<br> 2.1 Confusing the functions and types of money <br> 2.2 Ledgers and rails<br> 2.3 Using a ledger as a money system<br> 2.4 Monopolies and blockchains<br> 2.5 Bitcoin is a centralised currency on a decentralised database</span></p><p class="c0"><span class="c18">3. Towards a monetary commons<br> 3.1 Dual money systems<br> 3.2 Platforms vs protocols<br> 3.3 Mutual credit economics<br> 3.4 Mutual credit in the real world</span></p><p class="c0"><span class="c18">4. Federating local currencies<br> 4.1 Governance<br> 4.2 Nesting<br> 4.3 Exchange rate mechanisms & balance limits<br> 4.4 Experiences of existing federations<br> 4.5 Financing commons financial infrastructure </span></p><p class="c0"><span class="c18">5. A biomimicry perspective<br> 5.1 Locally attuned and adapted<br> 5.2 Bottom-up development combining modular and nested components<br> 5.3 Resilience through systemic diversity and decentralisation<br> 5.4 Membranes for identity and protection<br> 5.5 Fractal design</span></p><p class="c0"><span class="c18">Conclusion</span></p><p class="c0 c30"><span class="c18"></span></p><h1 class="c0 c27 c19"><a id="h.m3il2r33v99w"></a></h1><hr style="page-break-before:always;display:none;"><h1 class="c0 c27 c19"><a id="h.bqtg0kn9ik55"></a></h1><h1 class="c0 c19"><a id="h.93gesgiin36y"></a><span>Main </span><span>points</span></h1><p class="c0"><span>The authors of this paper have networked several hundred LETS and Timebanks so they can exchange between themselves while remaining independent. This paper considers mutual credit accounting as a viable and sensible basis for money creation and shows it could work in a decentralised way and with modern technology. But we need to stop building software platforms and think about a protocol, as Bitcoin is a protocol.</span></p><ul class="c15 lst-kix_5lgrd8tom3eg-0 start"><li class="c13 c0"><span>A short economic history focusing on private property and money as a commodity shows how without a radical transformation, the economy can only get more unequal </span></li><li class="c13 c0"><span>Money as an instrument of payment is examined in particular with regard to the use of ledgers and networks.</span></li><li class="c13 c0"><span>We show how ledgers obviate the need for actual money, and how this resolves many of the problems of money as-we-know-it. Ledger money has many advantages and embodies values much more congruent with the solidarity economy. It also works fractally.</span></li><li class="c13 c0"><span>The mutual credit economy thus described looks very good when seen through the biomimicry design lense.</span></li></ul><p class="c31 c0"><span class="c23 c4">This is the first of 3 proposed papers. </span><span>T</span><span class="c23 c4">he second will explore technical implementations, and the third, a socio-technical approach.</span></p><h1 class="c0 c19"><a id="h.2gl7su90df17"></a><span>About the authors:</span></h1><p class="c0 c31"><span class="c11">Matthew Slater</span><span> has been building free open source software for Community Exchange and living as a nomad since 2008. In 2009 he co-founded a Swiss nonprofit, Community Forge, which hosts that software for 150 communities. In 2013 he co-created the trading floor game with Sybille Saint Girons. In 2014 he built the timebanking site for New South Wales government in Australia. In 2015 he co-authored the Money and Society MOOC with professor Jem Bendell. He blogs at </span><span class="c32"><a class="c29" href="https://www.google.com/url?q=http://matslats.net/complementary_currencies&sa=D&ust=1455100055880000&usg=AFQjCNFNYzigE7OjuqAU31Vrt5Px0EEikw">http://matslats.net/complementary_currencies</a></span></p><p class="c31 c0"><span class="c11">Tim Jenkin</span><span> was an activist for the banned African National Congress (ANC) in the 1970s. He was arrested and sentenced to 12 years in prison for his anti-apartheid activities. He escaped from the Pretoria maximum security prison in 1979 and went into exile in the UK. During the 1980s he built and ran a secret communications network for the ANC. For more information see his wikipedia page https://en.wikipedia.org/wiki/Tim_Jenkin</span></p><h1 class="c0"><a id="h.afn74rv9lede"></a><span>Glossary</span></h1><p class="c14 c0"><span class="c11">Basic Income. </span><span>A government policy of awarding money to all citizens as their birthright. Most basic income proposals are framed as a cheaper and more equitable alternative to social security, But another way is to issue new money as basic income, which would give money very different incentives to money as we know it. </span></p><p class="c14 c0"><span class="c11 c4">Bitcoin</span><span class="c4">. The first blockchain application and decentralised digital currency. Many libertarians hoped the new technology would disintermediate the banking system and force a correction of many flaws in the money system.</span></p><p class="c14 c0"><span class="c11 c4">Blockchain</span><span class="c4">. A blockchain is a database stored across many servers, which maintains integrity of the data</span><span class="c4"> through successi</span><span>ve cryptographic hashes</span><span class="c4">. </span><span>Public</span><span class="c4"> blockchains have ways to do this without having to trust any given node</span><span class="c4"> (</span><span>See Proof of Work, Proof of Stake & Proof of Value)</span><span class="c4">, but there are also permissioned blockchains which trust all nominated nodes.</span><span> More about this in the second paper in this series.</span></p><p class="c14 c0"><span class="c11 c4">Clearing</span><span class="c4">. The process of cancelling out debts owed between multiple parties. Clearing can be continuous, or it can be a precursor to ‘settlement’ which means paying the outstanding debts with money or something of value.</span></p><p class="c14 c0"><span class="c11 c4">Community</span><span class="c4">. The members of an exchange.</span></p><p class="c14 c0"><span class="c11">Cryptocurrency: </span><span>Any currency which uses </span><span>cryptographic data structures to ensure the tamper-proof integrity of its data.</span></p><p class="c14 c0"><span class="c11">Currency</span><span>: a name for a unit of account or measure of value. Some currencies measure value by being officially valuable. The distinction is as between a gram, and a gram of gold.</span></p><p class="c14 c0"><span class="c11 c4">Exchange</span><span class="c4">. A group of people who exchange and keep accounts with a ledger. </span></p><p class="c14 c0"><span class="c11">Government.</span><span> In this document government means western governments such as UK and USA, and those following their lead on economic matters..</span></p><p class="c14 c0"><span class="c4 c11">LETS</span><span class="c4">. Local exchange trading system. A model for community exchange formulated by Michael Linton, which spread mostly through the middle classes in developed countries during the 1980s and 1990s. Characterised by the use of a ledger plus a directory of members’ offers and needs.</span></p><p class="c14 c0"><span class="c11 c4">Ledger</span><span class="c4">. A definitive </span><span>record of transactions. An open ledger has transactions with outside entities, a closed ledger only </span><span class="c4">between its own accounts.</span></p><p class="c14 c0"><span class="c11">Local currency</span><span>. A specific design of local currency in which attractive pieces of paper with a legal tender face value are sold for that legal tender, which is held in </span><span>reserve</span><span>.</span></p><p class="c14 c0"><span class="c11">Medium of Exchange</span><span>. A substance material or virtual, the quantity of which denotes value delivered to market but not yet taken from the market. Typically participants in a marketplace agree on the exchange media because without it only direct bilateral exchanges would be possible.</span></p><p class="c14 c0"><span class="c11 c4">Mutual Credit</span><span class="c4">. Closed </span><span>ledger</span><span class="c4"> accounting in which the sum of all account balances is necessarily zero. It implies an</span><span> exchange</span><span class="c4"> system</span><span class="c4"> is like a cell with a border and an inner life. This contrasts with more open systems of money which allow the unit of account itself to be hoarded out of circulation and ma</span><span>d</span><span class="c4">e </span><span class="c4">scarce</span><span class="c4">.</span></p><p class="c14 c0"><span class="c11 c4">Payment</span><span class="c4">. Normally this means settlin</span><span>g a debt by giving something of value. If money is not valuable, then technically no payment takes place</span><span>, all that really happens is a </span><span>ledger</span><span> entry.</span></p><p class="c14 c0"><span class="c11">Private currency.</span><span> This could mean many things but herein it refers to an arrangement or agreement by voluntary participants to accept some unit in payment. If the unit is issued on the basis of trust, membership of such groups should be discretionary. Furthermore, that group’s data should </span><span>not</span><span> in principle need to be seen outside the group.</span></p><p class="c14 c0"><span class="c11">Quantitive Easing (QE)</span><span> a type of monetary policy used by central banks to stimulate the economy when standard monetary policy has become ineffective. A central bank implements quantitative easing by buying financial assets from commercial banks and other financial institutions, thus raising the prices of those financial assets and lowering their yield, while simultaneously increasing the money supply.</span></p><p class="c14 c0"><span class="c11 c4">Rails</span><span class="c11 c4">.</span><span class="c4"> A ledger seen as a payment router. Ledgers can be networked together for greater coverage.</span></p><p class="c14 c0"><span class="c11 c4">Rent</span><span class="c4">. Money </span><span>derived</span><span class="c4"> not from productive work but from property owned and lent to someone who needs it.</span></p><p class="c14 c0"><span class="c11 c4">Solidarity economy</span><span class="c4">. A general term used to describe the growing numbers of businesses and nonprofits who create economic value but use other metrics of success than monetary profit, and other models of ownership than private property. The word ‘solidarity’ stands in contrast with the competitive ethic which </span><span>arises when the medium of exchange is scarce</span><span class="c4">.</span></p><p class="c14 c0"><span class="c11 c4">Time bank</span><span class="c4">. A local exchange system which uses hours as the unit of account. Formulated by Edgar Cahn, many governments support timebanking as a ‘social inclusion’ mechanism, and there are national associations in USA, UK, Israel, Australia, New Zealand and elsewhere. Many </span><span>community groups call themselves time banks but have no ties with national organisations.</span></p><p class="c0 c30"><span class="c23 c4"></span></p><h1 class="c12 c0 c27"><a id="h.keg7oleo2rvn"></a></h1><hr style="page-break-before:always;display:none;"><h1 class="c12 c0 c27"><a id="h.xfpif6y7v50h"></a></h1><h1 class="c0 c12"><a id="h.wbuqawjd1eko"></a><span class="c17 c11 c4">1. </span><span>The economy and the solidarity economy</span></h1><p class="c0"><span class="c5">It is helpful to recap on the last 30 years of economics as a process of privatisation of everything, especially of money itself.</span></p><p class="c0"><span>The post World War II decades saw widespread increases in standards of living but In the early 1980s, Capital started to regain the upper hand. Ronald Reagan and Margaret Thatcher unleashed financial institutions and 30 years later we are in their thrall. This was justified at the time and even today by an ideology that said government-owned monopolies (e.g. energy, communications) were wasteful and that a free market sharpened people’s minds and stimulated innovation which was better for everybody.</span></p><p class="c0"><span>Governments then began to price and sell that infrastructure below the market rate. The first UK privatisation, British Telecom, was accompanied by an unprecedented PR campaign to encourage widespread ownership. On the first day of trading the price nearly tripled and most </span><span>small investors</span><span> sold their stakes and learned that the stock market was a place to make money without working. A similar giveaway happened in housing as the government sold its housing stock to the poor who make money in a rising market. In hindsight we can see how these windfalls were just a first step in which public property was commodified or liquified, and began its inexorable flow towards a few wealthy owners.</span></p><p class="c0"><span>Another policy of this era was the deregulation of credit. Those governments, in breaking the power of the unions, threw industry overboard and retooled the economy for financial engineering. Essentially that meant simply relaxing laws around issuing credit, many of which had been put in place after hard-learned lessons of history. Working in concert, the finance sector learned to inflate various sectors of the economy, one after the other, and with neoclassical economics, to obscure the nature of the growth as largely borrowed money.</span></p><p class="c0"><span>As their assets inflated in value, property owners felt richer, house prices increased as more money was made available to buy them and demand for houses increased as investments, shares went up. Fusty building societies felt they were missing out on the new opportunities afforded to banks, and many </span><span>‘demutualised’</span><sup><a href="#ftnt1" id="ftnt_ref1">[1]</a></sup></p><p class="c0"><span>The new free market favoured large organisations with access to credit to buy up or squeeze out their smaller ‘less efficient’ competitors. Banks have now issued so much credit that it totals 30 times the quantity of </span><span>government</span><span> issued </span><span class="c5">fiat</span><span> money.</span><sup><a href="#ftnt2" id="ftnt_ref2">[2]</a></sup><span> Our collective debt to banks gives them enormous power and leverage, because they can set interest rates or </span><span>demand repayment of loans</span><span> at any time. </span></p><p class="c0"><span>All that essential public service infrastructure is still being transferred towards a few wealthy institutions. As property, its purpose is to maximise revenue, and the monopoly nature of it is leveraged to set high prices and often low quality service. While some of the 1980s </span><span>working</span><span> classes retired comfortably on profits from property speculation, their children must borrow many more multiples of their income to buy the same properties. The ideology demonstrably failed in the 1987 crash, but the same political and economic discourse is still used to justify an ever more obvious transfer of wealth from the producers to the owners.</span></p><h2 class="c0 c22"><a id="h.qfk0o1d5567y"></a><span class="c9 c4">1.1 </span><span>Deflation, the elephant in the room</span></h2><p class="c0"><span class="c5">While we are conditioned to fear inflation in times of monetary expansion, we should rather fear its antithesis, which is what the monetary expansion is trying to prevent! </span></p><p class="c0"><span>The global economy is still reeling from the financial catastrophe of 2007/8.</span></p><p class="c0"><span>The bursting of that bubble meant that many assets could only be sold for less than they were bought </span><span>for</span><span>. In a free market that means everyone would be bankrupt and the slate would be cleared to make way for a new generation. But that level of disruption is not desirable, and governments prevented it by </span><span>printing new money</span><span> to buy these distressed assets, thus mutualising the losses across the whole economy - through inflation.</span></p><p class="c0"><span>Had the banks acknowledged their paper losses, they would have been forced into bankruptcy. Instead they merely stopped lending because they had (less than) zero assets to risk, even despite massive government compensation in the form of QE. While not lending though, banks are still collecting on loans made in previous years and decades.</span></p><p class="c0"><span>When new bank lending is less than </span><span>repayment</span><span>s, then the quantity of money itself decreases, which is a deflationary force.</span></p><p class="c0"><span>Readers need to be aware that 97% of modern money is created as debt. This was a practically a conspiracy theory until 2014 when the Bank of England admitted that:</span></p><p class="c0 c21"><span class="c18">“</span><span class="c18">The reality of how money is created today differs from the description found in some economics textbooks... Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits.</span><span class="c18">”</span><sup class="c18"><a href="#ftnt3" id="ftnt_ref3">[3]</a></sup><span class="c18"> </span></p><p class="c0"><span>However the dominant discourse, neoclassical economics does not acknowledge or even understand this, which is why the establishment has failed so utterly to explain or recover from the crisis. While they are still reeling in shock, this paper attempts to offer a practical alternative.</span></p><p class="c0"><span>The environmental and social consequences of a debt-money system have been well explored elsewhere</span><sup><a href="#ftnt4" id="ftnt_ref4">[4]</a></sup><span>, but a couple of points bear repeating here.</span></p><p class="c0"><span>Firstly that, if (almost) all the money in circulation must be repaid with interest, then further borrowing is always necessary. Thus, to be stable, the economy must grow indefinitely, we must all work harder, produce </span><span>and</span><span> consume more, </span><span>and </span><span>borrow more. It should be noted that this growth is not always a ‘tide that raises all boats’. </span></p><p class="c0"><span>Secondly that interest, when added </span><span>up</span><span> all the way down the supply chain makes up a huge proportion of the cost of things</span><sup><a href="#ftnt5" id="ftnt_ref5">[5]</a></sup><span>. This is money pouring into banks as rent on something they created out of nothing.</span></p><p class="c0"><span>Thirdly that money as we know it is therefore scarce, by nature. Almost all of the money, having come from the bank, is rushing to return to the bank with interest. Money is on a greedy circuit. This sorry situation is greatly exacerbated when money is yanked out of that circuit and put into a savings account. There it counts as bank assets and is used to justify creation of another greedy circuit without the first one being complete.</span><sup><a href="#ftnt6" id="ftnt_ref6">[6]</a></sup><span> In other words, the act of saving debt-money is therefore antisocial because saving makes it harder for existing debt to be repaid without </span><span>new debt/money being created</span><span>.</span></p><p class="c0"><span>As the money supply decreases, trade slows, business go under, people become fearful, they save or repay loans instead of borrowing and the money supply decreases still further. This is the vicious cycle of deflation. All the bailouts, and the low, low interest rates, and mortgage tax relief are attempts by government and central banks to encourage banks to lend and producers and consumers to </span><span>borrow</span><span>, thus increasing the money supply, and hopefully the GDP and tax revenue. The hope was that, with enough of a kick, the economy will return to debt fueled growth. Now the hope is that if we shovel enough money into banks to compensate them for their overvalued assets, they will start lending again, one day.</span></p><p class="c0"><span>But when will that be? If banks can conceal their insolvency using ever more flexible </span><span>accounting</span><span> </span><span>there is nothing to stop them accepting risk free subsidies for ever. After eight years, crisis response has become the new normal. All the attempts to create inflation have failed because the new money will not circulate until banks lend it into circulation. The new money has inflated the housing, derivatives, and stock markets and recently the signs of deflation have become all too clear in the real economy, as seen here in the Bloomberg Commodities Index</span><sup><a href="#ftnt7" id="ftnt_ref7">[7]</a></sup></p><p class="c0"><span style="overflow: hidden; display: inline-block; margin: 0.00px 0.00px; border: 0.00px solid #000000; transform: rotate(0.00rad) translateZ(0px); -webkit-transform: rotate(0.00rad) translateZ(0px); width: 601.70px; height: 270.67px;"><img alt="BCOM_IND.png" src="./image01.png" style="width: 601.70px; height: 270.67px; margin-left: 0.00px; margin-top: 0.00px; transform: rotate(0.00rad) translateZ(0px); -webkit-transform: rotate(0.00rad) translateZ(0px);" title=""></span></p><p class="c0"><span>As the political will to print money (which is after all, a form of government borrowing) runs out, the deflationary force is winning out over the inflationary medicine. </span></p><p class="c0"><span>Only when we understand that money can be something other than commercial credit can we see ways out of the dilemma, the most obvious of which is for government to issue ‘sovereign’ money </span><span>as </span><span>fiat</span><span> (government decree), rather than indebting itself to banks</span><span> of debt, which by the way, is how most people still think money is issued. This is what most monetary reformers, led by campaign group Positive Money in UK and the American Monetary Institute propose.</span></p><h2 class="c0 c19"><a id="h.m98ac0stm8jq"></a><span>1.2 Whose economy is it anyway?</span></h2><p class="c0"><span class="c5">The vast majority of economic actors and stakeholders, value-creators, are not represented in public bipartisan debate.</span></p><p class="c0"><span>The metaphor of the economy having ‘commanding </span><span>heights’</span><span> from which it is ‘controlled’ either by a ‘freedom’ loving market or by a regulation loving government constructs a dualistic paradigm in which every person must decide which philosophy best represents their interests, leaving little room for a third way, or for blanket criticisms of </span><span>both sides</span><span>. Occasionally the actual value-creators are able to unite over single issues, such as when the French farmers block the roads, they can bring government and industry to their knees but they rarely manage to make a political force and are soon glossed over in media, history and political thought.</span><sup><a href="#ftnt8" id="ftnt_ref8">[8]</a></sup></p><p class="c0"><span>Government has many levers to control the economy, not only regulation. It has taxation policy, grant-making, direct market interventions, it can nationalise whole industries, make procurement policies. Improper ways are frequently used too, such as </span><span>bail-outs, bail-ins, plunge protection</span><sup><a href="#cmnt6" id="cmnt_ref6">[f]</a></sup><sup><a href="#cmnt7" id="cmnt_ref7">[g]</a></sup><span>, </span><span>international treaties</span><span> such as TTIP, and manipulating foreign countries to secure cheap access to their resources.</span></p><p class="c0"><span>But the single most significant lever is influencing interest rates and hence the price of money. This power has passed from government hands to </span><span>private banks</span><sup><a href="#cmnt8" id="cmnt_ref8">[h]</a></sup><sup><a href="#cmnt9" id="cmnt_ref9">[i]</a></sup><span>. </span><span>Few theorists</span><sup><a href="#cmnt10" id="cmnt_ref10">[j]</a></sup><sup><a href="#cmnt11" id="cmnt_ref11">[k]</a></sup><span> and commentators remind us just how powerful that sector has become:</span></p><ul class="c15 lst-kix_h9pltgjpc1uh-0 start"><li class="c13 c0"><span>It has enormous </span><span>holdings</span><span> and influences all sectors of the economy, sometimes owning whole supply chains in </span><span>raw materials, technology, security, food, health, defense, international relations and media</span><span>.</span></li><li class="c13 c0"><span>It can lend </span><span>all but </span><span>unlimited mone</span><span>y and set interest rates, empowering certain sectors or companies over </span><span>others</span><span>, thus steering the development of the economy.</span></li><li class="c13 c0"><span>Everything which is financed by credit yields its first income for the creditor, and can be sold at the behest of the creditor. The creditor therefore has more effective ownership than the nominal owners.</span></li><li class="c13 c0"><span>It is guaranteed </span><span>solvency</span><span> by the taxpayer and immunity to criminal law. If banks were prosecuted, the logic goes, they would have to open their books in court and expose their bankruptcy. The </span><span>failure</span><span> of those banks would be end of life as we know it, and we would regress technologically and morally to the middle ages. So a ‘little’ fraud should be tolerated.</span></li><li class="c13 c0"><span>It has unlimited budget for lobbying, access to </span><span>revolving doors</span><sup><a href="#cmnt12" id="cmnt_ref12">[l]</a></sup><sup><a href="#cmnt13" id="cmnt_ref13">[m]</a></sup><span> and a great many of its shareholders in government posts.</span></li><li class="c13 c0"><span>By financing the economics profession it has made alternatives to neoclassical economics unthinkable despite repeated crises.</span></li><li class="c0 c13"><span>With all its </span><span>data and data-mining capacity</span><span>, it knows us intimately</span><sup><a href="#ftnt9" id="ftnt_ref9">[9]</a></sup><span>.</span></li><li class="c13 c0"><span>It is holding almost all of our pensions.</span></li></ul><p class="c0"><span>This power in turn is not even under the laws of any country, but is governed, or coordinated by a </span><span>secretive</span><span> organisation in Basel (but sovereign, in no way ‘under’ Switzerland), the Bank of International Settlements.</span></p><p class="c0"><span>Many dissidents agree that the White House, the deep state, </span><span>Israel</span><span>, the Military Industrial Complex and other political and military institutions are capable of very great evil. But few seem to realise that the scopes, mandates and budgets of those organisations cannot compare to that of a banking cartel with the power to </span><span>force debt</span><sup><a href="#cmnt14" id="cmnt_ref14">[n]</a></sup><sup><a href="#cmnt15" id="cmnt_ref15">[o]</a></sup><span> on people and countries, then set to the interest rates, and then to selectively write off debts including their own. It is comparatively rarely that we hear analyses like this one.</span></p><p class="c0 c21"><span class="c18">"The biggest problem that we have as environmental activists is to fight the power of money." Biologist Jane Goodall</span><sup class="c18"><a href="#ftnt10" id="ftnt_ref10">[10]</a></sup></p><p class="c0"><span>Having realised this, what can we do? How is it possible to sustain resistance against such a force? </span></p><h2 class="c0 c19"><a id="h.uvocqxsq6o4h"></a><span>1.3 Social movements not getting to the root problem</span></h2><p class="c0"><span class="c5">While symptoms do need to be addressed, there are not too many initiatives to address causes of economic injustice. </span></p><p class="c0"><span>The Great Recession has fueled a range of new discourses which are rarely presented in the mainstream media, and some new practices are emerging. </span></p><p class="c0"><span>There has been a renewed interest in simpler, more transparent, more direct financial services. The </span><span class="c5">Move Your Money</span><span> campaign</span><sup><a href="#ftnt11" id="ftnt_ref11">[11]</a></sup><span> saw an encouraging movement out of banks and into credit unions but seemingly not enough to have systemic impact. Many </span><span>social startups</span><span> and government sponsored experiments are vying to revolutionise finance, investment, and payments with new models such as crowdfunding </span><span>projects</span><span> which banks won’t fund, and peer-to-peer lending which cuts out the bank as an intermediary.</span><sup><a href="#ftnt12" id="ftnt_ref12">[12]</a></sup></p><p class="c0"><span>Such new financial services point towards a new economy with less speculation and rent-collecting intermediaries, </span><span>but if the present crisis is about money issued as interest bearing debt draining out of circulation, then they only peripherally interesting.</span></p><p class="c0"><span>There has been increasing talk in northern Europe of a basic income and/or </span><span>QE for the people</span><sup><a href="#ftnt13" id="ftnt_ref13">[13]</a></sup><span> as way to inject money directly into circulation. Basic income is a fundamentally </span><span>just</span><span> mechanism, and there are strong arguments that it should be enough to live on. It stands in contrast to the </span><span>social security system</span><span> which attempts to mitigate fundamental injustices by taking from the </span><span>resentful</span><span> middle classes to give to the poor.</span></p><p class="c0"><span>Transition towns and ecovillages across Europe are increasingly aware of the importance of economic development to their wider goals. This movement-</span><span>wide awakening only</span><span> translates into a small number of dedicated individuals, and the needed legal templates & software tools barely yet exist.</span></p><p class="c0"><span>Many local organisations, especially in France, have created their own </span><span class="c5">local currencies</span><span>. Most of these are 'backed' by legal tender, which means they may serve to nudge shoppers into local procurement, but they neither increase liquidity nor transfer legitimacy from criminal institutions to trusted sources of credit/money.</span></p><p class="c0"><span>If all this gives grounds for hope I would like to temper it by observing some very long-term tendencies:</span></p><ol class="c15 lst-kix_bkxyiug4h7gx-0 start" start="1"><li class="c13 c0"><span>Governments now seem to believe that the money is simply not available, and that government spending is wasteful, inflationary and unsustainable. So solutions lie either in breaking that story or working without money. </span></li><li class="c13 c0"><span>technological unemployment means that there is less and less human effort needed to sustain life. This would be a good thing if opportunities to work (or at least to benefit from the work machines do) were properly distributed. </span></li><li class="c13 c0"><span>the wealthiest people have access to unlimited money and credit with which to buy, out-invest or undercut any competition</span><span>.</span></li><li class="c13 c0"><span>However productive the workers are, rent always increases </span><span>commensurately</span><span> with productive value of the land, thus confiscating most additional wealth created. Despite many r</span><span>ags-to-riches</span><span> tales of social mobility, most productive people will never control the wealth they produce unless they first own the means of production, and ultimately the land which brings food sovereignty.</span></li></ol><p class="c0"><span>If the power and role of banks could be said to be root cause of the lack of abundance, then most social movements and NGOs are only addressing the symptoms.</span></p><p class="c0"><span>The most powerful solutions seem to be social institutions built over decades</span><span>. From the 19th Century we still have cooperatives and mutual benefit societies, some of which are strong, though most </span><span>appeal</span><span> to </span><span>an older demographic.</span><sup><a href="#cmnt16" id="cmnt_ref16">[p]</a></sup><sup><a href="#cmnt17" id="cmnt_ref17">[q]</a></sup><span> We can look to Germany to see how such institutions strengthen the social fabric over long periods of time, and many remain, quietly all over the world. Mondragon in Basque region is also said to bring abundance and security to the whole community. More recently the expression ‘solidarity economy’ spread from South America and to Europe, and it describes the whole subset of institutions which value things other than profit. In Spain the</span><span> integral co-operative</span><span>s are growing.</span><sup><a href="#ftnt14" id="ftnt_ref14">[14]</a></sup><span> Also Europe has a degrowth movement with an annual conference.</span><sup><a href="#ftnt15" id="ftnt_ref15">[15]</a></sup><span> In USA the Italian slow food initiative has been augmented with a slow money initiative.</span><sup><a href="#ftnt16" id="ftnt_ref16">[16]</a></sup><span> In Austria there is the Economy for the Common Good movement</span><sup><a href="#ftnt17" id="ftnt_ref17">[17]</a></sup><span> in which businesses audit themselves using a tool similar to triple bottom line accounting.</span><sup><a href="#ftnt18" id="ftnt_ref18">[18]</a></sup></p><p class="c0"><span>But how much are these institutions growing during the permanent economic downturn? Are they struggling to compete in a marketplace with those who can issue new money? Are they receiving fair attention in the media? Or are they also being taken down by political opponents, like the Kibbutzim in Israel</span><sup><a href="#ftnt19" id="ftnt_ref19">[19]</a></sup><span>, or forced towards conventional capital like </span><span>Co-operative </span><span>bank in </span><span>UK</span><sup><a href="#cmnt18" id="cmnt_ref18">[r]</a></sup><sup><a href="#cmnt19" id="cmnt_ref19">[s]</a></sup><span>? </span></p><p class="c0"><span>For a while it seemed possible that Bitcoin or something similar offered the power to create money without interest, and payments without banks. It has many attractive features; it is unhackable and rewards its supporters; it holds out hopes of </span><span>privacy</span><span>, of </span><span>low transaction charges and moving money faster and easier than banks.</span><span> But the many benefits have not offset other concerns: price instability, the punitive legal judgements, fear-mongering in the financial press, and latterly serious governance issues. Having been designed as a sort of digital gold, Bitcoin suffers from many of the same flaws as gold-money. Any money-as-commodity is vulnerable to hoarding, speculation and throttling by the wealthiest players in the </span><span>market</span><span>. Rachel O’Dwyer puts it more forcefully:</span></p><p class="c0 c21"><span>"It would seem that Bitcoin, far from representing a monetary commons, is instead an ideal financial asset for rent-seeking capitalism. Because of its design there is also no possibility for cheap credit in the Bitcoin system and if the unit matures, a banking system will be necessary to provide credit based on deposits."</span><sup><a href="#ftnt20" id="ftnt_ref20">[20]</a></sup></p><p class="c0"><span>In section two we will look in more detail at the payment function of money and what elements of bitcoin could still be useful. </span></p><h2 class="c10 c0 c34"><a id="h.xma66n4us2xv"></a><span class="c9">1.</span><span>4</span><span class="c9"> </span><span class="c23">Resourcing the solidarity economy</span></h2><p class="c0"><span class="c5">Even without land or capital, value-creators still have vast reservoirs of untapped resources, but seemingly </span><span class="c5">are</span><span class="c5"> unable to access them.</span></p><p class="c0"><span>Chilean economist Manfred Max Neef offers a vision of a financial </span><span>system controlled from the bottom</span><span> up.</span><span>.</span><span style="overflow: hidden; display: inline-block; margin: 0.00px 0.00px; border: 0.00px solid #000000; transform: rotate(0.00rad) translateZ(0px); -webkit-transform: rotate(0.00rad) translateZ(0px); width: 140.50px; height: 140.50px;"><img alt="image001.jpg" src="./image06.jpg" style="width: 140.50px; height: 140.50px; margin-left: 0.00px; margin-top: 0.00px; transform: rotate(0.00rad) translateZ(0px); -webkit-transform: rotate(0.00rad) translateZ(0px);" title=""></span></p><p class="c0 c21"><span class="c18">“The financial institutions that may be concerned with local financing of Human Scale Development must state goals and forms of operation going far beyond conventional principles. In the first place, these institutions must promote local creativity and support community initiatives that are organized through solidarity, horizontal and equitable relationships. Second, they must encourage the greatest possible circulation of money at the local level. This means attracting locally generated surpluses and making them circulate as many times as possible within the local space, thus increasing the multiplier effect of a given level of deposits and savings. Third, these institutions must adjust themselves so that the savers, or the generators of surpluses, may decide on the use of their resources, thus allowing for a greater transparency in the relationship between saver and investor that may, in turn, promote greater participation in activities devoted to making development alternatives in the local space more viable. Fourth, these financial institutions must be managed in a cooperative way by people in the community itself, which means that the management should also be local in origin. Finally, if the local financial institution is to gain credibility, it must be protected against any potential liquidity crisis.”</span><sup class="c18"><a href="#ftnt21" id="ftnt_ref21">[21]</a></sup></p><p class="c0"><span>It is worth stressing the ‘solidarity’ part of the solidarity economy. By definition, the economy is something humans do together. Currently the economy is set up so that separate entities compete for market share, to grow and maximise their own wealth.</span><sup><a href="#ftnt22" id="ftnt_ref22">[22]</a></sup><span> The solidarity economy dares to suggest that while a competing raft of producers may yield the best products and prices for people with money to buy, the high cost of that competition falls on producers in the form of job insecurity, low wages and then all the resulting social issues. When economists talk about the efficiency of markets they means only the strength of the purchasing power of (their) money, while social and environmental justice, not measured in money, are invisible to that equation. Solidarity means </span><span>here </span><span>that producers and consumers share the risks, rewards and responsibilities. It seeks long term cooperation between producers </span><span class="c5">and</span><span> between the social classes which implies a more equitable distribution of wealth.</span></p><p class="c0"><span>N</span><span class="c23 c4">o argument seems capable of </span><span>persuading the holders of the purse strings to finance what Buckminster Fuller called </span><span class="c5">life-sustaining</span><span> projects. It would seem that all the available resources are already allocated to things we presumably value more.</span></p><p class="c0"><span>Perhaps there is a connection between two trends of the last 30 years:</span></p><ul class="c15 lst-kix_9gsrwk6amuqq-0 start"><li class="c13 c0"><span>the increasing proportion of the money supply which, being bank credit, is being pulled back towards the bank to be extinguished, thus a lack of </span><span class="c5">surplus</span><span> money.</span></li><li class="c13 c0"><span>the growing dogma that every single initiative should somehow cover its own costs, that nothing is worth funding without a business model, that </span><span>social enterprise</span><span> is nobler than charity.</span></li></ul><p class="c0"><span>No matter how important climate change is, we can’t reconstruct our energy generation and distribution systems while we are mired in debt and fossil fuels are cheaper than clean energy. E</span><span class="c23 c4">nvironmental, spiritual, cultural, and humanitarian projects with </span><span>nothing to sell but a more beautiful world </span><span class="c23 c4">are regarded</span><span>, especially i</span><span class="c23 c4">n the </span><span>‘</span><span class="c23 c4">realities</span><span>’</span><span class="c23 c4"> of an economic downturn</span><span>, as unpragmatic, non-essential luxuries. Worse than that, we are closing libraries because we can’t afford librarians; we are closing community centres because we can’t afford the insurance, houses are burning to the ground because the fire service could not pay the interest on its </span><span>loans</span><sup><a href="#cmnt20" id="cmnt_ref20">[t]</a></sup><sup><a href="#cmnt21" id="cmnt_ref21">[u]</a></sup><span>.</span></p><p class="c0"><span>Communities are hemorrhaging wealth because central government is retaining all the tax </span><span>revenues</span><span> to pay interest, and hemorrhaging potential wealth because needs </span><span>are failing</span><span> to be matched with available resources. Local governments have depended on government redistribution for </span><span>decades</span><span> and now, without money, nothing can happen. As if:</span></p><p class="c0"><span>“The apples are falling from the tree. Will you help me harvest them?”<br>“I can’t work for less than two Euros an hour - I’m hungry”<br>“All the euros have been used to pay the mortgage. But you can have apples!”<br>“What can I do with </span><span>apples</span><span>?”</span></p><p class="c0"><span>But the real scarcity of money by no means implies a scarcity of food, energy, cobalt, doctors or bureaucrats. Our collective failure of imagination will be the death of us. </span><span class="c4 c23">Pensioners, lonely and bored, people on sick pay who can work but maybe not take responsibility, and </span><span>maybe even the </span><span class="c23 c4">unemployed </span><span>could</span><span class="c23 c4"> be engaged in </span><span class="c23 c4">creating we</span><span>alth for themselves</span><sup><a href="#cmnt22" id="cmnt_ref22">[v]</a></sup><sup><a href="#cmnt23" id="cmnt_ref23">[w]</a></sup><span> and each other. They don’t need to be paid in scarce currency optimised for buying foreign slave-made consumer electronics. For many of them a thank-you and a </span><span>gossip</span><span> over a cup of tea would be ample recognition of their </span><span>usually </span><span>sidelined worth. For others the sense of </span><span>ownership</span><span> of their work, and a feeling of reciprocation would be ample. </span></p><p class="c0"><span>True, there are laws which penalise the unemployed for </span><span>volunteering</span><span>, and </span><span>prevent</span><span> nonprofits from taking unpaid volunteers, but the real obstacles are not bank deposits but the lack of coordination and intention to solve those social problems as a </span><span>community</span><span>.</span></p><p class="c0"><span>Many laws cease to be </span><span>relevant</span><span> when we account using something other than money. This reduces the cost of doing </span><span>business</span><sup><a href="#cmnt24" id="cmnt_ref24">[x]</a></sup><sup><a href="#cmnt25" id="cmnt_ref25">[y]</a></sup><span> much more than just having access to free credit.</span></p><p class="c0"><span class="c23 c4">In short, </span><span>while</span><span class="c23 c4"> the formal economy shrinks and needs go unmet, all kinds of resources are </span><span>also being left idle</span><span class="c23 c4">. The solidarity economy can </span><span>thrive</span><span class="c23 c4"> by matching the unmet needs and unused resources</span><span> perhaps with the help of non-monetary accounting. Unfortunately v</span><span>ery few people currently have the social skills, the strategic insight and the motivation to set such things in motion. Most of us are very poor at trust and cooperating, giving and receiving, without the mediation of money</span><sup><a href="#cmnt26" id="cmnt_ref26">[z]</a></sup><span>.</span></p><p class="c0"><span>There are enough examples templates and tools to show the way. The cooperative movement used to be huge and is still popular in many countries. Great solidarity is witnessed in the aftermath of natural disasters. Ecovillages, social enterprises, charity also have a role to play. </span><span>The present author </span><span>has been most impressed by middle-aged women channeling their social energy through a system of community exchange which uses the hour as its unit of account, called timebanking.</span></p><p class="c0"><span>Before we examine timebanks and other exchange movements, their power and how to amplify it, we need to know a little about virtual money and how it ‘moves’. </span><hr style="page-break-before:always;display:none;"></p><h1 class="c0"><a id="h.4aedgf6ks2he"></a><span>2 A deeper understanding of money and payments</span></h1><p class="c0"><span class="c5">Money as we know it is mostly just a state-mandated belief system, with banks running the machinery. What is that machinery and why is it so hard to subvert?</span></p><p class="c0"><span>Coins jangling in pockets and papers furled in wallets, feel and behave to their bearers like a commodity which can be exchanged for other commodities, as if they had value-in-themselves. If so, this makes exchange as simple as swapping two things of equal value. This simplicity </span><span>gives </span><span>credence to the view that money should be a commodity which cannot be issued from nothing nor manipulated for political ends. But in fact money functions equally well as a medium of exchange if it has no value-in-itself such as fiat money or credit money.</span></p><p class="c0"><span>However those who issue money from nothing are better served the more valuable we believe that money to be. The fallacious ‘barter origin of money’ story</span><sup><a href="#ftnt23" id="ftnt_ref23">[23]</a></sup><span>, explains that money is a valuable commodity whose physical properties give it an additional use in the marketplace. This view also conveniently sidelines the role of government (which historically is almost always involved in regulating if not issuing money), in favour of the market where the price of all commodities is determined by supply, demand, and manipulation by the biggest players, whose interests often align. </span></p><p class="c0"><span>Once we regard money as a commodity, or a property, it is obvious that it will flow towards the rich; the rich become so by virtue of their propensity to accumulate property.</span></p><p class="c0"><span>And the same is true of </span><span class="c5">any</span><span> commodity as we saw with British Telecom: </span><span>even introduced at the bottom of the econom</span><span>y, the shares circulated for a while, but eventually became property generating income for the already-rich. Thus privatisation, at least the kind of the last 3 decades, works to transfer wealth to those already rich.</span></p><p class="c0"><span>Our current economic predicament demands a kind of money which doesn’t get stuck, but which is sufficiently abundant and which readily</span><span> flows</span><span>, so that people now unemployed can invest, create and exchange the value they need to live and prosper.</span></p><h2 class="c0 c19"><a id="h.r67jqlgwiy6c"></a><span>2.1 Confusing the functions and types of money </span></h2><p class="c0"><span class="c5">Few people are able to describe what money is, and how it works, fewer still can see that its most essential functions are mutually antagonistic.</span></p><p class="c0"><span>Most of us willingly subscribe to money’s worldview without realising how it </span><span>puts us in service to</span><span> its issuers. It is intuitive that money is a figment of our collective imagination, but it should not be inferred that it is a neutral tool which merely helps societies organise production and distribution. Money is what we collectively decide, and with every sale and purchase, every loan and repayment, that decision is mutually reinforced.</span></p><p class="c0"><span>The neoclassical school defines money as the 3% legal tender issued by government. However the banks' promises to pay (the same money many times over) are to all intents and purposes, additional money.</span><sup><a href="#ftnt24" id="ftnt_ref24">[24]</a></sup><span> It turns out that this theory is flat wrong. Bank credit is indistinguishable from legal money because it performs the classical functions of money. Not only is bank credit acceptable for payment of </span><span>taxes</span><sup><a href="#cmnt27" id="cmnt_ref27">[aa]</a></sup><sup><a href="#cmnt28" id="cmnt_ref28">[ab]</a></sup><span> </span><span>or </span><span>other debts recognised by the courts, it</span></p><ul class="c15 lst-kix_9eebgo42ffw5-0 start"><li class="c13 c0"><span>stores value effectively, paying interest above inflation</span></li><li class="c13 c0"><span>moves far and wide with little friction making it a convenient way to pay</span></li><li class="c13 c0"><span>recently in the EU, bank credit is MORE acceptable for payment of taxes than cash legal tender payments which in some places are capped to €300</span></li></ul><p class="c0"><span>Despite money usually being defined in terms of these two functions, if we unpack them, we find that they sit very uncomfortably together.</span></p><p class="c0"><span>A long-term store of value for example should have intrinsic worth which probably means it be scarce, and be invulnerable to the political risk of inflation; also it need not be liquid - imagine how much harder it is to steal a house than a lump of gold. A store of value should </span><span class="c5">retain</span><span> its value over time, hopefully minimising exposure to inflation or the government’s defaulting on its debt. In fact modern money even sort of </span><span class="c5">increases</span><span> in value over time through mechanism of interest. All these point towards the commodity aspect of money which we well understand.</span></p><p class="c0"><span>So what would an optimal </span><span>medium of exchange</span><span> instrument look like?</span></p><p class="c0"><span>Well for a start it needs no intrinsic value. If its purpose is to help split the barter to enable trader A to sell to trader B then buy from trader C (or vice versa), it just needs to keep account of who owes how much of it to whom at any one time such that all parties agree. T</span><span>he unit must be available whenever exchange needs to happen, but it is not needed once the exchange is complete..</span></p><p class="c0"><span>A medium of exchange with no intrinsic value has other advantages over a commodity. It can be created in times and quantities as needed without being restricted by having to, say, produce gold. Furthermore it is easy to decrease the nominal value of a worthless unit over time, to incentivise spending.</span><sup><a href="#ftnt25" id="ftnt_ref25">[25]</a></sup></p><p class="c0"><span>The Credit Commons builds on the third option since the first is the commodity currency controlled by the market, and the second option, using the law, is the prerogative of the state alone.</span></p><p class="c0"><span>So while it is possible for an economy to issue and honour fiat </span><span>tokens</span><sup><a href="#cmnt29" id="cmnt_ref29">[ac]</a></sup><sup><a href="#cmnt30" id="cmnt_ref30">[ad]</a></sup><sup><a href="#cmnt31" id="cmnt_ref31">[ae]</a></sup><span> even without law, such as is commonly practiced in </span><span>babysitting circles</span><sup><a href="#ftnt26" id="ftnt_ref26">[26]</a></sup><span>, </span><span>a</span><span> large part of the effective money supply has </span><span>always</span><span> been credit, or promises to pay money, for these reasons:</span></p><ul class="c15 lst-kix_4an4uo49ikdn-0 start"><li class="c13 c0"><span>credit is information which can move more quickly safely & cheaply than metal.</span></li><li class="c13 c0"><span>credit is issued and accepted insofar as the issuer is trusted to repay, making its quantity elastic</span></li><li class="c13 c0"><span>credit disappears as it returns to its issuer, completing the process of exchange.</span></li><li class="c13 c0"><span>credit is harder to steal because it is fundamentally a relationship, not a commodity.</span></li></ul><p class="c0"><span>As explained earlier credit </span><span>compris</span><span>es 97% of all modern ‘money’. </span><span>While</span><span> commercial credit has some of these advantages, the way it is created, scarcely and expensively means, confusingly, that it behaves in the economy much more like a commodity such as gold.</span></p><p class="c0"><span>Credit which exists to facilitate exchange is short term and returns to its issuer. To facilitate exchange, risk is negligible and the notion of rent is extremely unhelpful. This is qualitatively different from a long term, higher risk loan for example for a business, which carries risks but also rewards.</span></p><p class="c0"><span>Medium-of-exchange money yields nothing when accumulated. It is unrealised wealth, not wealth per se, especially if it yields no rental income.</span></p><p class="c0"><span>Examined in isolation, the main functions of money point towards very different even contradictory instruments, such that bundling them together</span><span>,</span><span> leads to a kind of money which serves neither purpose well. </span></p><p class="c0"><span>A depression is when the medium of exchange is hoarded as wealth, liquidity is drained from the economy, preventing exchange. The Credit Commons is a way to create a system of exchange unhampered by the scarcity of legal tender money.</span></p><p class="c0"><span>If the value creators could in their minds decouple these two functions, noting that the medium of exchange which the economy is sorely lacking actually works best when it is worthless, they themselves could replace the missing medium of exchange insofar as they trusted one another for short term credit. </span></p><p class="c0"><span>If this sounds unlikely it is because monetary history, which is replete with examples of these practices, is hardly discussed and rarely understood. Many precedents exist for well functioning local currencies, trust systems, information money and even depreciating exchange media.</span></p><p class="c0"><span>If people (or governments) could learn to issue and accept promises without waiting for the permission of a </span><span>banking </span><span>cartel then liquidity crises and recessions would be the stuff of dystopian fiction.</span></p><h2 class="c0"><a id="h.l2c5ceeq15nx"></a><span>2.2</span><span> Ledgers and </span><span>rails</span><sup><a href="#cmnt32" id="cmnt_ref32">[af]</a></sup><sup><a href="#cmnt33" id="cmnt_ref33">[ag]</a></sup><sup><a href="#cmnt34" id="cmnt_ref34">[ah]</a></sup><sup><a href="#cmnt35" id="cmnt_ref35">[ai]</a></sup></h2><p class="c0"><span class="c5">Bank money would be useless without a transport network. </span><span class="c5">It is like a privatised rail network, with different companies owning different parts of the track.</span><sup><a href="#cmnt36" id="cmnt_ref36">[aj]</a></sup><sup><a href="#cmnt37" id="cmnt_ref37">[ak]</a></sup></p><p class="c0"><span>Neoclassical economics upholds the state theory of money, in which only the 3% issued by fiat is actually money. The other 97% is only promises to pay </span><span>existing</span><span> money which has no direct bearing on economics. This is contrary to our experience, which is that bank deposits feel like money and work like money, and can inflate and crash like any malfunctioning commodity market. </span></p><p class="c0"><span>But if bank deposits are like money should we the people who give money its value not be assured that this money is issued and governed with due care? To what extent are bank deposits property, whose property are they, and to what extent are they a relationship? For this the British people should be extremely grateful to New Economics Foundation and Positive Money, citizens organisations whose painstaking research brought this matter from the realm of conspiracy theory to a view widely held outside the corridors of power.</span><sup><a href="#ftnt27" id="ftnt_ref27">[27]</a></sup></p><p class="c0"><span>If we allow that fiat money with the force of law behind it is a commodity, bank deposits are rather ambiguous in nature. Bank money is only a promise of the bank to pay, and only a tiny </span><span>fraction</span><span> is even available as cash at any one time. So dubiously issued, and confusing to economists, why are bank deposits themselves counted as money?</span></p><p class="c0"><span>Well even though money loses value through inflation, the bank is a safe place to store it.</span><sup><a href="#ftnt28" id="ftnt_ref28">[28]</a></sup><span> And while cash is highly risky in all but face to face transactions, the bank can ‘transfer’ ‘money’ to any account in the world, making it a better way of paying in a globalised economy. In short bank deposits are an indispensable form of money because of the services provided by the bank. </span></p><p class="c0"><span>These services are possible precisely because no ‘money’ is involved except the day’s cash float. Bank money is nothing more </span><span>than </span><span>ledger entries. Virtual money moves from anywhere to anywhere on a ledger simply by adding a line; </span><span>crediting one account and debiting</span><span> </span><span>another</span><span>. </span></p><p class="c0"><span>A ledger, in the sense </span><span>it is meant here</span><span>, is merely a list of transactions between accounts. In its simplest form a transaction is like a single line in a spreadsheet</span><span>,</span><span> but it can be on paper, in a database or </span><span>(</span><span>in the case of Bitcoin</span><span>)</span><span> on a blockchain. Because a ledger i</span><span>s</span><span> in principle a closed system, and every transaction is a subtraction from one account and an addition of the same </span><span>amount </span><span>to another</span><span> account</span><span>, the sum of all accounts must necessarily be zero; thus every ledger has a sort of built-in integrity.</span></p><p class="c0"><span>A ledger is also a realm of governance, having one owner, one policy that governs which transactions are valid, who can create them and see them, one fee structure, and (before legal tender) its own </span><span>unit </span><span>of account. In ‘free banking’ every bank effectively issues its own currency which depends on that bank’s solvency. </span></p><p class="c0"><span>The ease with which payments flow within ledgers has led to them being likened to a railway network, moving money easily within itself. But this is only as useful as the ledger is </span><span>large</span><sup><a href="#cmnt38" id="cmnt_ref38">[al]</a></sup><sup><a href="#cmnt39" id="cmnt_ref39">[am]</a></sup><sup><a href="#cmnt40" id="cmnt_ref40">[an]</a></sup><span>; in real life, we need to move payments between ledgers, and this poses a number of challenges.</span></p><ul class="c15 lst-kix_kktli8yi40vq-0 start"><li class="c13 c0"><span>the entity holding the ledger has to have some actual money or at least a credit arrangement with the recipient, with which to make a payment.</span></li><li class="c13 c0"><span>an exchange rate needs to be established, unless the unit of account is defined in law.</span></li><li class="c13 c0"><span>the economy at large must be confident that the numbers added to one ledger were really subtracted from another. This involves compliance with software and accounting standards. The validation of that is the main reason why banks are looking to adopt blockchain technologies.</span><sup><a href="#ftnt29" id="ftnt_ref29">[29]</a></sup></li></ul><p class="c0"><span>Moving payments between ledgers is like moving to a railway with a different gauge.</span></p><p class="c0"><span>Payments must be certain to ‘leave’ one ledger and enter another despite typically running on different computers with different software and different owners. And there needs to be an audit trail. There must be no chance of payments </span><span>derailing</span><span> and not arriving, or of payments arriving without leaving anywhere!</span></p><p class="c0"><span>Strong technology and legal oversight exists to ensure sure that both organisations’ auditors agree on the accounts and that promises were not lost or duplicated as they streamed from ledger to ledger and from database to database and from network to network, and that reporting to tax and other authorities is as demanded.</span></p><p class="c0"><span>This is usually accomplished with </span><span>a </span><span>ledger of ledgers</span><span>,</span><span> such </span><span>a</span><span>s the Society for Worldwide Interbank Financial Telecommunication, SWIFT, which appropriately, is a </span><span>cooperative</span><sup><a href="#cmnt41" id="cmnt_ref41">[ao]</a></sup><span>, collectively owned by its member banks. </span></p><p class="c0"><span>Needless to say, banking rails which are plugged into the global financial network are tightly controlled and expensive.</span></p><p class="c0"><span>That is why banks regard their rails as private property and charge rent for the use of them.</span></p><h2 class="c0 c24"><a id="h.in0ysyf6ck6w"></a><span>2.3 Using a ledger as a money system</span></h2><p class="c0"><span class="c5">A ledger can be used as an entire payment system, as long as nobody needs to take money elsewhere. A local money system!</span></p><p class="c0"><span>We have seen above a kind of virtual money which exists on a ledger as the imbalance between accounts. There is no money, zero, in the ledger, but only account balances going up and down, their total always being zero.</span></p><p class="c0"><span>Ledgers in banks and other corporations are used to store promises of real money, because it is easier to track and transport promises than cash. The intention is nominally to settle the balance at a later date with a single net payment</span><span>,</span><span> though sometimes settlement is not even necessary if the net balance is close to zero. Sometimes these systems are said to provide liquidity because they allow payments without cash.</span></p><p class="c0"><span>A ledger used with the intention of balancing each account rather than settling with money is called a credit clearing system. Before computers, all </span><span>the cheques paid into the banks in one day would go to the clearing house where they would be added up and cancelled out. Banks</span><span> would pay each other only the difference. Clearing means much the same even today: the hassle of moving actual money can be reduced insofar as transactions can be cleared beforehand, and this is precisely what ledgers do. And payment need never be made as long as accounts stay within a tolerable trustworthy distance of zero.</span></p><p class="c0"><span>Conventional bank deposits are created on a balance sheet, thus as property, but on a ledger the payments between accounts are more like flows, or even relationships.</span></p><p class="c0"><span>Ledger money is not minted or printed, it has no physical form and no fixed quantity. Starting from zero, Alice can pay Bob 10 units. Then Alice’s account is -10 and Bob’s +10. The total is zero. Bob can pay Carol, and Carol, Alice. When Alice’s balance is back to zero she can walk away, having paid and been paid without the hassle of shipping units back and forth in armoured vehicles.</span></p><p class="c0"><span>Another way of looking at it is that spending and earning the internal currency units simultaneously creates and destroys ‘money’ such that, by definition there is always the right amount of it to represent the current credit/debit relationships.</span></p><p class="c0"><span>Alice’s having ‘owed’ the system for some time is not counted a debt and need not produce interest. In order for Bob to receive </span><span>widgets</span><span> before he paid widgets, someone else had to pay before they received. This is a reciprocal relationship and totally different from the commodity money paradigm in which the wealthy own all the money (or at least the right to promise what they don’t have) and rent it out to the poor. And let us not forget that what is really valuable here is not the money, but the goods and services flowing in the </span><span>opposite</span><sup><a href="#cmnt42" id="cmnt_ref42">[ap]</a></sup><sup><a href="#cmnt43" id="cmnt_ref43">[aq]</a></sup><span> direction!</span></p><p class="c0"><span>Well governed ledger money can only be used within contexts of trust, which we would be wise to nurture, but until we can live entirely within such circles commodity money is also needed. Aside from this, it can be used to provide a full range of life-giving financial services: investment, insurance, pensions & payments. Once we admit however, that there is no ‘money</span><span>' in the system, or at least no scarce commodity, the notion of lending it for interest disappears.</span><sup><a href="#ftnt30" id="ftnt_ref30">[30]</a></sup></p><h2 class="c22 c0"><a id="h.8zpxxgvwd8qx"></a><span>2.4</span><span class="c9 c4"> Monopolies and blockchains</span></h2><p class="c0"><span class="c5">Bitcoin changed the politics of payment networks. Banks are now an encumbrance to payments, except that </span><span class="c5">only banks can create legal tender</span><sup><a href="#cmnt44" id="cmnt_ref44">[ar]</a></sup><sup><a href="#cmnt45" id="cmnt_ref45">[as]</a></sup><span class="c5">.</span></p><p class="c0 c21"><span>"Whoever controls the data centre exercises political and economic control over communications. It’s difficult to see how we can counteract these recentralising tendencies in order to build a common core infrastructure... barriers include the age-old problem of scaling distributed forms of organisation beyond the local"</span><sup><a href="#ftnt31" id="ftnt_ref31">[31]</a></sup></p><p class="c0"><span>It is important to note that a ledger has to be owned and someone has to be trusted to maintain the ledger with integrity. A ledger owner has the power to move money between accounts, to inspect, edit, delete, deny and crucially, siphon off transaction fees (or any charges).</span></p><p class="c0"><span>Many thinkers believe that certain types of infrastructure should be excluded from the realm of competition because the duplication of those services creates huge complexities and inefficiencies. Those services, they argue, should be run by the state. But this reasoning went to the wall in the ongoing orgy of privatisation started in the 1980s. The notion of rails reminds Englishmen of the British Rail, a natural monopoly owned by the government which was privatised by ruling ideologues in the 1990s. There were price rises, safety concerns, large profits, and even now station staff can often find better prices than the computerised booking system. But I would point out that even in the midst of this farce, the rails were still managed by one company, Railtrack.</span></p><p class="c0"><span>I know of no Western government which owns its payment rails outside its basic postal service. This critical infrastructure is almost all owned by private corporations. This ‘natural’ cartel would have us believe that the only way to move ‘money’ is to own or rent the rails from payer to payee. Many small, specialist and startup payments companies with no rails of their own pay to piggy-back on the rails of one of these corporations because building another set of rails would be prohibitively expensive.</span><span style="overflow: hidden; display: inline-block; margin: 0.00px 0.00px; border: 0.00px solid #000000; transform: rotate(0.00rad) translateZ(0px); -webkit-transform: rotate(0.00rad) translateZ(0px); width: 166.50px; height: 166.50px;"><img alt="" src="./image07.png" style="width: 166.50px; height: 166.50px; margin-left: 0.00px; margin-top: 0.00px; transform: rotate(0.00rad) translateZ(0px); -webkit-transform: rotate(0.00rad) translateZ(0px);" title=""></span></p><p class="c0"><span>The Islamic system of Hawala takes a different approach. Instead of infrastructure to guarantee the system integrity, hawala relies on trust and the personal reputations of the agents at either end. This avoids the use of any rails and any US compliant banks, and hence of surveillance; this ancient, honourable, functional and lo-tech practice is publicly frowned </span><span>upon </span><span>because it can be used to finance America’s enemies. Perhaps another reason is that those banks don’t want competition.</span></p><h2 class="c22 c0"><a id="h.wvp34xsa6qw"></a><span>2.5</span><span class="c9 c4"> </span><span>Bitcoin is a centralised currency on a decentralised database</span></h2><p class="c0"><span class="c5">All I’ve said until now should help to explain the disruptive potential of blockchain technologies. Bitcoin’s success </span><span class="c5">would have meant the obviation of the whole payments industry. </span></p><p class="c0"><span>There is much confusion in the cryptocurrency discourse about the decentralisation of money and payments. All cryptocurrencies are built on one ledger which is copied and across many machines with checks to ensure the copies are the same. Thus the data is distributed but the ledger itself is a ‘singleton’ and could still be seen as </span><span>a point of centralisation</span><span>,</span><sup><a href="#cmnt46" id="cmnt_ref46">[at]</a></sup><sup><a href="#cmnt47" id="cmnt_ref47">[au]</a></sup><span> as is a single currency, even if there are many copies of the ledger in a distributed data architecture. Advocates of economic and financial decentralisation are very pleased to have witnessed emergences of blockchain technologies and the new freedoms they bring, but decry the inherent limitations of having only one Bitcoin with one issuance policy on one ledger.</span><sup><a href="#ftnt32" id="ftnt_ref32">[32]</a></sup><span> Many have envisaged a multi-currency marketplace with cryptocurrencies freely competing, thus allowing for a deeper decentralisation, but the so-called ‘alt-currencies’ most of which are based on bitcoin have </span><span>failed to carve out cultural niches</span><sup><a href="#ftnt33" id="ftnt_ref33">[33]</a></sup><span> and the focus has stayed firmly on Bitcoin. The next generation of blockchains will change that.</span><hr style="page-break-before:always;display:none;"></p><h1 class="c12 c0"><a id="h.hq4752pb9w05"></a><span>3</span><span class="c17 c11 c4">. Towards a monetary commons</span></h1><p class="c0"><span class="c5">There is a thriving discussion about restoring the notion of commons for land, software, information, many kinds of resources, but what about money? What does that even mean?</span></p><p class="c0"><span>Rachel O'Dwyer attempts to define a monetary commons thus:</span></p><p class="c0 c21"><span>"what we’re talking about isn’t just the implementation of a complementary currency that is held and produced in common, or the widespread re-appropriation of the production of money, but a monetary design that specifically supports forms of social and material reproduction. For example this includes health, education, and care services and from a monetary perspective, a Universal Basic Income and/or access to inexpensive credit."</span></p><p class="c0"><span>As we have seen, money feels to its user like property and in that sense it can be held and managed collectively. But with a deeper understanding we can see that to really own our money, we must be able to issue it and control the payments infrastructure. Creating a global payments infrastructure is easy with blockchains but two other problems remain. </span></p><p class="c0"><span>Firstly if we have to buy the blockchain accounting units then the power to issue it is beyond us. Bitcoin produces ‘money’ out of nothing, but only to heavily invested stak</span><span>e</span><span>holders (miners) and only at a predetermined rate, so Bitcoin cannot be made available as needed</span><span>.</span></p><p class="c0"><span>Secondly, it is increasingly difficult to get payment systems licenced under stringent new anti-money-laundering laws; unlicenced systems cannot transmit ‘money’ but must be accessed via gateways where the legal money is converted to tokens and back again at the other end. This conversion process is cumbersome although several Bitcoin technologies h</span><span>a</span><span>ve made the user experience seamless, leaving only the exchange rate risk and exchange fees.</span></p><p class="c0"><span>The story of ‘legal tender’</span><span> puts users of money very much at the mercy of the authors of the law. </span><span>Anyone who attempts to create ‘money’ without permission is a criminal.</span><span> Government gives itself the right to define money on behalf of the people, then it spends, taxes, monitors, orders debt be discharged in, and surveils that money. Furthermore a bank’s promise to pay legal tender is to all intents and purposes, legal tender itself, “as good as gold!” even if the bank is insolvent! </span></p><p class="c0"><span>It could be that there is no way to reform this system, to bend it in the interest of the majority and the ‘real’ economy</span><span>. It could be</span><span> that the only way to have a money which serves the interests of value creators rather than value extractors, which unleashes potential rather than enslaving it, and which expresses the intentions of the value creators rather than the congenital owners of everything, is to create a new money, or new money system, from scratch.</span></p><p class="c0"><span>Which is what this paper proposes.</span></p><h2 class="c22 c0"><a id="h.2i7ap5n8c5af"></a><span>3</span><span class="c9 c4">.</span><span>1</span><span class="c9 c4"> </span><span>Dual money systems</span></h2><p class="c0"><span class="c5">This isn’t about burning dollars and defaulting on debts, this is about setting up another kind of money system in parallel, just as has worked many times in history.</span></p><p class="c0"><span>There’s no economic or historical sense or justification for assuming that the store of value and medium of exchange functions must be performed by the same instrument. Quite the opposite. Monetary histories tend to focus on the money of kings and queens and war and international trade; but it is naive to think the plebeians, peasants and proletariat were using the same stuff to buy bread. </span></p><p class="c0"><span>It may be helpful to distinguish between hard and soft monies, valuable and valueless, or Bernard Lietaer calls them patriarchal and matrifocal.</span><sup><a href="#ftnt34" id="ftnt_ref34">[34]</a></sup><span> These two designs are used in parallel for much of history.</span></p><p class="c0"><span>Hard currencies are scarce and valuable, they tend to be made of, or backed by metals, and often use the metal as their measure as well E.g. a pound of sterling silver. These are used by the aristocracy and higher merchant classes to denominate their wealth, pay soldiers abroad, settle international debts, buy and sell land. Tax, which used be only for aristocrats was also a hard money function.</span></p><p class="c0"><span style="overflow: hidden; display: inline-block; margin: 0.00px 0.00px; border: 0.00px solid #000000; transform: rotate(0.00rad) translateZ(0px); -webkit-transform: rotate(0.00rad) translateZ(0px); width: 601.70px; height: 301.33px;"><img alt="image00336.jpg" src="./image02.jpg" style="width: 601.70px; height: 301.33px; margin-left: 0.00px; margin-top: 0.00px; transform: rotate(0.00rad) translateZ(0px); -webkit-transform: rotate(0.00rad) translateZ(0px);" title=""></span></p><p class="c0"><span class="c18">Bracteates were thin disks made of cheap metal, often with a leather backing, and would circulate only for a short time before being replaced </span></p><p class="c0"><span>Throughout history bread has been bought mostly with credit issued by tradesmen for local circulation, or local monies such as the bracteate which was issued by local institutions such as monasteries to buy raw material and redeemed for produce, or by local lords as a way to take value out of the economy. In both cases the value was not guaranteed, and bracteates would lose value over time, causing them to spent rather than saved.</span></p><p class="c0"><span>Modern money is clearly a descendent of hard money, but modern economies, running entirely on hard money differ in some important respects. The recessions caused by metal shortages in the dark and middle ages were very unlike now because the money needed to buy bread was abundant even if the rich didn’t have enough gold.</span></p><p class="c0"><span>Interestingly several countries such as </span><span>Russia even today use two currencies. The Rouble is highly inflationary, issued in great quantity, and is used in everyday transactions. But for business, investment and international trade and luxury goods, the US$ is used.</span></p><p class="c0"><span>Many of today’s complementary currencies use legal tender as a backing which means they remain firmly on the scarce hard-money side, even ones such as the Chiemgauer, which has a demurrage mechanism. These do nothing to mitigate the deflationary crisis of our time by increasing the quantity of the medium of exchange in circulation. Because they promise redemption in ‘hard’ money they are also bound by many laws. This is not their fault - the local population has never been educated about money and accepts the currency much more easily knowing it is ‘backed’.</span></p><p class="c0"><span>Unbacked currencies, insofar as they are accepted, are much less constrained, less surveilled, less vulnerable to loss through tax, and unlikely to be warped by the abuse of lending. Any group who can organise and who can exchange can issue a local currency and take (some of) their value-creating work out of the scarcity paradigm. The more essential goods and services the members make available to each other, the more abundance is felt by all. </span></p><p class="c0"><span>While such systems are somewhat under the radar, governments try to ensure that they cannot be used to avoid tax </span></p><p class="c0"><span>Rather than tax the money changing hands, guidelines around LETS taxation indicate that professional work itself should be taxed, at the going rate. So I could unblock the sink of an old lady in exchange for lunch, but a plumber would have to declare the work done and pay tax on the normal callout charge - not even the value of the lunch. Taken to its logical conclusion this becomes absurd. </span></p><p class="c0"><span>Is life or property possible while bureaucrats demand money from people under threat of force, even when no money changed hands? Is tax levied on the basis of monetary income or on the basis of value created? How legal is it to give labour to a friend instead of selling it for money? Is it possible to police personal exchange? </span></p><p class="c0"><span>If there is no convertibility to legal tender, on what philosophical grounds does a government levy and </span><span>evaluate tax demands for value created?</span><sup><a href="#cmnt48" id="cmnt_ref48">[av]</a></sup><sup><a href="#cmnt49" id="cmnt_ref49">[aw]</a></sup><sup><a href="#cmnt50" id="cmnt_ref50">[ax]</a></sup><sup><a href="#cmnt51" id="cmnt_ref51">[ay]</a></sup><span> </span><span>This is a grey </span><span>area</span><span> which certainly needs clarification, but until such time</span><span> reformers need to be occupying it!</span></p><h2 class="c0 c19"><a id="h.5j9zd0pf6bx"></a><span>3.2 </span><span>Platforms vs protocols</span></h2><p class="c0"><span class="c5">Everything in the software world seems to be about creating privately owned monopolies, not least payment systems innovations. How can a payment system not be subject to control by plutocrats?</span></p><p class="c0"><span>In the beginning, the internet was just a network of computers which could talk to each other. What enabled them to talk was shared languages, or protocol, which was published, which meant that anyone could participate. So email, ftp, http are all public protocols. Similarly the bitcoin white paper describes a protocol such that </span><span>anyone could build </span><sup><a href="#cmnt52" id="cmnt_ref52">[az]</a></sup><span>some software and join in.</span></p><p class="c0"><span>But many nodes in that network are now large repositories of data. To access or work that data we need permission from its owners. Often that permission is granted on condition that we expose ourselves to toxic messages and share sensitive data with people who may not mean us well.</span></p><p class="c0"><span>Platforms are powerful because they can write and run their own software, becoming highly specialised services. Every proposal to venture capitalists is about building a platform because a platform is property which can be monetised. Platforms define a scope and within that scope they offer highly integrated and efficient services. For that reason every platform wants to be a monopoly, because internal coherence is much easier than interoperability. For example the well known hitchhiking platform Uber admits no competition. The more drivers and passengers using it, the more efficiently it can match them together.</span></p><p class="c0"><span>The same utility can be accomplished without a corporation or a platform or a centre. Lazooz is a protocol like bitcoin but instead of payments it matches drivers with passengers in real time and settles accounts between them. A white paper produced by the LaZooz community makes clear that the initiative is led by the community, it seeks prosperity for all, and that the Israeli company does not own the project: </span></p><p class="c0 c21"><span class="c18">In order for the community to be able to act and engage with service suppliers and other regulatory needs, a company in Israel, La’Zooz Mine The Gap LTD, was registered. The company is bound with an agreement to the community, making it a “Representative” of the Community that acts as it is instructed by the community.</span><sup class="c18"><a href="#ftnt35" id="ftnt_ref35">[35]</a></sup></p><p class="c0"><span>We’ve considered the imperfections of Bitcoin’s governance, but the point stands that a public protocol-based approach to web services is much more democratic and resilient. Influence is much harder to buy when there is no property, volunteers are valued and anyone can innovate. </span></p><p class="c0"><span>A protocol defines the bounds of interoperability, but beyond that each participant can play according to their own rules. The Credit Commons is not a homogenous system based on a single ideology, but it allows for a multitude of different, alternative and experimental models to coexist, and in relationship if they choose.</span></p><p class="c0 c30"><span></span></p><h2 class="c22 c0"><a id="h.hiuwrhd1n283"></a><span>3</span><span class="c4 c9">.</span><span>3</span><span class="c9 c4"> Mutual credit economics</span></h2><p class="c0"><span class="c5">Accounting around zero set the notion of balance as a core economic principle, as opposed to growth, accumulation and unpayable debts.</span><span style="overflow: hidden; display: inline-block; margin: 0.00px 0.00px; border: 0.00px solid #000000; transform: rotate(0.00rad) translateZ(0px); -webkit-transform: rotate(0.00rad) translateZ(0px); width: 264.00px; height: 102.00px;"><img alt="" src="./image00.jpg" style="width: 304.00px; height: 202.00px; margin-left: -25.00px; margin-top: -13.00px; transform: rotate(0.00rad) translateZ(0px); -webkit-transform: rotate(0.00rad) translateZ(0px);" title=""></span></p><p class="c0"><span>The notion that wealth increases when bank balances increase is somewhat myopic. Such wealth, seen as a claim on the labour of another is a zero sum game, and its increase is really absolute increase only of servitude and inequality. </span></p><p class="c0"><span>Using a ledger as a private currency, as a closed system with accounts extending credit to each other, is sometimes called mutual credit. This term focuses not so much on the clearing aspect, but on the fact that credit can be made available to anyone at any time, and the risk entailed by that credit is spread out across the whole system. In the event of an account being abandoned rather than being closed at zero, the whole system deviates from the perfect zero, and all members are affected equally when the total supply and total demand leave equilibrium.</span></p><p class="c0"><span>The notion that supply creates its own demand and vice versa is called Say’s law and is regarded by economists as an economic fallacy. The law is quite profound but fails to take into account that when money is saved </span><span>and therefore </span><span>not circulated, demand falls out of equilibrium with supply. However in a mutual credit system the saving function has been decoupled and Say’s law </span><span class="c5">does</span><span> apply, in fact this notion of </span><span class="c5">economic equilibrium</span><span> would be tenet of mutual credit economics, if such a thing existed!</span></p><p class="c0"><span>Another word for economic equilibrium is exchange, because parties are giving and receiving in equal measure: only when an account balance is zero may the account be closed. Consider, after Alice has paid Bob ten units, there’s no rush but Alice is looking to earn 10 units back and Bob is looking to spend ten units down so they can both close on zero to complete the exchange. If Alice keeps paying Bob until the traders reach their maximum trust-extents in each direction, after that they can only trade back towards zero.</span></p><p class="c0"><span>In contrast, money as we know it creates the opposite dynamic. Bob having accumulated money, is now earning interest from Alice and his incentive is to keep it that way, further increasing the gap. Modern economists ask themselves how to determine the optimum quantity of money for maximal exchange, low inflation or bubbles, and full employment - but all of these may represent conflicting political agendas.</span></p><p class="c0"><span>The issues for governors of mutual credit systems are much simpler: how much can people be trusted to deviate from zero and still return? To put it another way who do they trust, and how much risk do they want to share? If no deviation were allowed there would be no liquidity and no trade. If infinite deviation was allowed, some players would only ever give and others only take. </span></p><p class="c0"><span>An intensively managed system pays attention to extreme accounts in both directions and puts effort into creating opportunities for them to trade - instead of sales to drive growth, there is matchmaking to restore balance. </span><sup><a href="#cmnt53" id="cmnt_ref53">[ba]</a></sup><span>It is normal for some accounts </span><span>to </span><span>have difficulty earning as much as they would like to spend and vice versa. Because these problems can affect the whole system, the whole system has an incentive to support those accounts, either by trading with them preferentially, redistributing credit or coming to some other arrangement. This mutual support is visible for what it is, not welfare bleeding out of the pay-packets of the people who actually work, but enabling everyone to both give and receive, which is essential for the health of the whole system.</span></p><p class="c0"><span>A poorly managed system may be lucky if negative failures to return to zero cancel out positive failures - defaults can be in either direction.</span></p><p class="c0"><span>It is well understood how spending locally can create a multiplier effect, and all local currencies seek to strengthen and make visible that virtuous circle. In that sense, any local currency can build solidarity within the local economy insofar as it actually diverts spending towards the local economy, which is a very difficult thing to measure.</span></p><p class="c0"><span>But there is a deeper solidarity within a mutual credit system than within the multitude of Euro proxies which have sprung up in recent years. </span><span>The value of the system depends on the engagement of the members and the quality of their experiences</span><span>, which is the subject of the third paper in this series. The wealth gains that come from good governance, a glut of production and the wellbeing of the precarious members are spread around much more in a mutual credit system than in a commodity money system, where all the wealth gains are sent to the top of the pyramid as rents are adjusted.</span></p><p class="c0"><span>All of which is why mutual credit </span><span class="c5">should be</span><span> the money of the solidarity economy.</span></p><h2 class="c0 c25"><a id="h.nah8xnxqieci"></a><span>3</span><span class="c9 c4">.</span><span>4 </span><span class="c9 c4">Mutual credit in the real world</span></h2><p class="c0"><span class="c5">Mutual credit is not some crazy new idea.</span><span style="overflow: hidden; display: inline-block; margin: 0.00px 0.00px; border: 0.00px solid #000000; transform: rotate(0.00rad) translateZ(0px); -webkit-transform: rotate(0.00rad) translateZ(0px); width: 158.50px; height: 194.70px;"><img alt="" src="./image05.jpg" style="width: 158.50px; height: 194.70px; margin-left: 0.00px; margin-top: 0.00px; transform: rotate(0.00rad) translateZ(0px); -webkit-transform: rotate(0.00rad) translateZ(0px);" title=""></span></p><p class="c0"><span>At the post WWII Bretton Woods conference, Keynes proposed that international trade be conducted through a country-to-country mutual credit system to be called the International Clearing Union but the USA could not give up its post-war financial power.</span></p><p class="c0"><span>The act of one account extending trust to another account to enable it to participate in a ‘split barter’ exchange can be seen as an act which creates liquidity as needed- the very facility which is lacking in the post 2008 economy. While ledgers are used throughout the financial world to lessen the number of money payments, payments will always be necessary as long as accounts give and receive different quantities within a given system. Yet at the highest level, each of us is born with zero and we depart with zero. There are only a few types of socio-economic structures that consciously balance their relationships within small circles.</span></p><ul class="c15 lst-kix_2nxx8dnmn530-0 start"><li class="c13 c0"><span>The most prominent is surely the </span><span class="c11">business barter industry</span><span> which helps businesses move unsold stock and get bums on otherwise empty seats, </span></li><li class="c13 c0"><span>followed by the </span><span class="c11">LETS</span><span> movement which encourages the middle classes to meet each other and save money together. (French </span><span class="c5">SEL</span><span>, German </span><span class="c5">Tauschkreis</span><span>)</span></li><li class="c13 c0"><span>finally </span><span class="c11">timebanking</span><span>, in which poor and excluded people are given opportunities to support each other and build confidence. </span></li></ul><p class="c0"><span>A few inspiring businesses and people really live by such systems, significantly avoiding their use of money, but these groups rarely impact in their local economies significantly.</span></p><p class="c0"><span>Reformer Thomas Greco, who introduced the expression ‘credit commons’ to the monetary reform movement, explains how to get beyond the limitations of business barter.</span></p><p class="c0"><span class="c18">As they are operated today, commercial trade exchanges are self-limiting and typically impose significant burdens upon their members. These include onerous fees for participation, exclusive memberships, limited scale and range of available goods and services within each exchange, the use of proprietary software, and insufficient standardization of operations which limits the ability of members of one trade exchange to trade with members of other exchanges.</span></p><p class="c0"><span class="c18">Virtually all commercial trade exchanges are small, local, and operated as for-profit businesses. Small scale, local control, and independent enterprise are all desirable characteristics... </span><span class="c11 c18">What the world needs now is a means of payment that is locally controlled but globally useful. That means giving members of a local trade exchange the ability to trade with members of other exchanges easily and inexpensively, with little or no risk.</span><sup class="c18"><a href="#ftnt36" id="ftnt_ref36">[36]</a></sup></p><p class="c0"><span>Members of LETS and Time banks almost always have positive experiences, often despite poor fiscal governance! The reason is because a mutual credit accounting system, accompanied by a directory of goods and services, exists to enable exchange and yields positive, productive real-world relationships. Many members report feeling that this ledger money is easier to earn and less painful to give - it unlocks generosity. A few play their local system like a life-game comparable to the popular “Build my bank balance”, except this game has direct socially beneficial outcomes for all involved.</span></p><p class="c0"><span>At present a great many of these systems are poorly governed, from a credit perspective because their owners have a poor understanding of how mutual credit is supposed to work. Regulation within the business barter industry fails to prevent the owners of exchanges running up a deficit, which means buying all the best stuff and flooding the members with credit, and then never earning that credit back. That’s why members of business barter systems often report that is easier to earn than spend the barter credit; the economic equilibrium in these exchanges is broken and the marketplace has more buyers than sellers. This difficulty of spending barter dollars and their changing hands at less than parity with US dollars is a sure sign of poor governance. Unless the ledger is inspectable though, culpability cannot be established.</span></p><p class="c0"><span>When the same things happens in LETS and timebanks, it matters much less because </span></p><ul class="c15 lst-kix_bpba0xadvzwp-0 start"><li class="c13 c0"><span>members generally depend less on these systems</span></li><li class="c13 c0"><span>many members are using the system as a channel for giving, not for accumulating</span></li><li class="c13 c0"><span>Accounts default with positive balances as often as negative</span></li><li class="c13 c0"><span>Members understand that the accounting is a tool to facilitate exchange</span></li></ul><p class="c0"><span>There is no reason the whole economy cannot be run in this same spirit. The economy is made from the value we all create. Yet these groups are usually so small as to have negligible impact on the economic lives of their members. So what are the obstacles to scaling?</span></p><ol class="c15 lst-kix_8kgwfupas1dp-0 start" start="1"><li class="c13 c0"><span>Lack of variety in the marketplace. Each movement appeals to a particular demographic and usually a locality leading to memberships with similar offers and similar wants.</span></li><li class="c13 c0"><span>Lack of need while main economy still apparently functions; earning hard currency is more ‘efficient’ because it pays unseen slaves rather than equals. </span></li><li class="c13 c0"><span>Lack of basic knowledge about how the economy and systems of production do and could work. Within the movement there is a lot of repeating mistakes though this is improving as people are starting to look more outwards.</span></li><li class="c13 c0"><span>Lack of a spirit of cooperation, community and the actual ability to organise decide, and work to a conclusion.</span></li><li class="c13 c0"><span>We don’t know why trading circles rarely grow above 150 people, but many suggest that Dunbar’s number might be a psychological limit.</span><sup><a href="#cmnt54" id="cmnt_ref54">[bb]</a></sup><sup><a href="#ftnt37" id="ftnt_ref37">[37]</a></sup><span> </span></li><li class="c13 c0"><span>150 people could provide all our economic needs 200 years ago, but now increasing specialisation within the professions means that many people can create nothing useful without hundreds of other specialists and equipment..</span></li><li class="c13 c0"><span>Most countries’ law taxes exchange as if it were income. In Sweden, trade exchanges are illegal.</span></li><li class="c13 c0"><span>Platform providers have to balance the value they draw out from their communities (usually in hard currency), against the friction that extraction causes by making members reluctant to trade.</span></li><li class="c13 c0"><span>Running costs especially of small groups make scaling difficult.</span></li></ol><p class="c0"><span>A number of new ideas could be deployed to solve some of these problems. The Credit Commons protocol would allow local exchanges to federate so they retain local control yet participate in a larger marketplace. Add to this the recent flowering of discussion around Platform </span><span>Cooperativ</span><span>es and the efficiency of a permissioned blockchain, and we have a very new twist on a very old idea.</span></p><h1 class="c12 c0 c27"><a id="h.yexgmyy36aq6"></a></h1><hr style="page-break-before:always;display:none;"><h1 class="c12 c0 c27"><a id="h.98xoe17auhrv"></a></h1><h1 class="c12 c0"><a id="h.6i3j2q77pnob"></a><span>4</span><span class="c11 c4 c17"> Federating local currencies</span></h1><p class="c0"><span class="c5">So there are many isolated, and some connected mutual credit systems around, but </span><span class="c5">together they would be greater than the sum of their parts.</span><sup><a href="#cmnt55" id="cmnt_ref55">[bc]</a></sup><sup><a href="#cmnt56" id="cmnt_ref56">[bd]</a></sup><sup><a href="#cmnt57" id="cmnt_ref57">[be]</a></sup><sup><a href="#cmnt58" id="cmnt_ref58">[bf]</a></sup><sup><a href="#cmnt59" id="cmnt_ref59">[bg]</a></sup></p><p class="c0"><span>The credit commons is the notion, perhaps first voiced by Tom Greco, that local ledgers should be connected together using public infrastructure rails, with each currency retaining control of its own issuance and balance of trade, but governed cooperatively. </span><span>I hope to explore the details below.</span></p><p class="c0"><span>There have been many local exchange platforms created in the last few years but no sharing of code and certainly no interoperability between them. Teams who want to facilitate community exchange have given all their effort to building custom software and not enough to re-usable software and not enough to building community.</span></p><p class="c0"><span>See </span><span>the appendix</span><span> for an abbreviated list of noncommercial community exchange </span><span class="c11">platforms</span><span>, none of which are compatible</span><span>, or even share software.</span></p><p class="c0"><span>In order to price one community’s value in terms of another, it is necessary that their respective ideas about what is valuable overlap sufficiently. The field of complementary currencies has seen some good discussions about what is valuable, and what we should be measuring, in particular around the use of time as a measure of value. Time works well at least in time banks which are local community projects with explicitly social aims, but the unequivocal egalitarianism of timebanking appeals less to middle class and business people who are unready to trade with the poor on equal terms.</span></p><p class="c0"><span>Notions such as reputation 'currencies' and gamification could be very helpful for designing new kinds of organisations, but they do not fit into this credit commons framework which is specifically about accounting for exchange as an alternative to using scarce money. This schema from the metacurrency project explains it best, showing how, of all forms of wealth, exchangeable wealth is the smallest part. Accounting for exchange does not involve tracking the reputation of either party, or rating the exchange itself. This can be done, and deserves to be done, but whereas exchange value necessarily exists </span><span class="c5">between</span><span> systems in order to track outstanding debts between them, qualitative indicators should be more locally appropriate, and indeed cannot in principle be translated between systems.</span></p><p class="c0"><span>Note that while the credit commons itself is proposed to be a mutual credit system, any type of currency could participate. All that is required of a candidate member is an account for import/export and trust from existing members that the candidate will return to zero.</span></p><p class="c0"><span>This section discusses some of the design parameters of a mutual credit federation.</span></p><h2 class="c22 c0"><a id="h.qqiwt8t15014"></a><span>4</span><span class="c9 c4">.1 Legal Structure</span></h2><p class="c0"><span>There are pros and cons to using formal structures. For example managing a bank account in the name of an association is easier and more trusted than someone’s personal account. The credit commons as a protocol would have no legal existence and no jurisdiction. Anyone could create an account and make relations with other accounts.</span></p><p class="c0"><span>It would embody a similar libertarian ethic to Bitcoin, but instead of being an open system without trust, it would consist of private groups who could choose the degree to which they trusted each other. </span><span>Thus anyone could open an account in a credit commons, but only trusted people and groups could exchange. In this arrangement I see no benefit to registering </span><span>the credit commons as an organisation, since no money should change hands and </span><span>no legal recourse is needed between trusted parties</span><sup><a href="#cmnt60" id="cmnt_ref60">[bh]</a></sup><sup><a href="#cmnt61" id="cmnt_ref61">[bi]</a></sup><span>.</span></p><h2 class="c28 c0"><a id="h.1419dye68iue"></a><span>4</span><span class="c9 c4">.</span><span>2</span><span class="c9 c4"> Governance</span></h2><p class="c0"><span class="c5">What governance issues would a Credit Commons community face?</span></p><p class="c0"><span>The Bitcoin infrastructure is not owned, but is a de-facto commons in which any computer can participate. While commons ownership and governance is a recurring theme in history,</span><sup><a href="#ftnt38" id="ftnt_ref38">[38]</a></sup><span> Bitcoin stakeholders across the world are struggling to determine its future amicably, as we have seen in the Bitcoin XT fiasco.</span><sup><a href="#ftnt39" id="ftnt_ref39">[39]</a></sup><span> Decisions in Bitcoin are taken democratically, not by one person/one vote, but one miner/one vote. The owners of the mining machines are not representative of all Bitcoin’s stakeholders.</span></p><p class="c0"><span>In mutual credit systems governments and banks and fiat issuance do not obfuscate who is creating value, who is a stakeholder and who is taking risk, and therefore who should be involved in governance and to what extent. </span></p><p class="c0"><span>The most important governance question in a mutual credit system is to manage risk on behalf of all the members by determining the extent to which accounts can deviate from zero. Within a scarcity worldview, it is much more important to manage the negative limit both because members fear losing out and because there is more incentive to take without giving.</span></p><p class="c0"><span>Since the credit is mutually guaranteed by all member groups and by extension, all members of all member groups, it is critical that at least this part of the governing process be participative. The same principle applies in the legal tender economy, but there is no acknowledgement that it is workers who give value to money</span><span>,</span><span> and risk management is done by banks only to maximise their profits.</span></p><p class="c0"><span>Also credit must be allocated as far as possible on a case-by-case basis. Banks are increasingly automating loan applications using algorithms, and while this is good for profits it does not serve entrepreneurs. The way to process credit applications more quickly is not through automation, but through the kind of aggregation we see in microcredit, where a loan request must be guaranteed by several people. In the credit commons a whole community would apply for credit from the collective of communities, and that community would guarantee that credit.</span></p><p class="c0"><span>The governing process has other responsibilities, as in any community money system: managing relations and especially disputes between communities, monitoring communities who may be struggling with their balance of trade; recruiting new members, managing public perception.</span></p><p class="c0"><span>The present author is not an expert on governance, but only wishes to note that it is easier for small groups who choose each other than for an ad hoc global community like Bitcoin. </span></p><p class="c0"><span>There might be a centralised brokering service to stimulate trade, and that brokering might be paid for with taxes or transaction fees. Alternatively brokering could be done by private individuals who could earn commission, in credit.</span></p><h2 class="c0 c28"><a id="h.idto17ej2qmi"></a><span>4.3</span><span class="c9 c4"> Nesting</span><sup class="c9 c4"><a href="#ftnt40" id="ftnt_ref40">[40]</a></sup></h2><p class="c0"><span class="c5">It is possible and probably desirable to build large systems from many small, governable systems using a fractal approach.</span></p><p class="c0"><span>The</span><span> credit commons is an open infrastructure for community currency groups to make multilateral exchange agreements.</span><sup><a href="#cmnt62" id="cmnt_ref62">[bj]</a></sup><sup><a href="#cmnt63" id="cmnt_ref63">[bk]</a></sup><span> Those groups are </span><span>private</span><span> and voluntary associations of individuals who may invite others to join them. Thus newcomers could not automatically join a private group but could form their own group. There could be many networks which are not connected at all</span><span>,</span><span> and there could be hierarchies of</span><span> connected </span><span> groups. For example all the time banks in UK could form a group to manage hours liquidity amongst themselves and Timebanks UK could be part of another group of all the national timebanking associations, also using the same unit of account, hours, which is the defining feature of timebanking.</span></p><p class="c0"><span>At each level of organisation there would need to be a governing process comprising all its members.</span><sup><a href="#cmnt64" id="cmnt_ref64">[bl]</a></sup><sup><a href="#cmnt65" id="cmnt_ref65">[bm]</a></sup></p><p class="c0"><span>Similarly the business barter networks could have their own arrangements in the same credit commons without touching timebanking, o</span><span>r as long as exchange rate mechanism is agreed, it could touch timebanking.</span><sup><a href="#cmnt66" id="cmnt_ref66">[bn]</a></sup><sup><a href="#cmnt67" id="cmnt_ref67">[bo]</a></sup></p><p class="c0"><span>Thus payments from </span><span>one </span><span>user to another might be registered at several levels depending how far in network space the payment is </span><span>travell</span><span>ing</span><sup><a href="#cmnt68" id="cmnt_ref68">[bp]</a></sup><sup><a href="#cmnt69" id="cmnt_ref69">[bq]</a></sup><sup><a href="#cmnt70" id="cmnt_ref70">[br]</a></sup><sup><a href="#cmnt71" id="cmnt_ref71">[bs]</a></sup><span>. A payment to a timebank in another country would have to obey the balance limits of both groups concerned at each level.</span></p><p class="c0 c30"><span></span></p><h2 class="c22 c0"><a id="h.2pfgqywmcnof"></a><span>4.4</span><span class="c9 c4"> Exchange rate mechanisms & balance limits</span></h2><p class="c0"><span class="c5">There are still hard economic questions to be addressed - just as in the mainstream money system. </span></p><p class="c0"><span>The </span><span class="c5">impossible trinity</span><span> applies equally to credit commons economies as to national economies:</span></p><p class="c0 c21"><span>The </span><span class="c11">Impossible trinity</span><span> (also known as the </span><span class="c11">Trilemma</span><span>) is a </span><span>trilemma</span><span> in </span><span>international economics</span><span> which states that it is impossible to have all three of the following at the same time:</span></p><ul class="c15 lst-kix_vvw08ivrcnv4-0 start"><li class="c36 c0"><span>A stable </span><span>foreign exchange rate</span></li></ul><ul class="c15 lst-kix_eh2btaazlzbl-0 start"><li class="c36 c0"><span>Free </span><span>capital</span><span> movement (absence of </span><span>capital controls</span><span>)</span></li></ul><ul class="c15 lst-kix_hqthgxlg2y8m-0 start"><li class="c0 c36"><span>An independent </span><span>monetary policy.</span><sup class="c5"><a href="#ftnt41" id="ftnt_ref41">[41]</a></sup><span> </span></li></ul><p class="c0"><span>Since the credit commons is a tool for distributing political power and issuance of credit to the local level,</span><span> independent monetary policy </span><sup><a href="#cmnt72" id="cmnt_ref72">[bt]</a></sup><sup><a href="#cmnt73" id="cmnt_ref73">[bu]</a></sup><span>is paramount. A stable foreign exchange rate is maintained by curbing imports and exports, which is to say, balancing exports and imports. This gives every community an incentive to produce if it wants to import and to spend if it wants to export. The designers of the Euro would have done well to apply such an ethic. </span><span>Furthermore, speculation and price manipulation of currencies is contained according to the proportion of each community’s credit which is allowed to circulate outside its own accounts. Keynes said as much describing his proposed International Clearing Union:</span></p><p class="c0 c21"><span class="c18">The institutions that Keynes projected for the post-war period were also</span><span class="c18"> </span><span class="c18">specifically designed to make national economic and monetary policies as independent as they could possibly be of the exigencies of external account. Here he seems to have explicitly come down in favour of one of the horns of Mundell's trilemma at the expense of the other two: for the sake of national autonomy he was apparently ready to forgo both fixed exchange rates and international capital movements.</span><sup class="c18"><a href="#ftnt42" id="ftnt_ref42">[42]</a></sup><span class="c18"> </span></p><p class="c0"><span>The post gold-standard FOREX system of currency exchange is a free market; this design has a self correcting mechanism which helps to keep prices stable. As the price of a currency deviates from its actual purchasing power, the price of goods and services in that country becomes distorted in a way that attracts trade in the opposite direction. For example, if a currency is undervalued, that country’s exports become cheaper, and demand for them increases, which drives up the currency price. This tendency towards stability is desirable in the credit commons.</span></p><p class="c0"><span>But within that framework, it is possible for a community with a sovereign monetary policy, to stabilise its own prices using credit/debit allocated for that purpose? This is perfectly sound practice as long as the limits are respected. All communities are allowed to issue credit/debit and can use it equally for liquidity with other communities or for stabilising their own currency. In the case of fraud, damage would be limited only according to how much trust had been allocated to the rogue community, and </span><span>would not be contagious.</span><sup><a href="#cmnt74" id="cmnt_ref74">[bv]</a></sup><sup><a href="#cmnt75" id="cmnt_ref75">[bw]</a></sup><sup><a href="#cmnt76" id="cmnt_ref76">[bx]</a></sup></p><p class="c0"><span>In small scale systems the precise exchange rate matters much less. Community Exchange Systems</span><span> has been running 15 years using exchange rates fixed a long time ago, and had no issues.</span></p><p class="c0"><span>The question remains then, as explained above, how balance limits are decided</span><span> between member exchanges. Greater balance limits mean greater risk, which is to say greater impact in case of failure to return to zero. Each group should decide its own process/formula</span><span> through a political process. Limits should be imposed by a custom script or plugin in the accounting software and not set in stone. T</span><span>here are plenty of examples from which to take inspiration.</span></p><p class="c0"><span>In the banking system it is normal to grant individuals overdrafts up to two months of salary without asking too many questions. Larger loans, for commerce and business startups, need to be scrutinised by the bank which has a mandate to be risk averse.</span></p><p class="c0"><span>Every business barter network has its own formula or process for allocating credit, which usually takes into account the desirability of the applicants produce and their trading volume.</span></p><p class="c0"><span>Within LETS, there are many theories about how balance limits should be determined. Typically a minimum limit is given to new members, which increases proportionately with volume of trade. </span></p><p class="c0 c21 c24"><span class="c18">BOX: </span><span class="c18">In Western Austria 'talents' were flowing from a rural Tauschkreis to a nearby urban one and both systems on were stuck on their respective limits and in danger of freezing. They put their heads together and organised a rural festival and bussed in the city folk to spend their talents back and restore the balance</span><span class="c18">.</span></p><p class="c0 c30"><span class="c11 c4"></span></p><h2 class="c28 c0"><a id="h.11btk1vvlpxd"></a><span>4.5</span><span class="c9 c4"> Experiences of previous federations</span></h2><p class="c0"><span class="c5">There have been several low-tech attempts at similar federations in the past.</span></p><p class="c0"><span>The credit commons may be a new formulation, but federations of private currencies have been attempted many times since the emergence of LETS in the 1980s.</span></p><h3 class="c22 c0"><a id="h.nzf45mxiot14"></a><span class="c16 c11">4.5</span><span class="c16 c11 c4">.1 Business barter</span></h3><p class="c0"><span>The business barter sector has many federations already because this is the business model of the software providers.</span></p><p class="c0"><span>Typically one software is sold to as many exchanges as possible and the</span><span> vendor takes a dollar commission from each inter-exchange transaction</span><span>, which seems inappropriate because no dollars change hands and also disincentivises exchange, more so if the fee is high.</span></p><p class="c0"><span>This model of federation serves the software vendors more than the traders because it carves up the marketplace, keeping traders separate according to their exchange’s software choice. In this way of thinking, members are property to be owned, before they are customers to be served!</span></p><p class="c0"><span>This way also causes problems because the software providers assume that each exchanges barter dollars are worth the same without checking the integrity of the exchanges, many of which are suffering inflation owing to a too profligate house account.</span></p><p class="c0"><span>The International Reciprocal Trade Organisation sought to improve the situation by introducing and governing another currency, called Universal Currency. The system is its own platform and thus members have the experience of being in two exchanges and using two currencies. In 2014 the system ran into liquidity problems and fraud allegations followed.</span><sup><a href="#ftnt43" id="ftnt_ref43">[43]</a></sup><span> The system has now been rebooted in partnership with Bartercard, but it is not clear that the governance problems have been addressed.</span></p><h3 class="c28 c0 c37"><a id="h.miv049pyqebf"></a><span class="c16 c11">4.5</span><span class="c11 c4 c16">.2 LETS</span></h3><p class="c0"><span>In the 1990s there were several attempts to make accounting software for LETS using databases on local machines. The most valiant attempt at intertrading using Access was in Scotland where everyone was using a well developed MS Access application called SAM. The LETS of LETS was held in a separate instance of SAM and transactions were communicated by email.</span></p><p class="c0"><span>Around 2003 Community Exchange Systems</span><sup><a href="#ftnt44" id="ftnt_ref44">[44]</a></sup><span> (CES) arrived, a web service allowing LETS to have their own web site in which members managed their own accounts rather than processing cheques communicating by post. CES grew quickly when it offered an intertrading mechanism between exchanges. </span><span>A fixed exchange rate was calculated according to the national currency and the time-value of each exchanges unit, and this persists to this day.</span><sup><a href="#cmnt77" id="cmnt_ref77">[by]</a></sup><sup><a href="#cmnt78" id="cmnt_ref78">[bz]</a></sup></p><p class="c0"><span>Several LETS around Zurich are networked together</span><span> with a semi</span><span>-</span><span>automatic system which requires they all use the same platform</span><sup><a href="#ftnt45" id="ftnt_ref45">[45]</a></sup><span>, and there are other loose federations around Europe without the theoretical basis, or more importantly, the technology, to scale up</span><span>.</span><span> </span></p><h3 class="c0"><a id="h.857h6msdvl02"></a><span>4.5</span><span>.3 Timebanking</span></h3><p class="c0"><span>Timebanking software has always been much more centralised than LETS being produced by the national associations rather than the communities themselves. Thus all timebanking platforms sharing a unit of account have enjoyed a high degree of interoperability.</span></p><p class="c6 c0"><span>The initial USA and UK systems were poorly built and managed and eventually both gave way to a free, well run, but closed source platform which now hosts several hundred timebanks. This means those timebanks are interoperable in theory but so far no policy exists to manage trading limits and no API to include software hosted elsewhere.</span></p><h2 class="c0 c19"><a id="h.fqe30y93qdxs"></a><span>4.5 Financing commons financial infrastructure</span></h2><p class="c0 c6"><span>Money is the quintessential public service, and for obvious reasons. whoever owns it has power to allocate (theoretically all) the wealth in a way that cannot be done with telecoms, gas, postal services or even water. Therefore money is a special case when it comes to privatising infrastructure. The owners of money as we know it have more power and less accountability than national governments. </span></p><p class="c6 c0"><span>That is why any credit commons cannot be called such unless it is un-ownable. The moment there is an owner, then the possibilities arise of transaction fees inhibiting trade, account fees inhibiting membership, credit administration costs becoming rent, and the whole system becoming a panopticon.</span><sup><a href="#ftnt46" id="ftnt_ref46">[46]</a></sup></p><p class="c6 c0"><span>As we have observed, whoever owns the debt effectively owns the debtor.</span><sup><a href="#ftnt47" id="ftnt_ref47">[47]</a></sup><span> The one-off cost therefore of developing the protocol and implementing it a few times absolutely cannot be met by borrowing or by conventional sources of capital whose ultimate aim is to increase their own wealth by lending or speculating. Indeed such parties have already shown no interest precisely because there is no business model. </span><span class="c5"> </span><span class="c5">A credit commons could only ever be financed via government or philanthropy</span><span class="c5"> - financiers more concerned with spending than profiting.</span></p><p class="c6 c0"><span style="overflow: hidden; display: inline-block; margin: 0.00px 0.00px; border: 0.00px solid #000000; transform: rotate(0.00rad) translateZ(0px); -webkit-transform: rotate(0.00rad) translateZ(0px); width: 601.70px; height: 601.33px;"><img alt="IMG_2727.JPG" src="./image04.jpg" style="width: 601.70px; height: 601.33px; margin-left: 0.00px; margin-top: 0.00px; transform: rotate(0.00rad) translateZ(0px); -webkit-transform: rotate(0.00rad) translateZ(0px);" title=""></span><hr style="page-break-before:always;display:none;"></p><h1 class="c12 c0"><a id="h.hobtlmxa2e2b"></a><span>5</span><span class="c17 c11 c4"> </span><span>A biomimicry perspective</span></h1><p class="c6 c0"><span class="c5">This section was co-authored with Jamie Brown-Hansen.</span></p><p class="c6 c0"><span>The field of biomimicry is, among other things, a way of doing biology that looks for unifying </span><span> </span><span>patterns in the design of natural systems. There is enormous diversity in the natural world, yet biologists are able to identify certain design strategies that are common across multiple species and even kingdoms of species. Some of the deepest design patterns, in fact, can be recognised in almost all biological systems at every scale, from bacteria to multicellular organisms to entire ecosystems. These unifying patterns are referred to within the biomimicry community as </span><span>Life’s Principles</span><sup><a href="#ftnt48" id="ftnt_ref48">[48]</a></sup><span>. They represent a design framework that has delivered thriving, regenerative systems in the natural world for 3.8 billion years, a proven recipe for long-term success within the operating conditions of this planet that we can apply where relevant in the effort to achieve sustainable human systems, including our systems of exchange.</span></p><p class="c0"><span>The proposal of the credit commons is consistent with many of nature’s core unifying design patterns: it is bottom-up, locally attuned and adapted, diverse, decentralised, iterative, modular, and premised on quantitative stability over time. The interconnection of community-based mutual credit systems is also endorsed by the Bio-credits Working Group of the Biomimicry Global Network in answer to the question, “</span><span>How would nature design a financial system</span><span>?”</span><sup><a href="#ftnt49" id="ftnt_ref49">[49]</a></sup><span> The remainder of this section draws out some specific characteristics of the credit commons proposal that are consistent with natural system design.</span></p><h2 class="c0 c24"><a id="h.owprvfe3dze2"></a><span>5.1 Locally attuned and adapted</span></h2><p class="c6 c0"><span>In the natural world, chances of survival improve when organisms are well adapted and responsive to local conditions around them. Similarly, after decades of policy experimentation and experience, sustainable development strategists have learned that the most appropriate prescriptions for human development in any given region are attuned and adapted to local context. I</span><span>n the conventional bank credit system innovations in system design are templated first at the global level and make their way down to national level implementation thereafter, often without further adaptation to the contexts of individual communities.</span></p><p class="c0"><span>Some measures have shown strong correlations with good econometric outcomes across the board, such as investments in health, education and women. However, some experiences of standardised policy prescriptions applied to countries irrespective of local context have also been catastrophic. </span><span>For example the Third Basel Accord recommended globally that banks increase their capital requirements, but amongst its effects was wave of suicides amongst farmers in India</span><span> who found it harder to service their debts.</span></p><p class="c0 c24"><span>The credit commons starts with local innovation by communities themselves, attuned and adapted to their particular context and needs.</span></p><h2 class="c0 c24"><a id="h.vwad0ms4bw5p"></a><span>5.2 Bottom-up development combining modular and nested components</span></h2><p class="c0"><span>Living systems assemble components one unit at a time, with development starting at the smallest scale. Simple solutions to a basic problem are nested within larger systems to form more complex entities. Starting with simple building blocks moving to more complex allows all the parts of the new system to grow and develop in response to local contexts, from the bottom up. This recalls the biological metaphor of cohabiting cells working together to form a multicellular organism. A cell is a (comparatively) simple entity and a life form in its own right. Biology gives us many examples of cells working together and specialising to make an organism with a higher degree of organisation.</span></p><p class="c0"><span>The credit commons proposes that the economy be re-imagined from the bottom up in a self-organised manner analogous to the design process of the natural world. The power of the state to force citizens to accept its promises as money is anathema to notions of freedom of persons, and of markets. The value of legal tender monies rests entirely on the productivity of the citizens, so citizens are the natural candidates to issue promises for produce, if money be such. Systems in which a currency is imposed from the above lead to disparities in the availability of the currency, as we see in the Eurozone between Germany and Greece, for example. The biomimetic principle of designing from the bottom up would suggest every person, or more likely every economy, have its own currency for internal trade, and that complexity and scale be layered on top of that stable system.</span></p><h2 class="c0 c24"><a id="h.i52su3t4dduf"></a><span>5.3 Resilience through systemic diversity and decentralisation </span></h2><p class="c0"><span>Close to the principle of building from the bottom up is the principle of decentralisation. Many centres increases the resilience of the whole system, because it reduces dependences and single points of failure. Natural systems maintain function following disturbance by incorporating a variety of duplicate forms, processes, or systems that are not located exclusively together. </span></p><p class="c0"><span>The</span><span> Biomimicry Resource Handbook</span><span> explains: “Resilience is the capacity of a system to maintain function following a disturbance. In short, it is the ability to recover after adversity. The capacity for resiliency, from bodily organs to ecosystems, often depends on the interconnectedness and functional diversity of multiple systems. When one system fails or does poorly, others can step in to compensate, either briefly or long term. As the nature of the disturbance is unpredictable, variation in strategies allows for some to endure while others may be lost. Redundancy permits the remaining to continue despite losing some, and decentralisation ensures that independent of where the disturbance falls, not all components will be subject to its impacts.”</span><sup><a href="#ftnt50" id="ftnt_ref50">[50]</a></sup></p><p class="c0"><span>The credit commons can be understood as a permaculture landscape of diverse local models interacting with each other, analogous to a natural ecosystem. A variety of locally attuned credit modules interacting in dynamic non-equilibrium is a more resilient structure than the metaphorical monoculture of today’s prevailing monetary system, according to former central banker, Bernard Lietaer.</span></p><h2 class="c0 c24"><a id="h.a6qrul5la64r"></a><span>5.4 Membranes for identity and protection</span></h2><p class="c0"><span>In modern economies the balance of trade figure reveals how much value a country is gaining or losing. It is obtained by measuring the flow of the national currency across borders. It is very hard to obtain this figure for local or regional economies which use the same currency as their neighbours. With much more localised currencies, this figure can tell us a lot about microeconomic health and activity. Each member of a mutual credit network has a maximum extent to which its balance can deviate from zero. These limits function like a membrane of a cell, revealing the value going in and out to the wider system. In economic terms a balance-of-trade indicator is built in to each economy and the health and needs of each economy becomes visible. Limits can be set by local economy AND by the higher order system and the lowest limits respected. This affords local economies a level of protection against strong inflows or outflows of credit which would cause inflation/deflation and distort the value of their currency.</span></p><p class="c0"><span>As the localities join together to form bioregions, and bioregions to form countries, transactions which have to pass between more balance limits, and more cultural barriers, become more cumbersome and probably more expensive. In this way the credit commons architecture favours localised exchange.</span></p><h2 class="c0 c24"><a id="h.t9okcd6ryn9x"></a><span>5.5 Fractal design</span></h2><p class="c0"><span>As we have shown, clearing systems can be nested, with one clearing system having an account in a meta system. Smaller local modules are nested within larger regional modules, with the pattern repeated up to the global scale. This is consistent with the pattern of system design in the natural world from microorganism to biosphere. Moreover, not only are facilities in the credit commons modular and nested, they are also iterative. In other words, the same principles of organisation and engagement can be applied at each system level. This is analogous to patterns of fractal design in the nature world. </span></p><p class="c0 c24"><span>For example, in order for a mutual credit facility to function, all participants must agree to the principle of balanced mutual exchange. In other words, they agree to give and receive equally over the course of their membership in the credit community. Concretely, this can mean, for example, that participants must start with a balance of zero, and end with a balance of zero. This principle applies not just to individual participants in a local credit community, but also to local communities participating in a regional credit facility, and so on up to the global level. In the case of a regional facility, each local community agrees to balance its imports and exports in order to participate; the same principle applied at the next level.</span></p><p class="c0 c24 c30"><span class="c26"></span></p><p class="c0"><span>We would suggest around 4 levels of nesting ranging from local systems to bioregional systems, to national or linguistic regions, to a world clearing system. This allows the same mechanism to serve at all scales of the economy and probably provides a bias towards more local trade, since currencies are more valuable nearer to where they can be spent. </span></p><h1 class="c10 c0 c20"><a id="h.m7cewxewwwnc"></a></h1><hr style="page-break-before:always;display:none;"><h1 class="c10 c20 c0"><a id="h.ujch1tqtjp4c"></a></h1><h1 class="c10 c0 c34"><a id="h.90juziagbt4"></a><span>Conclusion</span></h1><p class="c0"><span>Our current economy is structurally incapable of creating a society focused on wellbeing while the economy depends on ever increasing debt to banks. Government could </span><span>e</span><span>ffect many positive changes, but seems ever more in the thrall of the wealthy minority; so such change is only likely from ordinary people adjusting their values and behaviour to align with the society they want for themselves and their children. </span></p><p class="c0"><span>Money is not a real substance but a belief about what is valuable, put on us by a ruling elite. It tells a story that your gain is my loss; it is a shimmering mirage always on the horizon; a food that only increases appetite. It is an expression of soft coercive power in our society, a way of binding all our interests with the interests of its issuers. Our changing this belief is as unthinkable as our changing the state religion. </span></p><p class="c0"><span>The very notion of a local economy is so eroded in a global society, and money itself so aspatial, and local money systems so lacklustre that we could easily envisage a future with 9 billion peers using a global currency and see no role for community currency, or even community.</span></p><p class="c0"><span>U</span><span>nderstanding of money has grown hugely since the deflationary crisis started in 2008,</span><sup><a href="#ftnt51" id="ftnt_ref51">[51]</a></sup><span> but alternative money projects have grown less quickly.</span><sup><a href="#ftnt52" id="ftnt_ref52">[52]</a></sup><span> The</span><span> </span><span class="c5">local currencies </span><span>most in vogue at the moment </span><span>promote smaller, local business and local sentiment but create no new liquidity and have little transformative potential. </span></p><p class="c0"><span>Such a thing as a ‘solidarity economy’ absolutely cannot grow from the current globalised debt-money system. But the kind of money needed for a more beautiful world needs no permission from states, and no legal force. Radical individuals can make major lifestyle changes and step more or less out of the money system. But for more people to step into abundance, serious structures are needed to organise </span><span class="c11">food</span><span>, shelter, division of labour work, health-care & governance. This is only possible by </span><span class="c11">collectively</span><span> challenging norms that unspent money itself is wealth; accounting with other values is an ideal way to achieve that. </span></p><p class="c0"><span>Alternative currencies will likely not trigger a global political awakening, nor by creating money do we directly create wealth. They could smooth the transition but their real importance is as the foundation for a humane economy of abundance and justice, which it may be possible to create as money becomes scarce. Local money will amplify and retain local political and economic power, keeping it closer to the value creators. When debt comes knocking at our nation’s door, we need not be as helpless, and dependent on central banks as Greece in 2015.</span></p><p class="c0"><span>Money systems are like arches, they are stronger the more we lean on them. Many communities have prototypes in place but lack the confidence to lean. </span></p><p class="c0"><span>That is why, more than most other types of reform, discussion, intellectual exploration, and personal challenges are critical for changing our consciousness. </span><span>What could we achieve if we learned to cooperate?</span></p><p class="c0 c14"><span style="overflow: hidden; display: inline-block; margin: 0.00px 0.00px; border: 0.00px solid #000000; transform: rotate(0.00rad) translateZ(0px); -webkit-transform: rotate(0.00rad) translateZ(0px); width: 300.00px; height: 345.00px;"><img alt="arch-11.jpg" src="./image03.jpg" style="width: 300.00px; height: 345.00px; margin-left: 0.00px; margin-top: 0.00px; transform: rotate(0.00rad) translateZ(0px); -webkit-transform: rotate(0.00rad) translateZ(0px);" title=""></span></p><hr class="c38"><div><p class="c3 c0"><a href="#ftnt_ref1" id="ftnt1">[1]</a><span class="c8"> The financial base they accrued over 100 years of steady lending was not necessary for lending as a bank, so they distributed it all to current members often giving them several thousand pounds each. Many of these same institutions were insolvent in 2008.</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref2" id="ftnt2">[2]</a><span class="c8"> Throughout this paper we use the widely circulated figure that 97% of modern money is bank deposits but the true figure varies over time and between countries.</span><sup><a href="#cmnt79" id="cmnt_ref79">[ca]</a></sup><sup><a href="#cmnt80" id="cmnt_ref80">[cb]</a></sup></p></div><div><p class="c3 c0"><a href="#ftnt_ref3" id="ftnt3">[3]</a><span class="c8"> http://www.bankofengland.co.uk/publications/Pages/quarterlybulletin/2014/qb14q1.aspx</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref4" id="ftnt4">[4]</a><span class="c8"> See Money and sustainability (2012) by Bernard Lietaer, Christian Arnsperger, Sally Goerner and Stefan Brunnhuber. http://www.money-sustainability.net</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref5" id="ftnt5">[5]</a><span class="c8"> See the life’s work of Margrit Kennedy, specifically, </span><span class="c8 c5">Interest and Inflation Free Money</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref6" id="ftnt6">[6]</a><span class="c8"> See Paul Grignon’s argument about twice lent money https://youtu.be/TGdm1k836zE and the ensuing debtate </span><span class="c8">https://moneyasdebtblog.wordpress.com/sovereign-money-critique</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref7" id="ftnt7">[7]</a><span class="c8"> http://www.bloomberg.com/quote/BCOM:IND</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref8" id="ftnt8">[8]</a><span class="c8"> Read A People’s History of the United </span><span class="c8">States</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref9" id="ftnt9">[9]</a><span class="c8"> Read </span><span class="c8 c5">Black Box Society</span><span class="c8"> by Frank Pasquale</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref10" id="ftnt10">[10]</a><span class="c8"> https://www.facebook.com/OrganicRising/videos/1036450356397383</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref11" id="ftnt11">[11]</a><span class="c8"> http://moveyourmoneyproject.org</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref12" id="ftnt12">[12]</a><span class="c8"> http://www.nesta.org.uk/node/11694</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref13" id="ftnt13">[13]</a><span class="c8"> This is the preferred solution of Debunking Economics author Steve Keen</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref14" id="ftnt14">[14]</a><span class="c8"> http://cooperativa.cat/en</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref15" id="ftnt15">[15]</a><span class="c8"> http://degrowth.org</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref16" id="ftnt16">[16]</a><span class="c8"> https://slowmoney.org</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref17" id="ftnt17">[17]</a><span class="c8"> https://www.ecogood.org/en</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref18" id="ftnt18">[18]</a><span class="c8"> https://en.wikipedia.org/wiki/Triple_bottom_line</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref19" id="ftnt19">[19]</a><span class="c8"> http://forward.com/opinion/127122/what-actually-undermined-the-kibbutz/</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref20" id="ftnt20">[20]</a><span class="c8"> Rachel O’Dwyer, Other Values: Considering Digital Currency as a Commons (2014)</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref21" id="ftnt21">[21]</a><span class="c8"> Manfred max Neef, 1991, Human Scale Development</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref22" id="ftnt22">[22]</a><span class="c8"> Growth is very much abetted by borrowing, which means that regardless of which entity comes to dominate the sector, the finance industry usually owns them.</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref23" id="ftnt23">[23]</a><span class="c8"> See 5000 Years of Debt, by David Graeber, Chapter 1</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref24" id="ftnt24">[24]</a><span class="c8"> Economists track the quantity of both substances, calling the former base money or M1, and the latter bank deposits or M3</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref25" id="ftnt25">[25]</a><span class="c8"> Economist Silvio Gesell popularised the notion of decaying, or rusting money </span></p></div><div><p class="c3 c0"><a href="#ftnt_ref26" id="ftnt26">[26]</a><span class="c8"> https://en.wikipedia.org/wiki/Capitol_Hill_Babysitting_Co-op</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref27" id="ftnt27">[27]</a><span class="c8"> See Where Does money Come From, published by NEF in 2012, which was followed by the Bank of England’s Q1 Quarterly report 2014</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref28" id="ftnt28">[28]</a><span class="c8"> Money is safe only up to the government guaranteed limit. Your ‘money’ is at risk of being used to recapitalise insolvent banks. In fact with post 2008 interest rates so low, banks are an even less compelling store of value,</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref29" id="ftnt29">[29]</a><span class="c8"> “If you or I could agree instead of keeping our separate records, to share the same record from ... commission to settlement in the system of record we are sharing one jointly agreed, signed by both of us, authorised by both us transaction, we are eradicating that need for post trade reconciliation and settlement process that is lengthy, time-consuming and expensive.” - Blythe Masters https://youtu.be/ycMCGBuDJLQ?t=25</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref30" id="ftnt30">[30]</a><span class="c8"> Admin charges and risk management charges still apply, but the notion of rent is obviated.</span></p></div><div><p class="c0 c3"><a href="#ftnt_ref31" id="ftnt31">[31]</a><span class="c8"> Rachel O’Dwyer, The Revolution will (not) be decentralised: Blockchains (2015)</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref32" id="ftnt32">[32]</a><span class="c8"> Ian Grigg points out how this one-ness has been critical for </span><span class="c8">building momentum and also hype</span><span class="c8">. http://www.coinscrum.com/2015/12/14/what-more-did-bitcoin-achieve-coalescence-of-the-community-into-a-gfn/</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref33" id="ftnt33">[33]</a><span class="c8"> Alt-coins based on Bitcoin find it hard to keep up with new developments to Bitcoin so therefore fall behind. See </span><span class="c32 c8"><a class="c29" href="https://www.google.com/url?q=http://dcentproject.eu/wp-content/uploads/2015/10/design_of_social_digital_currency_publication.pdf&sa=D&ust=1455100056097000&usg=AFQjCNGYz8hmBoY_qYD934jWHPSBgGc3cg">http://dcentproject.eu/wp-content/uploads/2015/10/design_of_social_digital_currency_publication.pdf</a></span></p></div><div><p class="c3 c0"><a href="#ftnt_ref34" id="ftnt34">[34]</a><span class="c8"> The Future of Money, 2001.</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref35" id="ftnt35">[35]</a><span class="c8"> http://lazooz.org/whitepaper.html</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref36" id="ftnt36">[36]</a><span class="c8"> The Wealth of the Commons: A world beyond market & state [emphasis mine]</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref37" id="ftnt37">[37]</a><span class="c8"> Dunbar's number is a suggested cognitive limit to the number of people with whom one can maintain stable social relationships. https://en.wikipedia.org/wiki/Dunbar's_number</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref38" id="ftnt38">[38]</a><span class="c8"> See </span><span class="c8 c5">Governing the Commons</span><span class="c8"> by Elinor Ostrom</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref39" id="ftnt39">[39]</a><span class="c8"> http://ibtimes.com/bitcoin-communitys-latest-conflict-threatens-digital-currencys-growth-raises-2058396</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref40" id="ftnt40">[40]</a><span class="c8"> The concept of nesting credit clearing systems has also been discussed in the International Journal of Complementary Currency research (https://ijccr.files.wordpress.com/2015/03/ijccr-2015-martignoni.pdf)</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref41" id="ftnt41">[41]</a><span class="c8"> https://en.wikipedia.org/wiki/Impossible_trinity</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref42" id="ftnt42">[42]</a><span class="c8"> The End of FInance (2009), Massimo Amati & Luca Fantacci pp132</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref43" id="ftnt43">[43]</a><span class="c8"> http://www.dennis.co.nz/2014/08/the-irta-uc-fraud-2/</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref44" id="ftnt44">[44]</a><span class="c8"> http://community-exchange.org.za</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref45" id="ftnt45">[45]</a><span class="c8"> http://www.zart.org</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref46" id="ftnt46">[46]</a><span class="c8"> A proposed model of imprisonment in which all cells have an open wall facing a central point from which they are watched.</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref47" id="ftnt47">[47]</a><span class="c8"> Napoleon is reputed to have said, The hand that lends is above the hand that borrows.</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref48" id="ftnt48">[48]</a><span class="c8"> http://biomimicry.net/about/biomimicry/biomimicry-designlens/lifes-principles</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref49" id="ftnt49">[49]</a><span class="c8"> http://biomimicry.org/community-credit/#.Vk8CuLzns-1</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref50" id="ftnt50">[50]</a><span class="c8"> http://biomimicry.net/educating/professional-training/resource-handbook</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref51" id="ftnt51">[51]</a><span class="c8"> A recent survey by Positive Money indicated 10% of British MPs understood how money was created.</span></p></div><div><p class="c3 c0"><a href="#ftnt_ref52" id="ftnt52">[52]</a><span class="c8"> No reliable databases of local systems exist, or even typologies, because of their diversity, their transience, and their failure to attract resources for such tasks as mapping. The best data comes live from shared hosting providers like CES, Timebanks USA, Community Forge & hOurworld. Commercial systems are not sharing data.</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref1" id="cmnt1">[a]</a><span class="c2">NOTE TO REVIEWERS the intention of this paper is to introduce the expression 'credit commons' into wider parlance. The term itself is not controlled by me or anyone. So please do:</span></p><p class="c7 c3"><span class="c2">-Tweet about it</span></p><p class="c7 c3"><span class="c2">-Produce your own content about it</span></p><p class="c7 c3"><span class="c2">-Publically disagree</span></p><p class="c7 c3"><span class="c2">-Have a think about you can amplify the concept</span></p><p class="c7 c3"><span class="c2">Also: Who would want to fund such infrastructure with emphatically NO BUSINESS MODEL behind it?</span></p><p class="c7 c3"><span class="c2">Why not print this dense document and read it at leisure?</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref2" id="cmnt2">[b]</a><span class="c2">just printing it, will come back with comments, as networker I am able to send it to a worldwide audience...my part:-)...</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref3" id="cmnt3">[c]</a><span class="c2">WRT what date?</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref4" id="cmnt4">[d]</a><span class="c2">@matslats</span></p><p class="c7 c3 c30"><span class="c2"></span></p><p class="c7 c3"><span class="c2">Jessy is a friend from Ensprial... you can see some of what she is up to here:</span></p><p class="c7 c3 c30"><span class="c2"></span></p><p class="c7 c3"><span class="c2">https://medium.com/enspiral-tales/transitioning-your-team-to-collaborative-governance-9c77e26f6bbf#.ucf9zeqlw</span></p><p class="c7 c3 c30"><span class="c2"></span></p><p class="c7 c3"><span class="c2">Is it ok for me to put you both in email contact as I know she would like to pick your brains :)</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref5" id="cmnt5">[e]</a><span class="c2">Sure. there is a volunteer working on publishing. I'm not pushing</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref6" id="cmnt6">[f]</a><span class="c2">is it 2 or 3 ways?</span></p><p class="c7 c3"><span class="c2">explain bail-outs, bail-ins</span></p><p class="c7 c3"><span class="c2">does plunge protection mean hasardous speculation?</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref7" id="cmnt7">[g]</a><span class="c2">3. Plunge protection is when the Federal reserve buys things when the market is plunging to put a bottom on it.</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref8" id="cmnt8">[h]</a><span class="c2">as I know it's central banks that do that? ot u speak about ra(es on ecnomic agents loans?</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref9" id="cmnt9">[i]</a><span class="c2">Central banks are supposed to control interest rates but they don't have much power in practice.</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref10" id="cmnt10">[j]</a><span class="c2">Worth here noting a few in the footer for wider reading? Christian Marrazzi an d some of the Italian Autonomists do a good job of this. * purely for wider eductaional purposes :) I know I saw you mentioning 'Violence of Financial Capitalism' for example...</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref11" id="cmnt11">[k]</a><span class="c2">looks like a great reference but could you be a bit more specific?</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref12" id="cmnt12">[l]</a><span class="c2">what this?</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref13" id="cmnt13">[m]</a><span class="c2">Expression describing how people move between government and corporate jobs and back again. Makes it hard to tell where their loyalities lie.</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref14" id="cmnt14">[n]</a><span class="c2">? force to pay back?</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref15" id="cmnt15">[o]</a><span class="c2">it goes without saying that repayment is forced. the initial borrowing is supposed to be voluntary, because the borrower is taking all the risk.</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref16" id="cmnt16">[p]</a><span class="c2">Actually there is a new wave of interest in cooperative economics from young people across EU at this time... see links out from http://www.altgen.org.uk/ as an example...</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref17" id="cmnt17">[q]</a><span class="c2">Need to return to this as the site is offline</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref18" id="cmnt18">[r]</a><span class="c2">and what about being a part of the banksters strategy that want people to take care of themselves, or SIB, or 'market on poors'...</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref19" id="cmnt19">[s]</a><span class="c2">feel free to elaborate in french</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref20" id="cmnt20">[t]</a><span class="c2">French Essone bombers public service is bankrupt due to debts</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref21" id="cmnt21">[u]</a><span class="c2">great include it</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref22" id="cmnt22">[v]</a><span class="c2">be carefull to not become very neo-liberal, forcing weaks to work!</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref23" id="cmnt23">[w]</a><span class="c2">the unemployed are not weak</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref24" id="cmnt24">[x]</a><span class="c2">it is where neoliberals wnt us to go!!</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref25" id="cmnt25">[y]</a><span class="c2">yes there is an overlap with liberalism</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref26" id="cmnt26">[z]</a><span class="c2">Thanks for mentionning this content! For me the most important barrier in local money systems. A lot of work needs to be done here. Some keys are: ownership in the creative processes (being conscious of), daring to fail</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref27" id="cmnt27">[aa]</a><span class="c2">now in UE u cannot pay taxes over 300€ in paper money, so legal tender is less legal!!</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref28" id="cmnt28">[ab]</a><span class="c2">arrrghhh!</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref29" id="cmnt29">[ac]</a><span class="c2">is it similar to unit, as token has no trabslation</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref30" id="cmnt30">[ad]</a><span class="c2">a token might be a 'piece'?</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref31" id="cmnt31">[ae]</a><span class="c2">In casinos you get tokens... or chips, or discs... what would be the translation for one of those?</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref32" id="cmnt32">[af]</a><span class="c2">o dont' find any translation for that. HELP</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref33" id="cmnt33">[ag]</a><span class="c2">You might need to explain that this is an English expression.</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref34" id="cmnt34">[ah]</a><span class="c2">would framework work??</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref35" id="cmnt35">[ai]</a><span class="c2">this is industry lingo</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref36" id="cmnt36">[aj]</a><span class="c2">Not necessarily a problem, if ownership is separated from usage rights, rather like the right to fly over other people's countries that airlines need to have. Similarly, for a bank money transport network - or not?</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref37" id="cmnt37">[ak]</a><span class="c2">Such things could be legislated I suppose</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref38" id="cmnt38">[al]</a><span class="c2">??</span></p></div><div class="c1"><p class="c3 c7"><a href="#cmnt_ref39" id="cmnt39">[am]</a><span class="c2">large ledgers are much more useful because they support the square of the number of relationships. Metcalfe's law</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref40" id="cmnt40">[an]</a><span class="c2">Except large also makes it challenging for blockchain implementations, because they have scaling and throughput challenges.</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref41" id="cmnt41">[ao]</a><span class="c2">Didn't know that. Very interesting.</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref42" id="cmnt42">[ap]</a><span class="c2">?</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref43" id="cmnt43">[aq]</a><span class="c2">if money goes around, goods and services go the other way around</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref44" id="cmnt44">[ar]</a><span class="c2">Not really. They can only create promises that are redeemable in legal tender; mostly they can purchase legal tender from central banks, but this costs them!</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref45" id="cmnt45">[as]</a><span class="c2">Else where I say that a banks promise to pay legal tender is accepted as legal tender and that a banks promise to pay is acceptable as payment. Neoclassical economists don't see it that way, but to all intents and purposes banks are creating legal tender.</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref46" id="cmnt46">[at]</a><span class="c2">Great point! Almost always missed.</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref47" id="cmnt47">[au]</a><span class="c2">Most people probably assume, but are not concious about, that money must be a ledger because they cannot imagine money disappearing or popping up really.</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref48" id="cmnt48">[av]</a><span class="c2">I think you can through can where you define value created as price (or cost), as a VAT does. But a tax on income (or sales) has to be on monetary exchanges - which should give people an incentive to minimze them, to avoid tax (as in your unplugges-sink-fro-lunch barter example)</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref49" id="cmnt49">[aw]</a><span class="c2">I don't understand anything you say here, least of all there should have to be a tax on income.</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref50" id="cmnt50">[ax]</a><span class="c2">Sorry, not typing coherently! </span></p><p class="c7 c3"><span class="c2">All taxes have to be on monetary exchanges, whether purchases or payment for labour, as taxes are levied in money (as a unit of account, and almost always as the medium by which the tax is paid). As a consequence (like your example of the plumber and her client), there should be an incentive to barter instead. </span></p><p class="c7 c3"><span class="c2"> </span></p><p class="c7 c3"><span class="c2">Does that make sense now?</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref51" id="cmnt51">[ay]</a><span class="c2">> All taxes have to be on monetary exchanges...</span></p><p class="c7 c3"><span class="c2">In principle I agree but this is false. Taxes are levied on nonmonetary exchanges i.e. business barter. There is a special type of tax return for that in USA, the 1099B</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref52" id="cmnt52">[az]</a><span class="c2">An example being two different implementations:</span></p><p class="c7 c3 c30"><span class="c2"></span></p><p class="c7 c3"><span class="c2">http://libbitcoin.dyne.org/</span></p><p class="c7 c3 c30"><span class="c2"></span></p><p class="c7 c3"><span class="c2">&& </span></p><p class="c7 c3 c30"><span class="c2"></span></p><p class="c7 c3"><span class="c2">Satoshi core https://bitcoin.org/en/</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref53" id="cmnt53">[ba]</a><span class="c2">This is incredbibly insightful...</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref54" id="cmnt54">[bb]</a><span class="c2">I suppose the 'why' will need a lot of experimental evidence, but I think we can hypothesize. A big issue with trading circles is mutual trust, which is limited by the number of people you can know very well. Which Dunbar's number speaks to directly.</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref55" id="cmnt55">[bc]</a><span class="c2">This is my biggest question about the proposal. The Credit Commons is an idea worth supporting on its own terms, but there does not seem to be a strong argument that it would be greater than the sum of its parts.</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref56" id="cmnt56">[bd]</a><span class="c2">The argument is Metcalfe's law</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref57" id="cmnt57">[be]</a><span class="c2">I would say the argument is Reed's Law rather than Metcalfe's Law. (See link I posted above.)</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref58" id="cmnt58">[bf]</a><span class="c2">Both Metcalfe's and Reed's law are talking about telecommunication networks - transferring their principles to other types of networks should always be done carefully. The main criticism of both laws is that the value of the network connections is not equal - so in some cases, the value of the content delivered by the connection might be outweighed by the cost of maintaining the connection.</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref59" id="cmnt59">[bg]</a><span class="c2">paul we know the benefits of scaling because CES has been scaling for years.</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref60" id="cmnt60">[bh]</a><span class="c2">How do we deal with trusted parties who become untrusted parties?</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref61" id="cmnt61">[bi]</a><span class="c2">we accept any financial loss, use our governance process to exclude them, and maybe there is scope for reputational retialiation as well.</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref62" id="cmnt62">[bj]</a><span class="c2">Among other things...</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref63" id="cmnt63">[bk]</a><span class="c2">This paper hasn't mentioned the offers/needs directory - there was too much else to talk about.</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref64" id="cmnt64">[bl]</a><span class="c2">This federal system is similar to Quaker organisation - might be worth drawing a parallel - especially as it also encompasses the "shared values" necessary for trust to form</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref65" id="cmnt65">[bm]</a><span class="c2">Sounds great could you offer 2 sentences? BTW shall I put you as a peer reviewer?</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref66" id="cmnt66">[bn]</a><span class="c2">Governance requirement to monitor commons members for policy / practice changes that might not fit with collective ethos?</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref67" id="cmnt67">[bo]</a><span class="c2">there is only a need to monitor within realms of trust. There would be no overall monitoring</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref68" id="cmnt68">[bp]</a><span class="c2">"Travel distance" (network or geographical) might be a useful proxy to measure degree of trust within the commons space, as part of monitoring processes</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref69" id="cmnt69">[bq]</a><span class="c2">it might make a good basis for a buy-local transaction tax, but I don't know how good an indicator of trust it would be. This is a matter for groups themselves. We would need a plugin architecture so they could program their own algorithms</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref70" id="cmnt70">[br]</a><span class="c2">Doesn't the network need an agreed metric (or set of metrics) in order for it to be a useful tool? Otherwise we could end up with groups whose mutual trust levels are poorly aligned.</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref71" id="cmnt71">[bs]</a><span class="c2">"Travel distance" within the network (i.e. degrees of separation, rather than geographic distance) seems like a useful starting point for a proxy that groups could build on.</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref72" id="cmnt72">[bt]</a><span class="c2">What does this mean in practice? Obviously there is no enforcement of monetary policy in this system, but what are the implications if groups do wish to align their 'monetary' policies?</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref73" id="cmnt73">[bu]</a><span class="c2">I meant it goes without saying as the most important from the trilemma</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref74" id="cmnt74">[bv]</a><span class="c2">This is what I was getting at in the comment above, I guess - damage to the overall commons by a rogue agent could be much greater than you anticipate.</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref75" id="cmnt75">[bw]</a><span class="c2">Is there also the potential for two or more groups acting in concert to game the system against another group?</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref76" id="cmnt76">[bx]</a><span class="c2">The potential for fraud involves winning the trust of your peers. All risk is mitigated by balance limits which are determined by the group and each community can reduce its own. That is independent monetary policy</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref77" id="cmnt77">[by]</a><span class="c2">Any full description of this anywhere?</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref78" id="cmnt78">[bz]</a><span class="c2">https://www.community-exchange.org/home/how-it-works/conversion-rates/</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref79" id="cmnt79">[ca]</a><span class="c2">I know from output of PositiveMoney reports that this is the case in the UK - but is it also the same figure globally?</span></p></div><div class="c1"><p class="c7 c3"><a href="#cmnt_ref80" id="cmnt80">[cb]</a><span class="c2">PM hasn't done the math I think. The number is somewhat fuzzy anyhow, and constantly changing</span></p></div></body></html> |
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