I tried to find information about mutual credit clearing Unions. I couldnt find much, so I guess that the name itself explains it. I suppose that LETS is such a system.
Let me make an example so as to see if we are talking about the same method of exchange and to clarify things.
We have John, Michael and all the others. John is making furniture. In fact he has 5 different kind of furniture that he is making. Michael is a software engineer, he is paid by the hour and has expertise in a number of programming languages and frameworks. Both of them had done previous work and they have a reputation that distinguishes them from other of the same work.
John decided that he wants to have a site advertising his furniture so he goes to Michael and tells him to make him a site. Michael and John make a contract. Michael through the (system)site knows at which proportionality has john currency, ie furnitute been exchanged with other currencies, products even if that exchange is indirect. The system transforms to him through past transactions or future contracts the currency of furniture into the products he wants. This way Michael has an exact understanding of the pleasure he recieves at a specific time vs the work he will have to do now.
John on the other hand understands the amount of 'happiness he will receive' , ie the product. There is no need for such a transformation.
Both now have enough information to start trading, decide the amount of work each one will be obliged to do and at what time.
Lets just say now that Michael now has a contract with John that allows him to ask for a specific number of furniture of a specific design till a specific date. That means that after this date John has no obligation to make these furniture. He has no debt and he is free to abandon his workshop, retire.
Till that date Michael has to find work for John so as to transform his currency into another he likes. The system told him that most likely he will transform it into the products he likes but it is up to him.
Let us say that someone likes the furniture of john and wants to trade. At this time he can trade directly with John or with Michael.
As you can see if John decides to abandon his obligations the one to be harmed will be Michael. This system doesnt have an abstract sense of money. It tries to transform the currencies into currencies that we want.
How much value do 500 dollars mean to you? 500 dollars have different value per person depending on the things they can buy with them. After a period of time you will still have 500 dollars but the things you can buy are different because the prices change. Not only that, the person or node that has the money plays an important role on the value of money. Big corporations buy stock with a lower price than smaller ones. Their value of money is different.
The topology of the graph plays an important role in the transformation of money into goods.
So Dollars or any kind of such a currency, like gold, doesnt contain within it the pleasure, happiness we will receive with those money.
Now If someone were to give us how happy he would be if he were in a specific situation( number of products, amount of work), if everyone did that, I could take all those people and organize them in such a way, automatically creating circles of flows, automatically finding the prices and amount of products that are to be traded. If I am given enough information, I could even tell an engineer how his invention will change the flow of products and prices.
I havent made the insertion of data user friendly yet, but I think that It takes all parameters into account and the price is determined in such a way so as that the individual maximizes his gain. You must also understand that noone can cheat. If someone says something different from what he wants , he will get worse results.
Savings equal the amount of money on negative balances. There are methods to stop people from not paying and this should be enforced globally. If someone has a flow of products every day, if he doesnt want to pay old debts, he could be dropped out of the system, not be able to buy new things. Other people could also insure someones debt.
As old debts are transformed into new debts by making new contracts, savings change position from one person to another as debt changes hands. You can undestand that those who will have debt will be the ones that are thought as the most productive and usefull in the future. Another method for savings allocation is proportionality of your savings to the goods you will want in the future.
What I am saying here IS experimental. What is sure though is the fact that it requires a lot of information to make it work.
Best regards...
2011/6/22 Thomas Greco
<thg@mindspring.com>
Dear Apostolis,
Below are the links to my websites, and the title of my latest book.
Clearing circles have been operating successfully for many years. It
is an old idea.
Now, the challenge is to optimize the procedures and protocols and
take it to scale, then network local exchanges together to provide
an means of payment that is locally controlled but globally useful.
A debit balance in a credit clearing exchange can be looked at as a
loan. It is a draft upon a line of credit that is extended by the
collective membership. In a clearing system some accounts must be
allowed to be negative. The total of negative balances (or positive
balances) can be looked at as the supply of internal currency.
Savings and investment, or
finance is a separate function
from
exchange.
Yes, they are related, but require different mechanisms.
Thomas
Thomas H. Greco, Jr.
thg@mindspring.com
Mobile phone (USA): 520-820-0575
Beyond Money: http://beyondmoney.net
Tom's News and Views: http://tomazgreco.wordpress.com
Archive Website: http://www.Reinventingmoney.com
Photo gallery: http://picasaweb.google.com/tomazhg
Skype/Twitter name: tomazgreco
My latest book, "The End of Money and the Future of Civilization"
can be ordered from Chelsea Green Publishing, Amazon.com, or your local bookshop.
On 06/21/2011 7:35 PM, Michel Bauwens wrote:
Thomas has written a few books and is in touch with
many local credit commons initiatives ...
he's in cc,
Michel
On Wed, Jun 22, 2011 at 3:38 AM,
Apostolis Xekoukoulotakis
<xekoukou@gmail.com>
wrote:
What you say was exactly the idea with
which I started working.
Where is more info about it? Has Thomas created such a
clearing house?
Most importantly, has he found an algorithm to create
trading circles? has he studied the macroeconomy of such a
system?
Why do we need to see the global network?
Well, in order to be able to make investments. New
investments about a specific product can have indirect
consequences to the whole network. We may then have to
compute what percentage of the investment will have to be
paid by each peer.
We need to know about the global network in order to
decide to which persons we can store our savings and the
ability of those currencies to be transfered into goods
that we will want in the future.
It is important to think of each peer as a producer, a
seller, an investor. Investors need information.
2011/6/21 Kevin Carson
<free.market.anticapitalist@gmail.com>
El 21/06/11 04:23, Apostolis Xekoukoulotakis
dijo:
> What I am about to say needs testing and
more thinking but let me tell you
> what I have done so far to create an
alternative to the free market.
We're probably using the term "free market" in a
different sense. The
market can refer simply to the cash nexus, or the
arena of commodity
production for monetized exchange.
But it can also be used, by market anarchist like
me, to describe the
entire spectrum of voluntary transactions and
relationships --
including cooperatives, gift economies, communal
property, informal
barter, mutual aid, etc.
>> I have created a new class of
currencies that are very similar to the
>> very
>> old currencies. What if each person
used the creation of his work as
>> currency. When someone owns 5 paul's
chairs for example , It is meant
>> that
>> Paul will have to give him those 5
chairs in the future if he asks for
>> them.
>> This is then some kind of loan.
Someone gives something now in exchange
>> for
>> something in the future. If he doesnt
need the chairs, he might have to
>> exchange Paul's chairs with something
else.
That sounds a lot like Tom Greco's mutual credit
clearing networks,
which I'm a big fan of. Every member runs a
balance that looks a lot
like the balance in a checking account. When you
sell a good or
service to a member your balance goes up, and when
you purchase same
it goes down. And the system allows people to run
negative balances,
so long as the negative balance is limited to some
value relative to
their average monthly sales and the account
continues to be active and
turn over. So "money" is essentially backed by
the goods being
traded; rather than being a store of value from
past production, it is
simply a unit of account for denominating trade of
present-for-present
or present-for-future production. Nobody has to
have a store of money
from past production in order to trade, so there's
no problem of
economic stagnation for want of liquidity
("there's not enough money
in circulation"). People create money by trading.
--
--
Sincerely yours,
Apostolis Xekoukoulotakis
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