Credit Clearing: A New Approach to Exchange
Our Goal: Liberate Exchange
The ultimate goal is to free humanity from the constraints of conventional money by reclaiming the credit commons and establishing direct exchange mechanisms that enable communities to:
We promise to create a system that:
- Enables direct exchange of value without bank or government intermediaries
- Provides sufficient credit for all legitimate trades
- Operates through transparent, verifiable processes
This promise is backed by mathematical principles, historical precedent, and working implementations.
Economic Freedom
Create a system where goods and services directly pay for other goods and services, without reliance on bank-created or government-issued money.
Equitable Exchange
Ensure that all legitimate trades can occur without artificial shortages of exchange media, enabling true economic democracy.
Sustainable Development
Establish the foundation for a peaceful, convivial civilization where communities can thrive without exploitation.
The Evolution of Exchange
We stand at the threshold of the next evolution in exchange—beyond money itself—where mutual credit clearing can transform our economic relationships.
The Money Problem
The conventional monetary system suffers from fundamental design flaws that have led to systemic problems. Research has identified the following key issues:
Centralized Control
Money creation and distribution is monopolized by banks and governments, leaving communities dependent on external entities for their means of exchange.
Interest-Bearing Debt
Nearly all money enters circulation as interest-bearing debt, creating a mathematical impossibility for all debts to be repaid and necessitating perpetual growth.
Artificial Scarcity
Despite abundant productive capacity, money is artificially kept scarce, preventing legitimate trades from occurring and contributing to unemployment.
Concentrated Wealth
The design of the money system inherently concentrates wealth and power, creating systemic inequality that technology alone cannot solve.
The Fundamental Contradiction
Money has evolved into a mere accounting system—credits and debits in a ledger—yet we treat it as a scarce commodity that must be acquired before trade can happen.
This contradiction between money's accounting function and its commodity treatment is the root cause of many economic dysfunctions.
Core Conflicts
Moving beyond conventional money faces several systemic conflicts that must be addressed:
| Conflict | Money System | Credit Clearing | Resolution Path |
|---|---|---|---|
| Power Dynamics | Centralized control by banks and governments | Decentralized community governance | Gradual transition through parallel systems |
| Profit Incentives | Interest extraction and financial rent-seeking | Service fees for system maintenance only | New business models for exchange facilitation |
| Trust Paradigm | Trust in central authorities and their currencies | Trust in transparent systems and community reputation | Merit-based systems with verifiable performance |
| Education Gap | Limited understanding of money creation | Requires new paradigms and mental models | Educational initiatives with practical demonstrations |
The Standardization Dilemma
A particularly challenging conflict exists between the need for standardization (to achieve network effects and interoperability) and the importance of local adaptation and control.
Standardization Needs:
- Interoperability between different credit networks
- Common protocols for exchange and verification
- Consistent rules for trust and merit
Local Control Needs:
- Adaptation to local economic conditions
- Community governance and democratic control
- Cultural relevance and appropriate scale
Credit Clearing: The Solution
A comprehensive credit clearing approach has been developed that addresses the fundamental issues with conventional money:
Mutual Credit Clearing
A system where trade occurs through the offsetting of credits and debits, without the need for a separate exchange medium. Every sale creates credit for the seller and a corresponding debit for the buyer.
Trust-Based Limits
Each participant has a credit limit based on their capacity to provide value to the community, their past performance, and their participation in the system.
Key Principles of Credit Clearing
- Zero-Sum Balances: All balances in the system always sum to zero, creating a mathematical guarantee of system integrity.
- No Interest Charged: Credit balances do not earn interest, and debit balances do not accrue interest. This removes the growth imperative from the economic system.
- Decentralized Issuance: Credit is created by the participants themselves at the moment of transaction, not by a central authority.
- Trust-Based Limits: Credit limits are based on a participant's capacity to deliver value, not artificial constraints or collateral.
- Transparent Operations: All system rules, transactions, and balances are transparent to participants, creating community accountability.
System Architecture
- 1Account Creation: Participants establish accounts in the clearing system, with initial credit limits set by community governance.
- 2Transaction Recording: Trades are recorded as credits for sellers and debits for buyers, with no separate currency needed.
- 3Balance Management: Participants manage their accounts to stay within limits, offering goods/services to reduce debit positions.
- 4Reputation Building: Successful transactions build merit scores, potentially increasing credit limits over time.
Core Benefits
- Abundance of Exchange Media: Credit is available whenever trustworthy participants wish to trade.
- No Interest Burden: Removal of interest eliminates the growth imperative and debt treadmill.
- Community Control: Local governance over credit policies and system rules.
- Resilience: Independent from national currency failures and financial system crashes.
Implementation Strategy
Below is a practical roadmap for transitioning to credit clearing systems:
Phase 1: Foundation
- AEducation & Awareness
Develop clear educational resources explaining credit clearing principles
- BCommunity Building
Identify and connect communities of practice interested in alternative exchange
- CProtocol Development
Create open standards for credit clearing systems
Phase 2: Pilot Systems
- ABusiness Networks
Implement B2B credit clearing systems in specific industry sectors
- BLocal Communities
Establish community exchange systems in geographic regions
- CData Collection
Gather performance metrics and refine system design
Phase 3: Scale & Integration
- ANetwork Expansion
Connect separate credit clearing systems into larger networks
- BGovernance Evolution
Develop federated governance models for multi-scale systems
- CInterface Development
Create seamless bridges between conventional money and credit clearing
Current Progress
How You Can Participate
- Learn the fundamentals of credit clearing through our educational resources
- Join a local pilot if one exists in your area or industry
- Contribute to development if you have technical or governance expertise
- Share these concepts with organizations and communities you're part of