Post edited 3:40 pm – December 1, 2010 by Richard Todd Chinnock

While it thrills me to see such well put together conceptualizations about how to incorporate mutual credit as an official aspect of the Common Good Bank framework I must also vote no to it.

My reasons why are that, with the current levels of awareness of financial instruments, we simply do not have a large enough market of groups and individuals who have confidence in these types of concepts.

My concern is that the end result will be that many see the project as "scheme-y"

In my opinion the only involvement CGB should have towards establishing a mutual credit circle is through vote decided support of not for profits whose goal is to establish mutal credit for their community or group of communities and then making exchange easy once a community or communities have a circle established.

Post edited 10:17 am – November 30, 2010 by wspademan

John G Root Jr said:

… it creates new money debt and interest free

Yes, to the extent that we replace official currency with mutual credit, the new money is debt and interest free. The money that we create through fractional reserve lending (like most of the money created in the example here) may be interest-free (see Interest-Free Loans), but of course it is a debt and must be repaid.

We as a world society must not create an unlimited amount of money debt and interest free. Interest-free yes, fine. But like it or not, the money by its very nature represents an obligation; so when we create money we always and unavoidably create an obligation. I agree that we want money to reflect reality, so when we create it, it is best to reflect the reality of obligation by creating money as debt (see Let's Create Money As Debt!).

we will then add company stock to the mutual credit, Federal deposits and CGB Stock we already have.

Not exactly. Each CGB member has a virtual account consisting of the sum of three parts: a bank balance, a mutual credit balance, and the value of their CGB stock. The acquired companies on the other hand will belong to the members corporately. Each participating community will profit from an acquired company in proportion to how much that community paid. But the profits go to the bank and to the Community Fund, not to the individual members.

There are very good reasons for deeply understanding the principle that money should only ever reflect reality.  It will keep us from making the mistake of treating the money as something valuable in itself.  It will allow us to manage the economy for the common good, it will allow us to keep prices stable and it will eliminate the temptation of something for nothing (interest or usury).

Yes. See, above, my second paragraph in this comment.

Issuing new money to represent the value of something new is entirely legitimate,

No. Money does not represent the value of things, it represents the right to those things and the demand for that right — which should, reasonably, reflect the real-world cost of those things in materials and human costs (such as labor and suffering). Since money represents both what is wanted and what is given up, it should always be created as both credit and debt.

does not require debt,

Suppose that we as a world society create some money to give a grant to a musician to write an oboe concerto. What does the musician do with the money? Presumably the musician uses it to pay for food, transportation, housing, entertainment, etc. That is the real world cost of the composition. That is the real world obligation that is created when we create the money. In order to reflect the reality that the grant obligates society, we should either raise that money first OR pay it back after (that is, create it as debt).

and is what the sovereign does. 

I think we do not want a global sovereign. We want rules that provide for a just and respectful community of communities, with regional or even global collaboration at the discretion of the individual communities. We want a design that never requires universal participation. This is a crucial issue and should be a separate thread (probably in a new forum on "Relations Between CGB Communities"): How will communities keep each other accountable? Economic ostracism?

(I hope you do not mean that individual communities can create money debt-free, since that would enable any one community to exploit the others.)

By the same token the due to human nature surplus from exchange is what generates rising standards of living and so it will be necessary from time to time to grant money to everyone

No. Suppose, for example, that food production suddenly gets 50% more efficient, so half as much time and materials are required to produce all the food we need. The price of food quickly falls by 50%. Do we need to issue more money? No. That would abruptly raise the prices on everything, with no relation to reality.

All prices will fluctuate in relation to each other in any case. Global inflation or deflation is not a problem in the Common Good Bank system. What matters is that we can create money as needed, to fund what needs to be done, so that everyone has enough to eat, a home, and satisfying work.